What’s Next for Blockchain? Wider Adoption of Privacy Technologies

Zero-knowledge proofs (ZKP) are cryptographic primitives that provide the basis to solve privacy and scalability challenges in blockchain technologies. ZKP employs mathematical proofs about the truth of a statement that does not reveal any additional information about it. For example, a prover can generate a proof of the knowledge of the private key that corresponds to a key in a list of public keys, without revealing either the private key or the public key to which it corresponds. This makes it possible for different parties to transact without disclosing their specific identities or transferred amounts. An example of practical implementation of this concept is Zcash, a digital currency and the first project to implement zk-SNARKs - a new form of zero-knowledge cryptography. 

As an example, let’s say you need to prove to someone that you’re older than 18. Zero-knowledge proofs enable you to do so without letting the other party know your actual birth date. Another example is Yao’s Millionaires’ Problem. In this multi-party computational problem, two millionaires are trying to find out if they have the same amount of money without revealing to each other its exact quantity. Again, zero-knowledge proofs would be an efficient solution to this problem. 

You can find more simple explanations of zero-knowledge proofs, that are simple enough for even children to understand. This approach takes the security of your online communications and transactions to a whole new level, especially in e-commerce and data mining which often requiresecurely comparing confidential numbers.

It only takes someone to know the polynomial’s entire factorization to render it trivial for that person to make proofs for the specific zk-SNARKs to produce false statements. This means that no one should know the polynomial’s full factorization. One of the ways to accomplish this is by publicly opening up the polynomial creation process. For instance, Zcash did this with its last fork when it updated its polynomial and carried out a public polynomial creation in the so-called Powers of Tau ceremony. 

Zero-knowledge Scalable Transparent Argument of Knowledge (zk-STARK), on the other hand, uses somewhat different mathematics and doesn't require a trusted setup. They do, however, need a lot of space (more than SNARKs), which is a significant disadvantage due to blockchains already being limited in this area. Plenty of platforms are already deploying zero-knowledge proofs. For example, Starkware Industries is utilizing STARK technology toward improving scalability and privacy on Ethereum. Aztec Protocol is developing a zero-knowledge privacy protocol and decentralized exchange which is already live on the Ethereum mainnet. Secret Network is developing ‘secret contracts’ to facilitate computation over encrypted data. 

However, according to him, the major challenge with smart contract mixers in transactions is that the receiving party still has to have ETH to pay for gas. While this allows it to submit the proof to receive their funds, sending that gas presents a privacy leak. Buterin believes this problem can be solved with the layer-2 protocol, where a user broadcasts their proof over something like Whisper. A specialized set of nodes accepts these proofs, and includes them into a transaction and pays for the gas, as well as collecting the fee from the recipient. This protocol would have to be “specced out”, standardized, and implemented. 

For example, to use KNC (Kyber Network Crystal) on Uniswap, he asks would the user first transfer KNC from their “Kyber account” to their “Uniswap account” and then do whatever they wanted to do with Uniswap, or perhaps something different. Ideally, from a user-experience point of view, it would still feel like the user makes one operation. The user experience of dapps that requires users to sign three transactions in a row isn’t very convenient.