Zero-Knowledge Succinct Non-Interactive Argument of Knowledge - allows you to perform transactions on the blockchain without public commit. Verification of a transaction using this method is implemented directly between the sender and the recipient.

Already in the early years of Bitcoin's existence, users realized that it was a pseudonymous, not an anonymous network. And if you associate a pseudonym with the name of a person, then you can further track the entire chain in an open ledger. Using zk-SNARK, transactions take place without public disclosure of data, without placing them on the ledger. In such a network, there will be no blockchain explorer, and only the owner can check the balance using his private key.

Does anonymity hurt? This is the main subject of discussion. After all, blockchain is good because everyone can see balances and transfers, which means they can be sure that no one has faked them. Of course, using open source code, it is easy to check the principles of issuing coins and avoid violations. However, if a vulnerability is found and a hack occurs, market participants will not be able to immediately detect a discrepancy in the total emission. Simply put, a hacker will mint coins and never get caught (unless he gets really greedy).

The next disadvantage of anonymity lies in the dissatisfaction of regulators and law enforcement agencies. Cryptocurrencies are actually better and safer than gold and even fiat. Just because absolutely everyone can investigate their movement, and not just authorized services. Completely anonymous coins Monero, ZCash - which we will discuss later) refuse to list the exchanges, because they can be a tool for illegal operations.

The zk-SNARK still has more pros than cons. And the main thing is a completely new principle of interaction with data. A similar method, for example, will be used by the Bank of Russia when issuing a digital ruble. The user can confirm the presence of balances, but only upon request. This is a valid way of maintaining banking secrecy, which citizens are required by law.

And then imagine how many areas of the blockchain can usefully apply zkSNark. After all, if a company cares about personal data, only the blockchain will become a real way for the user to save them. When interacting with any of the smart contracts, some of the information is temporarily revealed, but it can remain encrypted for the public and even for contract owners.

If we compare this with some example from life, it is as if all our words were recorded around the clock by different companies and disposed of them as they wish. But we went to the mountains, where there is protection even from satellite communications, and we talk, knowing that only we both now hear each other, and even we ourselves do not record this conversation.

What is the future of zk-SNARK?

The most interesting thing is the ability to use zk-SNARK on top of the Ethereum network and its virtual machine. Confidential transactions, where balances and balances are hidden, but only the sender and recipient are visible, open up new scenarios for using the blockchain.

Polygon, one of the largest [L2] Ethereum networks, has acquired startup Mir for a new market record $400 million to focus on building zero-knowledge systems. Moreover, more recently, in August of the same 2021, Polygon absorbed Hermez Network in a deal for $ 250 million.

zkSNARK, like Bitcoin, over the years of development can acquire the status of an advanced technology and go beyond the image of a “shadow economy” tool.

Zero-Knowledge Succinct Non-Interactive Argument of Knowledge - allows you to perform transactions on the blockchain without public commit. Verification of a transaction using this method is implemented directly between the sender and the recipient.

Already in the early years of Bitcoin's existence, users realized that it was a pseudonymous, not an anonymous network. And if you associate a pseudonym with the name of a person, then you can further track the entire chain in an open ledger. Using zk-SNARK, transactions take place without public disclosure of data, without placing them on the ledger. In such a network, there will be no blockchain explorer, and only the owner can check the balance using his private key.

Does anonymity hurt? This is the main subject of discussion. After all, blockchain is good because everyone can see balances and transfers, which means they can be sure that no one has faked them. Of course, using open source code, it is easy to check the principles of issuing coins and avoid violations. However, if a vulnerability is found and a hack occurs, market participants will not be able to immediately detect a discrepancy in the total emission. Simply put, a hacker will mint coins and never get caught (unless he gets really greedy).

The next disadvantage of anonymity lies in the dissatisfaction of regulators and law enforcement agencies. Cryptocurrencies are actually better and safer than gold and even fiat. Just because absolutely everyone can investigate their movement, and not just authorized services. Completely anonymous coins Monero, ZCash - which we will discuss later) refuse to list the exchanges, because they can be a tool for illegal operations.

The zk-SNARK still has more pros than cons. And the main thing is a completely new principle of interaction with data. A similar method, for example, will be used by the Bank of Russia when issuing a digital ruble. The user can confirm the presence of balances, but only upon request. This is a valid way of maintaining banking secrecy, which citizens are required by law.

And then imagine how many areas of the blockchain can usefully apply zkSNark. After all, if a company cares about personal data, only the blockchain will become a real way for the user to save them. When interacting with any of the smart contracts, some of the information is temporarily revealed, but it can remain encrypted for the public and even for contract owners.

If we compare this with some example from life, it is as if all our words were recorded around the clock by different companies and disposed of them as they wish. But we went to the mountains, where there is protection even from satellite communications, and we talk, knowing that only we both now hear each other, and even we ourselves do not record this conversation.

What is the future of zk-SNARK?

The most interesting thing is the ability to use zk-SNARK on top of the Ethereum network and its virtual machine. Confidential transactions, where balances and balances are hidden, but only the sender and recipient are visible, open up new scenarios for using the blockchain.

Polygon, one of the largest [L2] Ethereum networks, has acquired startup Mir for a new market record $400 million to focus on building zero-knowledge systems. Moreover, more recently, in August of the same 2021, Polygon absorbed Hermez Network in a deal for $ 250 million.

zkSNARK, like Bitcoin, over the years of development can acquire the status of an advanced technology and go beyond the image of a “shadow economy” tool.