Zero-Knowledge Proofs application in Ethereum

Ethereum is a public ledger and by its design, it’s meant to be transparent. However, there is confusion about it being anonymous because many people still believe that the blockchain in general is anonymous, which is false. Anything can be tracked on the ledger, including the details of every transaction and deal you’ve made since you started trading. It may not be a big deal to some, especially to those who don’t understand that their personal privacy can easily be violated as a result of this.

People are starting to realize that there is a big privacy gap in crypto. This has been amplified by the disturbing push for the adoption of CBDCs by the government which will give them some level of control over the finances of the general masses. Zero-Knowledge proofs have been cited by many to be revolutionary, especially when it comes to building privacy tools.

ZKPs are encryption schemes in which a party who is a prover proves their case of truth concerning specific data on the other party,a verifier without revealing the information. Here are few of the projects that have worked around the technology to build an important utility- privacy in crypto.

1. Aztec offers users privacy utilizing layer 2 solutions, specifically the zk rollups system. Users send transaction requests to Aztec and the transactions are then put into a batch, and rolled up with other users' transactions, which can lead to a longer processing time but has privacy baked in at a base layer.
2. Railgun is a privacy-preserving smart contract wallet developed on Ethereum and uses zk-SNARKs to obfuscate transaction details and make anonymous transactions of any Erc 20 tokens or Erc 721 tokens. Users also get privacy at rest, meaning they can keep a private balance which wasn’t possible on previous L1 privacy protocols.It works by removing all identifying information from transactions. It’s similar to a MetaMask or any other wallet, just with privacy preserving zk-SNARKs in place.
3. Zether is a confidential (transaction amounts are hidden) and anonymous (transaction sender and receiver are hidden) payment mechanism on blockchains with an account model like Ethereum. It is implemented as a smart contract called ZSC. One of the major limitations that Zether is known for is that transactions get processed at the end of a current epoch, inferring that it can be quite difficult on a busy network. However, it is quite promising and has everything it takes to be among the major players in private crypto overtime.

I believe that there are many other ways to keep a private balance on Ethereum. As a privacy maxi, I would love to hear this subreddit’s thoughts on what’s out there in this area. A time will come when privacy will become a big word in crypto and we’ll have the bulk of crypto users keeping their on-chain activities private.