Confidentiality can take many forms and occur at many levels. The technologies that blockchain architects initially envisioned for privacy chips are now being used by a large number of crypto stakeholders, from companies to exchanges. What started out as an anonymous way of doing business has spawned a booming industry, built on technologies designed for concealment, but which can also be programmed to reveal a few selections.
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zk-snarks are better known for their use in privacy protocols such as Zcash. These "proofs without knowledge" have much broader applications than simply masking the sender and receiver when transmitting cryptographic data via a public ledger. A proof of zero knowledge allows one party to prove to another that a statement is true without revealing any information about the statement itself.
To break this down into a simple analogy, let's imagine that farmer Bob sells cattle to the market. He wants to prove to the auctioneer that there is a cow in his caravan, but without opening the door (as the creature would escape). With the help of a heat sensor installed inside the trailer, Bob can prove that it contains a lively and breathing animal, but the auctioneer will not have no way of knowing what cow it is, or even if it's a cow (unless gambling away). That's basically how a zk-snark works: proof that something is true, while not revealing any information about the thing in question.
In terms of how zk-snarks can be deployed outside private coin transactions, look no further than smart contracts. Quras, for example, uses technology to provide intelligent privacy-enabled contracts that run on its eponymous virtual machine. Applications include hiding information about credit history; allow confidential sharing of medical and health care information from IoT devices; and facilitate sealed auctions executed with the aid of smart contracts.
Mouayad Yousef is the COO of Burence, a research and development platform in cryptocurrency and blockchain. He explains why private smart contracts are desirable, he told News.Bitcoin.com: "Smart contracts have the potential to automate business processes ranging from calculating insurance premiums to Market supply of decentralized synthetic products, but for this it must be in. The dissemination of information chases all the benefits that could arise from the use of the blockchain, to the extent that publicly verifiable smart contracts allow observers to promote markets and steal proprietary algorithms of their competitors. Privacy technology allows you to hide the secret sauce contained in a smart contract, while allowing you to check its integrity. "
zk-Snarks is not the only privacy protection technology whose applications go well beyond those originally envisioned by its pseudonymous creator. Mimblewimble's origins no longer need to be recalled, but its evolution has done so. Although used by both Grin and Beam – and soon by Litecoin as well – it is the Beam iteration of Mimblewimble that has applications for the largest number of users. Understanding how Mimblewimble works is not easy, unless you like elliptic curve cryptography. Even Beam's attempt To explain the process via a series of dumb metaphors, it takes a little digestion.
What is relevant here is not so much the way Mimblewimble works, but the fact that it can provide complete transactional anonymity between the parts while being compatible with implementations such as Beam that allow optional audibility. Digitally signed documentation can be attached to transactions, giving an authorized auditor permission to view transactions associated with a particular key. Cypherpunks seeking to hide their business from those who spy on governments will have little interest, but companies who wish to conceal their daily belongings to the public (paying staff, contractors, and purchaser of goods) while remaining in compliance. an accounting point of view, it is extremely useful.
Bulletproofs are actually part of the family of zero-knowledge proofs and allow you to aggregate multiple pieces of evidence from different parts into one. In practice, this means that bulletproofers can compress information in a meaningful way without compromising their validity. When they were included in Monero last year, for example, bulletproofers reduced transaction costs by reducing the average size of each transaction.
There are a number of interesting applications for bulletproof in addition to facilitating confidential transactions. They can be used as proof of solvency, for example, with a research paper noting: "A Bitcoin exchange with 2 million customers requires around 18 GB to prove its solvency in a confidential way … Using Bulletproofs and its protocol variants … this size could be reduced to about 62 MB." The same document a total of eight bulletproof use cases, including smart contracts and cryptographic derivatives.
Privacy Coin Tech follows the same adoption curve as other disruptive technologies: first, it is used by criminals, outlaws and geeks. Then by companies, ordinary end users and even governments. Just like encryption, privacy – preserving technologies are equally effective: from the unknown to the ostracized, it has become indispensable in less than a decade.
What other privacy technologies have extensive applications that go beyond the mere possibility of making anonymous transactions? Let us know in the comments section below.
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