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Home DeFi

Zero-Knowledge Proofs Bring Privacy to Crypto and Digital Payments

Morgan Blockwell by Morgan Blockwell
June 26, 2025
in DeFi, Getting Started
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Zero-knowledge proofs help prove facts without sharing private information.

  • Zero-knowledge proofs (ZKPs) let users confirm data without revealing it.
  • They are used in cryptocurrencies, digital IDs, and secure voting.
  • Zcash and Ethereum projects are using ZKPs to protect user privacy.

What Are Zero-Knowledge Proofs?

Zero-knowledge proofs are a technology that helps one person show they know something without revealing what it is. This helps keep personal or private information safe during online transactions or verification.

In simple terms, ZKPs allow someone to “prove” a fact is true without giving away why or how they know it. This can help protect details like passwords or wallet information while proving ownership or access.

Real Uses of ZKPs

These proofs are used in many ways. In voting, they let a person confirm they can vote without saying who they are. In digital IDs, they confirm someone’s identity without sharing private details. Businesses can use ZKPs to meet rules without exposing data.

There are two types of ZKPs. Interactive proofs involve steps between two people. Non-interactive proofs happen in a single step and are easier to use on the internet or in apps.

How ZKPs Work in Crypto

Public blockchains show all transaction details. ZKPs help protect privacy by hiding things like amounts and wallet addresses. This is useful in both cryptocurrencies and central bank digital currencies (CBDCs).

Projects like Zcash use zk-SNARKs, a kind of ZKP, to offer private transactions. Users can choose “transparent” or “shielded” transactions based on their privacy needs. Ethereum tools like Aztec and StarkNet are also using ZKPs for secure smart contracts and lower fees.

Why ZKPs Matter

ZKPs improve security, privacy, and scalability. They help build systems that follow rules while keeping data private. They also reduce the risk of hacks, since sensitive data isn’t exposed.

However, ZKPs can be complex and need strong computers to run. Sometimes, trusting the system setup is needed, which can be a risk if not handled well.

The Future of Zero-Knowledge Proofs

ZKPs are growing fast. Many experts are building better versions to lower costs and use less computer power. A newer tech, called ZK-rollups, helps by combining many transactions into one, saving space and money on blockchains.

As privacy becomes more important in digital spaces, ZKPs may become a key part of how we interact online, vote, track money, and protect our identities without giving up our personal details.

Source: cointelegraph.com

Tags: digital identityzcashzero knowledge proofszk rollupszk snarks

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