Zero Knowledge, Crypto Privacy Research That’s Breaking Out Of Blockchain

A little-known privacy technology is receiving huge amounts of funding from the blockchain industry. It can change how we live and work together. Turns out it doesn’t need blockchains to do that.

Even as institutions and investors flee blockchain amid stories of widespread fraud and dysfunction, there is at least one technology emerging from the crypto ecosystem with potential far beyond blockchain projects and cryptocurrency. This sector of privacy technology tools and research is called Zero Knowledge Cryptography, or “ZK” for short.

In the simplest terms, ZK is a tool for proving you know the truth about something without offering the details to others – and worrying about what they might do with that information. It’s a handy trick, but the technique is incredibly complex and difficult to scale.

Examples of crypto organizations investing heavily in ZK research include =nil; Foundation that raised $22 million in January for a ZK-powered marketplace, the Ethereum Foundation’s ongoing 2023 ZK research grants, and millions in venture capital raised by ZK companies like Starkware. All this investment is beginning to yield practical results.

Why Crypto Startups Care About ZK

Public blockchains, which make cryptocurrency possible, are essentially digital nudist colonies on public beaches. Everything ever written to them is visible to all. Even if you use encryption, you leave tracks in the sand that can be used to learn who you are, what you have, and who you interact with. ZK is a way to avoid making these tracks.

With a chance to solve a fundamental privacy problem like this, it’s no wonder crypto industry companies like PolygonMATIC and AlgorandALGO are hiring top ZK talent and dumping millions into their research – with significant results:

• An approach called PLONK improves ZK security and flexibility.
• Using evidentiary data and recursive evidence helps when you need to rely on the result of multiple calculations, performed by multiple parties.
• And the Halo2 system improves security by removing the need for a trusted setup ceremony, an otherwise necessary process that increases security risks.

Work like this reduces cost and complexity while expanding the number of ZK tools and practical use cases.

Zero Knowledge Projects With Zero Blockchain

With all these advances, it is becoming clear that much of ZK’s impact lies far beyond blockchain.

Even blockchain leaders agree. EthereumETH co-founder Vitalik Buterin said in 2022 that ZK is necessary for blockchains, but also that ZK alone will be at least as important in shaping the future of the entire technology industry.

This broader view of ZK is starting to drive real innovation in how organizations think about solving problems, especially where the solutions require coordination between people, companies and governments who cannot share data directly with each other. For example, ZK proof can be used to verify content and prohibit malicious data sharing, such as fake images.

Fake images on the internet have always been a problem, but in a world of increasing conflict and tribalism, the use of images that are not what they appear to cause outrage and undermine trust. To solve this problem, a group called C2PA proposed an industry standard for photographic digital signatures. Some camera chipsets already implement it. But it’s easy to defeat the signature when you edit the image, and almost every image shared on the internet is edited in some way.

That’s why Stanford researchers Trisha Datta and Dan Boneh developed a ZK method to prove that an image has undergone only permissible transformations, such as scaling. Problem solved, no blockchain involved.

When we need to share but can’t

WalmartWMT created a supply chain network on a blockchain in 2018 to track down contaminated food. Suppliers opposed the project. Another supply chain project led by Maersk was recently shut down. Companies participating in these projects, some of which competed with each other, did not want their internal data to reside in a shared system, blockchain or otherwise. A ZK approach addresses this concern by leaving the data in each company’s internal system and generating ZK proof of everything from customs certifications to shipping status. There is no need for a blockchain in these cases.

Unless you’re trying to prevent issues like financial double-spending, creating ZK proofs and validating them can be done faster and cheaper on traditional computing infrastructure.

Add a little Dash Blockchain to ZK for flavor

Blockchains can still be useful in non-cryptocurrency ZK applications. The Baseline Protocol is a standards body I worked on with industry leaders such as Ernst & Young, ConsenSys, MicrosoftMSFT and SAP. It advocates using ZK proof to orchestrate services like Google Maps and TwilioTWLO without disclosing data between them. The baseline technique reduces the need to copy data between systems, which can be a real comfort to companies concerned about data leaks.

The standard does not require any cryptocurrency or specific blockchain. But a blockchain is a handy, always-on, tamper-proof bulletin board for publishing ZK proofs to signal other services that it’s their turn to do something.

The research continues

Cryptocurrency stakeholders continue to double down on ZK research. Token networks like ZcashZEC use ZK proof. Layer2 projects such as Mina and Aztek are rolling out. And so-called zkEVMs are all the rage among Ethereum scaling enthusiasts. Although ZK has a long life ahead of it beyond blockchain, some of its most obvious uses are still relevant in the crypto community.

If you’re thinking that high-security file validation, enterprise system integration, and web service orchestration are incredibly boring uses of exciting technologies like blockchain and ZK… you’re right. But maybe, after a decade of blockchain hyperbole, boring is just what we need.

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