full image - Repost: Fit for purpose: Zero knowledge proofs enable real world usage of blockchain (from Reddit.com, Fit for purpose: Zero knowledge proofs enable real world usage of blockchain)
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The ability to implement zero-knowledge proofs on Algorand is part of the upcoming upgrade. I think this will add a massive amount of utility to the Algorand ecosystem.For those of you that are not familiar, Zero knowledge proofs were invented by Silvio Micali (the founder of Algorand). The wikipedia explanation is quite nice:A zero-knowledge proof is a method by which one party (the prover) can prove to another party (the verifier) that a given statement is true, while avoiding conveying to the verifier any information beyond the mere fact of the statement's truth. The intuition underlying zero-knowledge proofs is that it is trivial to prove the possession of certain information by simply revealing it; the challenge is to prove this possession without revealing the information, or any aspect of it whatsoever.What does this mean? Think about if you want to prove to the government (or anybody) that you are who you say you are. In real life, you must show people your birth certificate, social security card, passport, etc.With zero-knowledge proofs, you can have all of this precious information tied to your wallet on the blockchain, and you can now prove your identity without ever having to disclose your social security number, your birth date, or your home address. You would essentially have a "check mark" next to your name that says "User X" has all of their documents on file and they are a real person and the are the one and only "User X".This is extremely useful for bridging the gap between the real world and blockchain. Zero-knowledge proofs solve the most common argument against blockchain technology for real world use cases. That is you can't use blockchain for people's personal information because it is a public ledger.Developers have tried to leverage zero-knowledge proofs on Ethereum, but the ethereum virtual machine (EVM) is too inefficient. This is where Algorand's virtual machine (AVM) will shine because it is the most efficient virtual machine in crypto. It will be able to efficiently execute these zero-knowledge proofs on layer 1 of Algorand.Here are some specific use cases for ZK proofs in crypto (from this article):Digital identity verification Zero-knowledge proofs can be used to verify the identities of users without revealing any sensitive personal information. This can be useful in applications such as digital voting systems, where the identities of voters must be verified without compromising their anonymity. Note: Another example would be if private records want to be stored on the blockchain such as medical records (looking at you MAPay). These could be stored and kept private from the public and only available to the patient and the medical service provider. Privacy-preserving transactions One of the most popular use cases for zero-knowledge proofs in crypto is to enable privacy-preserving transactions. For example, Manta Network’s MantaPay decentralized application (DApp) uses ZKPs to enable users to make transactions on the decentralized exchange (DEX) without revealing their identities or transaction details. This allows users to maintain their privacy while still being able to use the platform for transactions. Shielded transactions Zcash is a cryptocurrency that uses zero-knowledge proofs to enable shielded transactions. In such transactions, sender and recipient addresses, as well as transaction amounts, are obscured from the public blockchain, providing added privacy for users. Tokenization and ownership verification Zero-knowledge proofs can also be used to tokenize assets and verify their proof of ownership. For example, a property can be tokenized and any party can verify its ownership without publicly revealing any other information. Global compliance Some countries have strict regulations regarding the collection and sharing of financial information, which can be difficult for decentralized platforms to comply with. Zero-knowledge proofs can be used to share the required information with regulators while keeping it private from other parties. This can help bridge the gap between decentralized platforms and traditional financial institutions, making it easier for DeFi to comply with regulations in various jurisdictions.I'm excited to see how people implement shielded transactions on Algorand like zCash, Manta, or Monero, but these other use cases will show the world why blockchain is superior to current distributed systems.
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