No need to show ID when buying alcohol! Understand what “zero-knowledge proof” is from the classic game “Where’s Waldo”.

Why is “Zero Knowledge Proof” so important with over $400 million in investments this year?
Vitalik, the founder of Ethereum, once said in a public speech that Zero Knowledge Proof (ZKP) and blockchain, although two independent technologies, complement each other in three key aspects: privacy, scalability, and interoperability. According to data from Messari, investments in the ZK field exceeded $400 million in 2023, with a focus on Ethereum’s L1/L2 scalability and emerging ZK developer infrastructure. Although ZK technology is relatively new, its rapidly developing ecosystem is expected to integrate best practices to achieve more secure, private, and scalable blockchain applications.
In this article, we will explore the importance of Zero Knowledge Proof in the Web3 space, starting from the basics and diving deeper into its impact.
What is Zero Knowledge Proof?
Zero Knowledge Proof is a technology that allows for the verification of a statement’s truthfulness while maintaining privacy. It plays a significant role in information security and privacy protection. Let’s delve into its essence, importance, operation, and applications.
Fundamentally, Zero Knowledge Proof is a cryptographic technique that enables one party, known as the prover, to prove the validity of a computation to another party, known as the verifier, without revealing any underlying data used in the computation. ZKP originated in 1985 and has evolved from theory to practical applications with the latest advancements in software tools and hardware.
A classic example of Zero Knowledge Proof is the game “Where’s Waldo?”
The prover knows the location of Waldo in the picture but does not want to disclose the specific location. They can use a covering that obscures most of the image, revealing only the covering of Waldo to prove that they know where Waldo is without revealing the specific location. This is a form of Zero Knowledge Proof where the prover proves a fact (knowing Waldo’s location) without revealing any other information.
Zero Knowledge Proof allows one party (the prover) to prove the truthfulness of a statement to another party (the verifier) without revealing any information other than the truthfulness of that statement. In simple terms, it’s “I know, but I won’t tell you what it is.” To provide a real-life example, if you need to prove your age to buy alcohol but do not want to disclose your specific date of birth or other personal information, Zero Knowledge Proof is a technology that can assist you in doing so.
Zero Knowledge Proof and its Three Complementary Aspects to Blockchain
When Vitalik mentioned that Zero Knowledge Proof (ZKP) and blockchain are complementary, he emphasized their mutual enhancement in privacy and scalability, as well as the trust interoperability achieved through ZKP. Let’s explore these three positive contributions of Zero Knowledge Proof to blockchain in depth.
Benefit One: Privacy Protection
One of the main characteristics of blockchain is transparency: all transaction records are public, meaning anyone can view transaction details. This can be an advantage in some cases but can also lead to privacy issues. For example, on the Bitcoin network, even though addresses are anonymous, specific user behavior can be traced through transaction analysis.
Zero Knowledge Proof plays a crucial role here. Through ZKP technology, users can prove that they have complied with specific rules (e.g., have paid enough funds) without revealing the specific details of the transactions. This enhances the privacy of blockchain users by hiding their identities and the specific content of their transactions.
Benefit Two: Scalability of Blockchain
Another major challenge faced by blockchain is scalability. As more transactions and complex smart contracts are loaded onto the blockchain, processing speed slows down, and transaction costs increase.
Another important feature of ZKP is its succinctness. It means that even for complex statements that need to be proven, the required proofs can be very short and efficient. This is particularly important in resource-constrained environments like blockchain because it means that complex verifications can be performed without consuming a significant amount of network resources. This feature is highly effective in reducing transaction data size and increasing system throughput.
Zero Knowledge Proof can help address this challenge in the following ways:
ZK Rollups:
This is a Layer 2 solution that “rolls up” multiple transactions into a single transaction and submits them to the main chain. ZKP ensures that these rolled-up transactions are executed correctly without the need to process them individually. This significantly reduces the data burden on the blockchain, improves throughput, and reduces transaction costs.
ZK-SNARKs in Smart Contracts:
The increasing complexity and number of smart contracts pose challenges to blockchain performance. By using ZK proofs, certain computations of smart contracts can be performed off-chain, with only the final proof being sent to the chain. This reduces the burden on the blockchain while maintaining the integrity and security of contract logic.
Benefit Three: Trust Interoperability
Current blockchain interoperability protocols rely on trusted systems, such as multi-signatures or incentive validators. ZKPs can replace cryptographic economic trust assumptions with cryptographic proofs, opening up new paths for more secure and robust cross-chain communication. Interoperability is one of the emerging areas in the primary applications of ZKP.
What are the Applications of Zero Knowledge Proof?
With advancements in cryptographic technology and increasing attention from the blockchain community, ZKP’s performance has significantly improved, leading to its application in various fields. The ZK ecosystem can be divided into three layers:
1. Infrastructure Layer:
These are tools or hardware used to build protocols or applications on top of ZKP. For example, ZK-VM is a novel blockchain virtual machine that uses ZKP to ensure that the execution of transactions and smart contracts is not only correct but also private. This offers tremendous potential for enhancing the privacy and functionality of blockchain platforms.
2. Network Layer:
These are L1 and L2 protocols that leverage ZK proof systems. For example, ZK Rollup is a Layer 2 solution that aggregates multiple transactions and verifies them using a single zero knowledge proof. This maintains transaction privacy while significantly improving the processing capacity and throughput of the blockchain.
3. Application Layer:
These are user-facing products that utilize ZK mechanisms. For example, Dark Forest is a game based on ZKP that demonstrates how interactive gameplay mechanisms can be achieved while protecting player privacy.
Zero Knowledge Proof has a wide range of applications, including:
1. Privacy-preserving payment systems:
Examples include Zcash, which allows users to transact in cryptocurrencies without revealing transaction details.
2. Identity verification:
Users can prove that they possess certain qualifications or attributes without revealing specific identity information.
3. Smart contracts:
On the blockchain, Zero Knowledge Proof can be used to prove that certain conditions have been met without revealing specific data satisfying those conditions.
4. Compliance verification:
Companies can prove their compliance with certain rules or standards without revealing trade secrets.
The Market Demand for Generating ZK Proofs
While ZK technology is highly effective in improving project scalability, privacy, and trustworthiness, it requires a significant amount of computational power. This high computational demand puts pressure on infrastructure teams, creating a significant market opportunity for companies that can provide efficient and cost-effective computational services.
There are two different modes for generating ZK proofs: Proof Markets and Proof Networks. Proof Markets offer flexibility and cost-effectiveness, allowing for broader participation in the generation of ZK proofs. Proof Networks, on the other hand, provide a smoother and developer-friendly experience through internal servers.
The emergence of new ZK applications, such as ZK Coprocessors, ZK Attestation, ZKML, and ZK Bridges, has led to an increasing demand for generating ZK proofs. The diversity and growth rate of these applications indicate that the application of ZK technology is expanding into broader areas, further driving the demand for ZK proof generation capabilities.
The Future of the Zero Knowledge Ecosystem
While still in its early stages, the rapid development of the ZK ecosystem is expected to usher in a new era of secure, private, and scalable blockchain solutions. The future of ZK primarily involves speed-oriented novel ZKP designs, reduced hardware requirements, improved developer tools, and support for decentralized proof generation.
Although Optimistic and ZK scaling solutions both aggregate transactions for verification, each solution has made design trade-offs between security, latency, and computational efficiency. However, in the medium to long term, we will see a fusion of these two stacks to accommodate diverse ranges of on-chain applications.
The ZK application layer is currently in its infancy, but with the growing demand from end-users for privacy protection on public blockchains, it may continue to expand. Emerging concepts such as Solana’s Token 22 program with Confidential Transfers, which utilizes ZKP for privacy features in encrypting token balances and SPL token transfers, demonstrate the adaptability and potential of ZK beyond the ETH ecosystem.
The transformative potential of ZK is becoming evident, indicating improvements in the security, privacy, and scalability of blockchain solutions. As the infrastructure in the ZK field develops, we will be able to unlock more forms of on-chain applications.