Zero Knowledge Proofs and Implications Going Forward

/ Chris Collins / 11.05.2018 /

This past week, Starkware announced it raised a $30M Series A as it continues its work toward commercializing the nascent yet promising STARK (Scalable Transparent Argument of Knowledge) Zero Knowledge Proof (ZKP) system. That is a bit of a mouthful, but for those new to this terminology, Zero Knowledge Proofs essentially allow a user to prove something to another party without revealing any underlying information (also, here is a great primer). This sounds very much like a magic trick, but it is based on innovation in applied cryptography that first got kickstarted by a paper published by three MIT researchers back in 1985.

For privacy proponents and blockchain enthusiasts alike, Starkware is one of the more fascinating startups to watch, but it is just one of many developments in recent years to bolster privacy in the blockchain space. I first found out about privacy-focused protocols through Monero and Zcash, which use methods called bulletproofs and SNARKs, respectively. It’s exciting to see the progress and experimentation now with STARKS beginning to make waves. Promising greater security and scalability, it could prove key to the ongoing development of the blockchain ecosystem. I believe the importance of privacy will continue to grow in everyday life and view these developments as critical for opening up new opportunities for social collaboration.

There has been increasing excitement around ZKPs and how they can bolster privacy in everyday use cases. Given that they enable trust to be established in a public and verifiable way, there are various potential implementations in which they can unlock value and potentially turn data aggregators’ business model on its head.

Corporates

Companies have a strong incentive to in keep their operations private and typically won’t disclose more than they need to for competitive reasons. Recent examples include JP Morgan’s collaboration with Zcash to add privacy capabilities to its Quorum blockchain, and Ernst & Young’s implementation of ZKPs to launch its Ops Chain which will allow companies to securely transact on public networks.

Consumer Credit

Leaving our credit history in the hands of credit reporting agencies is a risky proposition that we know all too well. Undoubtedly, there are many entrepreneurs working toward solutions that empower consumers to take control of their credit history as part of their larger identity. A component that could facilitate this is leveraging ZKP’s to prove one’s creditworthiness to any entity that conducts a credit check, without revealing potentially sensitive details around the individual’s personal history.

Energy

Smart grids, electrical grids powered by IoT devices, are projected to grow to a $50B+ industry by 2022. However, lack of user privacy is a potential issue since utility providers receive granular consumption data which can enable the creation of detailed user lifestyle patterns. Privacy features can obfuscate details that are not relevant to a utility company’s primary service offering.

Voting

As voting becomes increasingly digital, it is becoming important to make sure voting stays verifiable and anonymous, whether it’s in a national election, company board, or a governance protocol. With ZKPs, voters would be able to see verifiable proof that their vote was counted in a way that doesn’t reveal their identity.

Other Use Cases

In a society where sensitivity around privacy of our data becomes increasingly important, ZKPs may alter the dynamics of various frequent interactions. For example, when applying for an apartment lease you may not have to divulge months’ worth of bank statements, utility bills, etc. to prove you meet a landlord’s application requirements.

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