Understanding Zero-Knowledge Proofs: Keeping Sensitive Data Private in the Blockchain

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The following post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga.

The advent of blockchain technology has brought with it a myriad of benefits. Having a public, immutable ledger, agreed upon by everyone in the network, allows for all sorts of applications, from the transfer of wealth between individuals to tracking ownership of digital art. However, because the ledger is public, privacy is sacrificed. Depending on the application, this is not always an issue, but for others the ramifications are large. Some platforms have attempted to solve this issue.

One crypto that is attempting to use time to solve problems is Analog (ANLOG). The cryptography underlying Analog relies on what is known as a zero-knowledge proof, distinctly different from the protocol used by other cryptocurrencies like Bitcoin (BTC) or Dogecoin (DOGE). It uses a protocol called zk-SNARKs, or zero-knowledge succinct noninteractive argument of knowledge, first popularized by Zcash. In broad terms, this means that data can be encrypted, agreed upon, verified, and added to the blockchain without the data itself being exposed to anyone.

Take a look at each term to better understand zk-SNARKs:

  • Argument of knowledge: Using math, specifically cryptography, a prover can prove to a verifier that they know something for certain. And the verifier can say this is definitively true. This is at the basis of all blockchains.
  • Zero knowledge: This means that the verifier has no access to the thing the prover is proving, so the data stays private.
  • Succinct:  The math involved can be done quickly.
  • Noninteractive: Only a single communication from prover to verifier needs to happen for the data to be verified. Earlier iterations of zero-knowledge proofs needed multiple rounds of communication between prover and verifier.

As a metaphor, let’s consider the children’s book “Where’s Waldo?”. Imagine you wanted to prove to your friends you knew where Waldo is without revealing where in the picture you see him or anything else about the scene. You could take a large sheet of paper — larger than the picture — and cut a hole just big enough for waldo. If you showed this to your friends, they could verify you knew where Waldo is but would have no idea where in the picture he was or what the rest of the scene looked like.

Analog uses this technology to create what it calls the Timechain, an immutable, indexable, ledger of time and events while protecting the private data of those involved. One thought-experimental that Analog likes to use is to imagine you have a package being delivered by FedEx Corp. FDX. The delivery involves a lot of private data about you that you would not want publicly broadcasted, like your name, address, access code, maybe even credit card number. With Analog’s Timechain, data should never be exposed.

According to Analog, this will allow for the communication of critical information between people and organizations relevant to time — hospital schedules, military operations, critical building maintenance — while maintaining privacy and safeguarding sensitive information.

The preceding post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga. Although the piece is not and should not be construed as editorial content, the sponsored content team works to ensure that any and all information contained within is true and accurate to the best of their knowledge and research. This content is for informational purposes only and not intended to be investing advice.

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