Zero Knowledge Proofs and Implications Going Forward

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.

Potential Use Cases

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Source: Identiverse

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.

The Future of Zero Knowledge Proofs

Privacy

Like with all things in the blockchain ecosystem, we are very much still in the early days. ZKProof Standards, a collaborative initiative led by academics and supported by various organizations in the space, was just formed this year and should help the technology develop at a faster pace.

In this post, I mention just a subset of the use cases that will emerge in the future. I look forward to the day when we not only have greater control of our data, but also a greater ability to choose what we want to reveal about ourselves when trying to prove something. Ultimately, privacy is intertwined with trust – and where there is a lack of trust, there is plenty of opportunity to empower people.

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