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What Is Zero-Knowledge Proof? How Does It Resolve Scalability Issues In Blockchain?

Updated: May 10

Most layer 1 crypto Blockchain systems face a huge problem of limited scalability. This problem mostly occurs in layer 1 Blockchains that use Proof-of-Work (PoF) as their consensus mechanism. Typically, each Blockchain has a specific limit in terms of how many transactions it can handle at a time. Whenever a Blockchain receives a large number of transaction requests exceeding its limit, the network clogs down, and users have to face delays in the verification of their transaction.

As a result, miners have to do more work and utilize more computational resources, which ultimately leads to higher gas fees. Bitcoin and Ethereum are the prime examples of layer 1 Blockchain suffering from scalability issues. The scalability issue occurs in these Blockchains mainly because of their lack of ability to manage a high number of transactions. For instance, Bitcoin Blockchain can only manage 7 transactions per second, while Ethereum can tackle around 20 transactions per second.

These numbers are relevantly lower in comparison to centralized payment systems like Visa and PayPal, which can cater to thousands of transactions per second. Although many individuals and businesses want to adopt Blockchain due to its decentralized nature, its scalability issue is a major obstacle to its wide adoption. Therefore, to evolve further and attract more users, Blockchain technology has to solve this issue. That’s where Layer 2 comes in.

Layer 2 Blockchain systems like Polygon and Arbitrum have started to deploy a new method called Zero Knowledge Proof to resolve the scalability issues. In this article, we will discuss everything you need to know about Zero Knowledge Proof, including what it is, how it works, and most importantly, how it can resolve the scalability issues in Blockchain. So, without further ado, let’s dive into it.

What Is Zero-Knowledge Proofing?

In simple words, Zero-Knowledge Proofing is a cryptographic mechanism that replaces the traditional Proof-of-Work consensus methods. This method allows a user in the Blockchain network (Prover) to attest and prove the validity of a statement to another user (Verifier). The best part of the deal is that the prover only needs to verify the authenticity of the statement without revealing any sensitive information.

Basically, in Zero-Knowledge Proofing, the prover creates a statement, and the verifier can't tell what they're proving or evaluating, but it's enough to convince them that their intentions are honest. In simple words, the verifier knows that you are telling them the truth but doesn't know what it means. There are three criteria that Zero Poofs need to meet to be considered genuine, including completeness, soundness, and zero-knowledge.

  • Completeness: The prover has to prove to the verifier that what they say is complete and they have knowledge of what they claim to know.

  • Soundness: It ensures that the information provided is correct and accurate. In case the information is incorrect, the prover cannot convince the verifier that the information is right.

  • Zero-Knowledge: No information is provided to the verifier beyond what they need for verification. This ensures the safety of sensitive information.

All in all, Zero-Knowledge Proofing brings additional security, validation, and integrity to transactions made on the Blockchain on top of ensuring data privacy.

Types of Zero-knowledge Proofs

Here are the three types of Zero-Knowledge Proofs that improve transactional security and privacy on Blockchains.

  • Optimistic rollups (Fraud Proof): Basically, this type assumes that every transaction is valid and accepts every transaction, provided that the transactions can later be checked for validation and sent for fraud proofing if a statement provided is not true.

  • Zero-Knowledge rollups (Validity Proof): In this type, there is little to no interaction between the verifier and prover. The verifier and prover relationship consists of two parts: hiding and binding. In hiding, the committed polynomial constraint cannot be identified by the verifier by viewing the commitment. Meanwhile, in binding, the committed polynomial cannot be changed by the prover.

  • State Channels: State Channels enable scalable peer-to-peer interactions and transactions on the Blockchain.

ZK-rollups Layers 2 scaling protocols

1- ZK-SNARK

Also known as the Zero-Knowledge Succinct Non-Interactive Argument of Knowledge, ZK-SNARK is able to create better privacy and integrity of data by using a cryptographic approach. This approach enables one of the parties (prover) to convince the other that they possess what they claim to possess without the need to show it.

Protocols that are using SNARKs:

Some protocols that make use of ZK-SNARK include:

  • Loopring

  • Polygon Hermez

  • ZKSync

  • Zcash

  • ZKsync2.0

  • ZKSwap

  • Hermez

2- ZK-STARK

Also known as ZeroKknowledge Scalable Transparent Argument of Knowledge, ZK-STARK is a ZK Roll-Ups layer 2 scaling protocol that increases the scalability of ecosystems like Ethereum. Like every other Zero-Knowledge program, the ZK-STARK protocol ensures data can be verified in the easiest possible way without having to reveal anything about the data itself. It can reliably help prove what is present in the data without giving away any sensitive information. ZK-STARK uses hash functions to solve any resistance with quantum computing on of eliminating privacy and scalability issues.

Protocols that are using STARKS:

Let's look at the list of protocols in which ZK-STARKS is used:

  • Polygon Miden

  • Straknet

  • StrakEx

  • DYDX

  • Immutable X.

Zero-Knowledge Proof And Its Privacy Application

Now that we know exactly what Zero Knowledge Proof is, how it works, and where it's used, you might be wondering how it's applied in the Blockchain. So, let's also explore further to understand whether Zero-Knowledge Proof has uses other than improving scalability in a cryptocurrency ecosystem. There are numerous different areas in which Zero-Knowledge Proof can prove to be useful. Here are some of its most prominent uses:

  • It can be used for complex documentation to prevent unauthorized access to the documents.

  • It can be used to secure and protect storage utilities.

  • As an extension of what it does for crypto transactions, it can be used to secure all kinds of business proceedings that involve the non-disclosure of sensitive information.

  • End-to-end encryption can be formed using zero-knowledge proof. This will ensure total privacy and security in messaging applications.

  • It can be used while sharing any kind of sensitive data without having to involve a third party.

  • It can even be used to protect file systems. For example, it can detect that certain data is present in the files, but it will not reveal what the data is. This ensures that the data cannot be leaked by security personnel.

As you can see, there are many uses of Zero-Knowledge proof outside the crypto space. All in all, Zero-Knowledge Proofing utilizes encryption to ensure data security and eliminates the threat of undetected surveillance. In this day and age, our data is at a constant threat of being stolen or under surveillance. There are very few methods that can be carried out by people without intensive knowledge of data security. The Zero Proofing method is one of those few protocols that can be used to ensure total data privacy.

Final Thoughts:

The biggest problem with protocols that ensure total privacy is the intensive measures government organizations might take to investigate or regulate them. A good example of this would be Monero, which is a cryptocurrency under investigation by the IRS and not allowed to operate its private Blockchains. Zero-Knowledge Proof eliminates these problems and allows private Blockchains to operate freely without government interference. That’s precisely why ZKP is gaining popularity, and many Blockchains are considering implementing it in their current infrastructure to ensure privacy.

If you want to develop a Blockchain system using the Layer 2 protocols or want to integrate Zero-Knowledge Proofing into your existing Blockchain, we can help you out. Here at IIInigence, we stand proud as the best Blockchain development agency offering a wide range of services, including Blockchain consultancy as well as cryptocurrency, smart contract, dApp, Decentralized Marketplace, and Metaverse development. Our highly experienced Blockchain developers can help you integrate Blockchain into your business with the assurance of scalability and data integrity. So, what are you waiting for? Get in touch with us and schedule a call with one of our experts to see how we can help you fulfill your goals.

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