How Do Zero-knowledge Proofs Promote Blockchain Security?

Golden bitcoins on the black background closeup. Cryptocurrency virtual money

Despite the short lifespan of cryptocurrencies and blockchain, they have provided us with cutting-edge technologies that can be used in multiple aspects outside the crypto world.

Most of these technologies appeared with the rising security concerns of digitalisation and decentralisation of data. Hackers and fraud schemes have targeted crypto transactions for many years now, and some breaches dried out millions from investors’ wallets.

Therefore, crypto developers consistently call for reinforced blockchain security protocols, such as zero-knowledge proofs. ZKP practice is complex but makes total sense in increasing transaction security. Let’s explain this concept and how it works.

Defining ZK Proofs? 

Three researchers at the Massachusetts Institute of Technology, Shafi Goldwasser, Silvio Mical and Charles Rackoff, invented zero-knowledge proof in 1982 and was later published in 1985.

The ZKP protocol was created to provide a safer environment for data exchange and transactions. This system has a huge potential for crypto transfers, given the robust data security it provides. 

Zero-knowledge proofs rely on processing information without revealing its content and having zero knowledge about the transaction data details. This concept stands on the basics that hackers cannot breach transactions if no details or information are disclosed, which provides a security lid on sensitive and confidential information.

This foolproof security measure might be challenging to understand, given the complexity of transaction operations. However, let’s explain it with the below example. 

ZK-Proofs Work Flow

Zero-knowledge proofs imply the verification of transactions without viewing their content. Well, how do you successfully verify without looking at the information? Simply put, it requires proof that the other party has knowledge of the information without asking for details about it.

Assume there is a safebox with a Bitcoin inside of it, and Jack knows that there is a Bitcoin inside the safebox and that a security code is required to unlock it. However, Jack does not know the code and asks Billy to verify their knowledge of the code.

Billy uses a secret code to unlock the safe and grabs the Bitcoin, and then he shows Jack the Bitcoin as proof that he knows the code. However, the catch is that he does not tell Jack the code and how he took the Bitcoin out.

Jack asks Billy to repeat the process 20 times, and every single time, Billy manages to get the Bitcoin out without one mistake. This repetition decreases the possibility of Billy being lucky to a marginal percentage.

This simple example embodies the flow of ZKP and how it uses proof to verify transactions without knowing the content of the transaction. Moreover, this flow resembles blockchain transactions and how private and public keys are used to decipher encrypted transactions.

How Are ZK-Proofs Used?

ZKPs were invented way before cryptocurrencies have seen light. Therefore, they have unlimited use cases in order to safeguard private information.

There are other sectors that require data protection in light of the digitalisation of platforms and services. ZKPs can be used in military, finance, technology, healthcare and other areas that need data protection.

Individuals and organisations can benefit from ZKP protocols to preserve their identity while transacting and to keep their information away from competitors or hackers, which makes them highly applicable in crypto transfers. 

Pros And Cons of Zero-knowledge Proofs

The zero-knowledge proof process is relatively new to cryptocurrencies and has yet to prove its worth. However, there are theoretical benefits and challenges to using this technology.


  • Promoting privacy in cryptocurrencies and blockchain operations.
  • High scalability with multiple use cases in industries other than cryptos, including healthcare, law enforcement, finance, etc.
  • Simplicity for the user since it does not change anything in the user experience.
  • Reinforcing data exchange by not disclosing transaction data leads to decreased crypto attacks.


  • Requires robust machines and computing power.
  • The application of ZKP is based on theory and mathematical equations and has not been put into practice yet.
  • The complex steps involved in the zero-knowledge proof protocol can lead to longer transaction processing times.


Zero-knowledge proof protocol is an advanced security protection system that hides transaction information to prevent exposure to hacks and cyberattacks. They require data verifications without viewing its details by providing proof that data can be and has been verified by the other party.

ZKPs were invented to promote data security in light of increased digitalisation. Therefore, this protocol has vast use cases from blockchain to other industries that require privacy and increased cyber security.

About Neel Achary 18722 Articles
Neel Achary is the editor of Business News This Week. He has been covering all the business stories, economy, and corporate stories.