Cryptocurrency, a digital or virtual currency designed as a medium of exchange, relies on cryptography to secure and verify transactions and to control the creation of new units of cryptocurrency. One way to authenticate cryptocurrency transactions is with zero-knowledge proofs (ZPKs). Essentially, an owner of sensitive data can run a specified analysis on their dataset and provide a guarantee that they indeed ran this analysis without revealing anything about the data, other than the output of this analysis. ZKPs works to authenticate transactions by having a “Prover” convince a “Verifier” that it has the correct output or value for an analysis while revealing nothing but that output or value.
A ZKP is a proof conducted between a “Prover” and a “Verifier.” The Prover is the individual that demonstrates to the Verifier that they know the information, let’s say the value of “x,” to validate the transaction. Authenticating a transaction with a ZKP allows for greater security between the Prover and the Verifier, because the Verifier would not know, nor have to know, how the Prover came to the correct value of “x”. ZKPs secure all information and identities between the Prover and Verifier.
Currently, ZKPs have been deployed in anonymous cryptocurrencies like ZCash, whose current market cap exceeds $600 million, and also find important applications to emerging blockchain technologies that raise themselves pressing legal, ethical, and policy questions.
But ZKPs have a lot of room for growth. Georgetown’s Justin Thaler, an assistant professor in the department of computer science, has dedicated his latest research to develop new, more efficient ZKPs using his MDI Seed Grant funding awarded in 2017.
This MDI seed grant led to a recent publication: Doubly-efficient zkSNARKs without trusted setup, and a NSF Career Award on this topic. Thaler’s work will also play an important role in a semester-long research program at the Simons Institute for the Theory of Computing at UC Berkeley next fall. The program will focus on “Proofs, Consensus, and Decentralizing Society,” which will bring computer scientists and policy and legal experts to push forward blockchain technologies and their applications to society, economics, and cryptocurrencies.