What Are Zero-Knowledge Proofs? Making Private Transactions Possible

Zero knowledge proofs

Imagine being able to prove something without having to reveal any information about it. Sounds impossible? Well, that's where zero-knowledge proofs come in.

Research on cyber safety carried out by The Harris Poll and NortonLifeLock reported that four in five people have concerns about their data privacy, and seven in ten have taken measures to safeguard their online privacy. The study was conducted among 10,003 adults over the age of 18 in 10 countries: Australia, Brazil, France, Germany, India, Italy, Japan, New Zealand, the UK, and the US.

It’s true that we share too much personal information these days because we are left with no choice — you simply won’t access the site and services unless you agree to their terms. Does everyone really want to click that button? That is the question.

In this article, we’ll take a look at how zero-knowledge proof technology is revolutionizing the approach to privacy and security, and how it can keep our data private and avoid exposing too much of it.

Let’s get started!

What are zero-knowledge proofs?

Zero-knowledge proofs (ZKPs) are cryptographic protocols that allow one party (the prover) to demonstrate to another party (the verifier) that they possess knowledge of a certain piece of information, without revealing the information itself.

The concept was first described in 1985 in a paper called “The Knowledge Complexity of Interactive Proof-Systems” by MIT computer scientists Shafi Goldwasser, Silvio Micali, and Charles Rackoff.

The authors showed that it was possible to prove certain properties of a number without revealing the number or any other related info. They introduced a significant mathematical finding which demonstrated that the type of interaction between a prover and a verifier could reduce the information required to prove a theorem.

The paper is now recognized as a seminal work in cryptography and has paved the way for the development of zero-knowledge proof protocols.

Today, the concept of ZKPs has found its application and become a crucial tech in online authentication, secure communication, and privacy-preserving transactions in crypto. To be more specific, ZKPs have been used to implement secure digital signatures, anonymous authentication, and private blockchain transactions.

Find out how we implemented the ZK-rollup functionality in the Echo blockchain ecosystem

How do zero-knowledge proof protocols work?

How zero knowledge proofs work

Zero-knowledge proof protocols require a series of interactions between the two parties — the prover and the verifier. These are the procedures they need to go through:

  1. The prover randomly chooses a question from an established set of questions and sends the answer to the verifier
  2. The verifier selects another question from the set as a “challenge”
  3. The prover calculates and returns the answer to the challenge
  4. The verifier uses the response to verify the prover’s access to information

The verifier continues to issue challenges to ensure that the prover isn’t just trying to guess the answers. These actions are repeated until the verifier is convinced that their counterparty has genuine knowledge of the information.

At the very end, although the verifier is sure of the truth of the statement, they still don’t learn anything else about it and don’t receive any personal or additional data.

What are the different types of ZKP?

There are different types of ZKP, including interactive zero-knowledge proofs (IZKP), non-interactive zero-knowledge proofs (NIZKP), and succinct zero-knowledge proofs. Each of these types has its own unique protocol and mathematical technique.

  • Interactive zero-knowledge proof

This is the most widely used type. Under this protocol, the prover and verifier engage in multiple rounds of interaction to prove a statement.

  • Non-interactive zero-knowledge proofs

They imply that the prover sends a single message to the verifier, who can verify the statement without any additional interaction.

  • Succinct zero-knowledge proofs 

These are a kind of compact version of IZKPs or NIZKPs. They require fewer computational resources and can be used in situations where efficiency is a priority.

If you’ve heard of ZKPs before, you might have heard of ZK-SNARKs and ZK-STARKs as well. These are two specialized forms of zero-knowledge proofs that have gained significant attention due to their applications in blockchain technology and crypto transactions.

ZK-SNARKs are a type of succinct zero-knowledge proof that is also interactive. They involve a series of interactive steps between the prover and the verifier and are designed to be more efficient than other types of interactive zero-knowledge proofs.

ZK-STARKs, on the other hand, are non-interactive zero-knowledge proofs that are also succinct. They don’t require any interaction between the two parties and are designed to be scalable and transparent. This makes them a perfect fit for transactions on public blockchains.

Why do we actually need zero-knowledge proofs?

Zero-knowledge proofs significantly increase the security of personal data, speed up the identity verification process, and enable greater efficiency and scalability of blockchain-based protocols. Let’s dig a little deeper.

Enhanced privacy and security

Zero-knowledge proofs were developed in order to protect privacy and sensitive data, as they allow individuals to prove something without the need to share any additional info or disclose any personal data.

This is particularly useful in financial transactions. A ZKP can help prove that a party has enough funds to complete the transaction without having to reveal their account info or share their actual balance. This enhances privacy by preventing unnecessary disclosure of financial information.

Take a look at how PixelPlex develops financial software and ensures its security

Higher efficiency and scalability

First, zero-knowledge proofs can reduce the amount of data that needs to be transferred between the two parties. This improves the efficiency of communication and reduces network congestion.

Secondly, zero-knowledge proofs greatly diminish the size of a proof, simplifying the process of transmitting and storing it. This feature can enhance scalability by minimizing the storage and bandwidth requirements for managing a system, most often based on blockchain.

Faster and safer identity verification

In a typical identity verification process, an individual is required to provide their name, address, date of birth, and other personal details. However, this information may be at risk of theft or misuse.

With zero-knowledge proof, a person can prove that they are over a certain age without revealing their exact date of birth. This approach can help speed up the identity verification process because there is no need to manually check the data.

Moreover, zero-knowledge proofs provide an additional layer of security as sensitive information is not exposed, reducing the risk of identity theft or fraud.

5 use cases for zero-knowledge proof

5 use cases of zero knowledge proofs

Zero-knowledge proofs can be used in various situations where privacy and security are crucial. These include authentication, decentralized identity, password verification, digital signatures, and private transactions. Let’s take a closer look at each of these applications.


We all use online services that require us to authenticate ourselves in order to gain access. ZKPs can simplify the authentication process for both platforms and their users by generating a proof, which can verify identity without revealing personal information.

This improves the user experience and reduces the need for organizations to store large amounts of user data. What’s even more important, it helps minimize the risk of data breaches and leaks.

Decentralized identity

ZKPs can be used to create decentralized identity systems, where individuals can take full control of their own identity information and can selectively reveal it as needed, without relying on a central authority. By using zero-knowledge proofs to verify identity, decentralized identity systems can help increase security, strengthen privacy, and give users control of their own data.

Password verification

Zero-knowledge proof technology incorporates a cryptographic tool called a zero-knowledge password proof (ZKPP). This enables the prover to show the verifier that they know a password, without revealing anything other than the fact that they do know the password.

ZKPPs can be used in password authentication systems to securely verify a user’s password. By creating a mathematical puzzle that only someone who knows the password can solve, ZKPPs provide a way to prove knowledge of a password without revealing the password itself. This increases security and reduces the risk of password theft.

Digital signatures

Zero-knowledge proofs can help individuals prove ownership of a digital signature. For instance, let’s say Helen needs to sign a document and verify that the signature really belongs to her. She could use ZKP technology to demonstrate her knowledge of the private key connected to her public key.

Once she has done this, anyone can confirm that Helen signed the document without having to know her private key or learning any more details about her personally.

Confidential transactions

Zero-knowledge proofs have found significant applications in the blockchain domain, with cryptocurrencies like Zcash using them to enable anonymous transactions.

ZKPs allow users to protect information about the transaction amount and the addresses of sender and receiver, making it more difficult for third parties to track and trace the transaction’s history. This enhances the privacy and security of crypto transactions and reduces the risk of financial info being exposed to malicious actors.

There’s no blockchain security without properly written smart contracts. Check out our smart contract audit services and see how we ensure their security

Closing thoughts

Zero-knowledge proof is a very promising technology that has numerous potential applications, from digital identity management to secure financial transactions.

As the need for better privacy and security in our digital age continues to grow, zero-knowledge proof technology is becoming increasingly important. It will be fascinating to see how this tech evolves and how it will impact various industries in the years to come.

If you’re eager to jump into that future right now, we’re here to help! Our blockchain development team will guide you through the entire process, from advising you on how blockchain and related technologies work to building a platform that not only safeguards your users’ privacy but also provides your business and its customers with financial benefits.

No need to wait any longer — contact us to start working on your project right away!


Anastasiya Haritonova

Technical Writer

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