What are Zero Knowledge Proofs and How Do They Work

Zero-Knowledge proofs are a popular cryptographic method that utilizes probabilistic assessments to allow parties to verify data without revealing or sharing the underlying data. The process was originally introduced by a group of MIT researchers in the late 80s and has since seen growing adoption in the blockchain sector. Nowadays, zero-knowledge proofs serve a vital role in the business sector by verifying sensitive data securely.

What Problems do Zero-Knowledge Proofs Fix?

Zero-knowledge proofs solve several problems facing the business and personal sectors. There are many scenarios in which one party must verify they possess certain data without revealing the data specifically. 

The Treasure Parable

For example, imagine that you know the secret temple location full of treasure and another party has the key needed to unlock the secret temple. Before agreeing to join forces, they request that you prove you have the actual map. However, you know that if you reveal the location of the treasure, you are no longer needed. 

As any decision to show the map directly would jeopardize your value and potential windfall, you devise another strategy to prove you own the map. Instead of showing the map directly, you instead provide the first steps of the journey. The keyholder understands that only the map holder would know this vital info, and after a bit of back and forth questioning, they have faith you indeed possess the ancient temple’s location. 

Imagine the same scenario: replace the treasure with a cryptocurrency address and the key with a private key. In this way, it’s easy to see why zero-knowledge proofs have become an integral part of conducting business on the blockchain.


One of the main benefits of zero-knowledge proofs is that they help retain a certain level of privacy. Parties can verify information without directly exposing the information. In the real world, individuals can use these protocols to verify their identity without revealing sensitive data such as social security numbers. 


In many instances, and especially in the case of complex equations, Zero-knowledge proofs can speed up verifying data. It’s much faster for a computer to utilize zero-knowledge proofs rather than re-compute a massive equation. This efficiency equates to more savings and a more responsive network.

How do Zero-Knowledge Proofs Work?

Today, there are many different types of zero-knowledge proofs in use. While their strategies vary, they all share a common tactic. They provide small pieces of unlinkable information that would be nearly impossible for an outside party to know without revealing the important facts.

It’s vital to understand that zero-knowledge proofs are not exact in that there is a minuscule chance that someone could guess the information provided separately. However, when all the provided info is put together, there is such a high probability of ownership that it’s nearly impossible to fake.

  • Interactive Constructs vs. Non-Interactive Constructs

There are two main types of zero-knowledge proofs in use today. The first strategy is known as interactive zero-knowledge proofs. This is the original version of the concept. It requires the two parties to exchange data multiple times until a certain certainty percentage can be verified. This technique is highly effective; however, it does reveal the parties involved in the equation.

  • Non-Interactive Constructs

Non-interactive constructs take the zero-knowledge-proof concept a step further by eliminating the parties’ need to communicate directly. This approach is fairly new and is mostly used within the blockchain sector. In most instances, this approach relies on an initial setup phase that generates a common reference string. 

Zero-Knowledge Proofs in Cryptocurrency

Zero-knowledge proofs have found a home in the crypto sector as of late. These protocols are ideally suited for the cryptographic structures found in today’s blockchains. Early cryptocurrencies didn’t offer anything similar, and it led to issues such as theft and fraud.

For example, Bitcoin transactions reveal the sender, the receiver, the time, and the amount. While it’s possible to obfuscate this data using third-party protocols and additional systems such as CoinJoin, it’s not as effective as zero-knowledge proofs.

Z-Cash was the first cryptocurrency to utilize zero-knowledge proofs effectively, thanks to the network’s revolutionary zk-SNARK protocols. Notably, zk-SNARK stands for Zero-Knowledge Succinct Non-Interactive Argument of Knowledge. This next-gen protocol provides users with a new level of privacy that was previously not possible. 

The Future of Zero-Knowledge Proofs

One of the biggest areas of development for zero-knowledge proofs is identity verification. There has been a steady rise in both major institutional and government level hacks and identity fraud. The use of zero-knowledge proofs could help to alleviate these concerns because they would provide fewer attack vectors. Every time you provide your personal information, that data remains on a third-party system. If this system gets compromised, you are also left open to attack. 

Zero-knowledge proofs could prevent these security risks by eliminating the need to provide this information in the first place. Imagine going to your doctor’s office, and instead of showing an ID or filling out a registration form, you provided zero-knowledge proof. You could prove you were who you say you are, and you would not have to worry about the office’s security precautions. This same approach is now seeing growing adoption in the medical field and other systems that traditionally hold a lot of personal info. 

Zero-Knowledge Proofs – A Brighter Future for Users

Bitcoin live price
price change

Zero-knowledge proofs provide a glimmer of hope in an increasingly hostile digital environment. They may be the key to protecting citizens’ vital data from state-organized hackers and expanding international cyber warfare. At the very least, they play a crucial role in protecting blockchains and other digital networks. For these reasons, you can expect to see further integration of these helpful systems across multiple industries. 

Stay up to date with our latest articles

More posts

Here are the Benefits of Auditing Your Smart Contract with SolidProof

Auditing a smart contract is vital to ensure that the code functions as intended. SolidProof offers a wide range of services to help with this process. The company guarantees a sound audit process and an experienced team of auditors.  Here are the benefits of auditing a smart contract with a reputable company such as SolidProof: A wide range of services: SolidProof offers a wide range of services to help with the audit process, including code review, security analysis, and more.…

Smart Contracts Vulnerabilities Specific to The DeFi Space

As the financial world moves increasingly online, it's becoming more and more essential to ensure that all transactions run securely. One way this is possible is through the use of smart contracts.  Smart contracts are computer programs that automatically execute the terms of a contract. They provide a secure way to conduct transactions without relying on third-party intermediaries.  While the use of smart contracts offers many advantages, they are also vulnerable to attack. In this blog, we will explore how…

Malicious Attacks on Smart Contracts that Auditors Can Easily Identify

With many businesses adopting blockchain technology and Smart Contracts, offering reliable security audits in the industry has become increasingly important.  Businesses may protect their assets and contracts by recognizing and preventing harmful assaults. This blog post will explore the different attacks a group of criminals can carry on Smart Contracts. We'll also look at real-world instances of assaults to help you secure your contracts. What are Smart Contracts? Understanding the Benefits of This Technology What are smart contracts? They are…

How Smart Contract Audit Can Help Prevent Hacks

As companies move toward implementing smart contracts, the need for technical audits becomes increasingly essential. Having a third-party auditor check your contracts for vulnerabilities can prevent your company from suffering from a hacking attack.  What are Smart Contracts? A smart contract is a script that automatically carries out a contract's provisions. Smart contracts are self-executing, meaning that once the system verifies the meeting of pre-determined conditions, the contract will automatically execute. This eliminates the need for intermediaries such as lawyers…

Top 10 Ways to Earn Free Bitcoin in 2022

Here are the best ways to earn free Bitcoin when your purse is light. --- Are you interested in Bitcoin, but still hesitant to risk putting money towards it? Alternatively, are you looking to sat every sat possible, but lack the dry powder to buy more? Here’s a secret: you can put more bitcoin in your pocket without spending a dime – or even doing any real work.  That’s not to say you’ll earn much bitcoin without either of those…

Are Gold-Backed Tokens Worth Investing During Crypto Bear Market?

The crypto market is under the complete control of bears, investors taking short positions to profit from declining prices. In this unstable environment, new capitalists are fearful or skeptical when funding projects. Instead, they turn to more reliable assets that would not wipe out their portfolios when or if they flop. Gold-backed tokens represent a category of assets ready to provide portfolio stability and allow investors to overcome the bear market without too many losses. On the contrary, gold-pegged tokens…

What is Taro? Trading Assets and Currencies on Bitcoin

Taro leverages Bitcoin, lightning, and Taproot to enable the peer-to-peer transfer of currencies and assets beyond just BTC. —  Worried that Bitcoin is too boring to play within the growing digital asset economy? Fret no longer.  Using Taro, the original blockchain network can support the decentralized exchange of multiple assets – including fiat currencies. Moreover, the protocol works together with the lightning network, letting users transact – instantly and for free – with non-BTC-denominated balances.  Read below to learn about…

What is Fedimint? The Custody Solution to Bitcoin Privacy

Fedimint combines distributed custody with blind-signed ecash tokens to let Bitcoin users transact in private. --- Despite its growth, Bitcoin still faces some glaring limitations to reaching mass adoption as a fully censorship-proof payments network. One of them is privacy. Bitcoin’s ledger is fully open and public, meaning anyone can track another person’s transactions if they know his public address.  The other is a custody problem. While wallet software UX has improved considerably over time, many Bitcoin holders still store…

What Is a Crypto Bear Trap?

Cryptocurrencies are often incredibly volatile and can see massive price swings in a short time.  This makes them ripe for bear traps. A bear trap is a situation where traders wrongly think a coin is about to reverse a downtrend. These events often result in significant losses.  This guide will discuss crypto bear traps, how to identify them, and the risks involved in these situations. Introducing Crypto Bear Traps A bear trap happens when a trader buys assets, expecting the…

Understanding the GameFi Phenomenon

The GameFi industry is changing the way people think about gaming and finance. It provides a new way for gamers to interact with each other and earn money. It is also giving people a new way to invest their money.  The GameFi industry has the potential to change the way these industries operate. This guide will look more closely into this new business, covering several features. What Is the GameFi Sector? The GameFi sector is a crypto-based industry that uses…