Jonathan Rouach: Zero-Knowledge Proofs Will Drive Privacy on the Blockchain
Along with scalability, privacy is one of the key challenges that blockchain technology must grapple with before it can see widespread adoption. Immutability and decentralisation are two of the core tenets of the technology, but these are in many ways at odds with how businesses (and individuals) want to handle their transactions.
Anonymity is one solution, but privacy is more complex than that, and there are a number of solutions under development that are addressing this fundamental concern.
Jonathan Rouach is the co-founder and CEO of privacy-enhancing technology provider QEDIT. QEDIT uses zero-knowledge proofs to provide an enterprise solution for preserving all-important privacy on the blockchain, a major sticking point for businesses looking to harness decentralised technology without opening themselves up.
“We're taking this highly advanced technology and we're bringing it to the enterprise world”
Binary District Journal spoke with Jonathan about the state of the blockchain industry at large, and the place that zero-knowledge proofs will have in its future. First, though, he provided us with a succinct metaphor for exactly how the technology works in theory.
Where’s the Proof?
“There’s a simple way to explain how a zero-knowledge proof works. Think about the children’s activity book ‘Where’s Waldo’. The manner in which ZKPs work is similar to showing someone that Waldo exists on the page without revealing where on the page he is located. You could achieve this by opening and placing the book inside an oversized envelope with a tiny hole in the middle. Aligning the picture of Waldo’s face behind the hole proves that he’s on the page without giving away his precise location.
“Similarly, ZKPs allow us to prove something is true without revealing any context or underlying information. In a financial setting, they could be used to prove that a valid transaction took place without exposing any sensitive details like who sent what, or how much, to whom. That’s a very basic way of describing ZKPs. We’re taking this highly advanced technology and we’re bringing it to the enterprise world.”
So, why do Jonathan and QEDIT see zero-knowledge proofs as the future? Ultimately, they view them as fundamental protections against wrongdoing in a technology that is problematically transparent.
“Trusted hardware solutions have a number of attack surfaces – they can have backdoors introduced by developers and vulnerabilities that are exploited by hackers. They’re also prone to side channel attacks. Zero-knowledge proof (ZKP) cryptography provides the most secure solution to protecting sensitive information and it has privacy-preserving features that enable data-driven collaboration among enterprises.
“By now, we’re past the 'blockchain can do everything' stage”
ZKPs are particularly useful in a blockchain environment where companies wish to rely on a shared ledger to mitigate risk and achieve efficiency gains but, at the same time, cannot disclose private business data on a platform that’s accessible to competitors in the same network.”
“By now, we’re past the 'blockchain can do everything' stage. However, there are specific blockchain projects that are being deployed – albeit not as much as the initial hype might suggest – that are beginning to actually run and create value.”
The Zero-Knowledge Explosion Has Happened
The past six months to a year have seen zero-knowledge proofs explode as a concept. Of course, people were working on them before, but it only feels as though they have become a part of the mainstream blockchain conversation very recently. It’s down to those building it, so we asked Jonathan why exactly he thinks they are picking up more attention as time goes on.
“Well, it's time!” he tells us. “I'll tell you my angle on this. I’ve got a lot of experience in the blockchain industry – QEDIT is my third initiative in this space. My first company was an Israeli bitcoin exchange called Bits of Gold, and after that, I co-founded LedgerLock, which provided security services for digital assets in the crypto space. LedgerLock was acquired by Digital Assets Holdings in 2015 and Bits of Gold has since grown into the largest crypto exchange in Israel.
In the blockchain space, people have been looking at the fringes of cryptography for a very long time. Projects like Zcash started somewhere in 2013 when people realised that Bitcoin was highly transparent and not equipped to address the issue of privacy.”
“So, my co-founder, Ruben Arnold, and I asked ourselves: is it possible to move tokens around and prevent double spending, while using advanced cryptography to generate zero-knowledge proofs instead of broadcasting raw transactional details to the network? At that time, there was already some momentum in the zero-knowledge proof space due to the release of zkSNARKS.”
Interest Is Beginning to Swell
As the potential use-cases for zero-knowledge proofs multiply, so do the parties interested in bringing the technology to the fore. Unlike more established industries, though, blockchain is still seeing collaboration between parties, something Jonathan sees as intrinsic to its future.
“Competitors need to collaborate. This has been a longstanding cross-sectoral need, well before blockchain”
“Competitors need to collaborate,” he tells us. “This has been a longstanding cross-sectoral need, well before blockchain. Each industry’s ecosystem has many actors yet there have been no tools to enable collaboration while safeguarding sensitive data.”
“There are a number of ZKP schemes being developed and perfected. You have different implementations based on various mathematical models but they all share a core commonality in that they prove the veracity of information without revealing the underlying data.
The ZKP community is comprised of researchers – experts who are advancing the space of cryptography or zero-knowledge proofing in that area – and applied engineers who take these concepts and create libraries and more advanced tools to develop end-to-end protocols that utilize these tools.”
“One of the other communities that we helped to organize, together with the Zcash Foundation, is called ZKProof.org, an open-industry academic initiative supported by the world’s top researchers, developers and practitioners to promote a standard for ZKP schemes. This community is already paving the way towards a best-practice ZKP standard.”
Finding Use-Cases Is Proving Easy
Once a technology reaches a certain level of popularity, the use-cases for it begin to reveal themselves. The first industry that comes to mind whenever blockchain is discussed is, of course, finance. The ability to securely log financial transaction data and send cryptocurrency peer-to-peer is how most people were introduced to the concept of blockchain technology altogether. This is just one of the many potential and developing uses for blockchain, though, and zero-knowledge proofs can have a place among all of them.
“To give an example, we've worked with a company in the luxury goods space, specifically diamonds,” Jonathan says. “There are many actors involved in the journey of a diamond from the moment it's mined, to when it is polished and placed in a piece of jewellery. There are also competing producers, competing transporters, and polishing firms, for example.”
“They all want to be able to make sure that the diamonds they are holding are authentic, and they rely on paper-based certificates to do so.”
“When blockchain arrived, it provided a unique opportunity to have the entire diamond supply chain digitised, moving from paper-based certificates to a token-based representation of the asset. With tokens on a blockchain, everybody sees where that token is and who produced how many pieces – this level of transparency is not practical for business.”
“In a real-world scenario, you have competitors on your network, and if you don't have a solution for privacy then you cannot really deploy blockchain for your use-case.”
Bringing Complex Tech to Big Business
So, how difficult is it to communicate the technology to enterprises? “That's one of the biggest challenges,” Jonathan says. “They often don’t have anyone on their team who understands the deep intricacies of the technology. In a room full of people from the blockchain space, if everyone is being honest, they know that there is still so much to learn. In this context, selling your product is quite complex because you need to make sure that they have a proper way to evaluate and trust the technology.”
“In a room full of people from the blockchain space, if everyone is being honest, they know that there is still so much to learn”
“We explain to them that there is a very strong scientific community vetting the mathematical proofs behind the protocol. There are a lot of tools we put in place to ensure a process of trust. The entire ZKProof.org effort is a trust ecosystem where you have professors, engineers and commercial companies that try to transform mathematical proofs into practical tools that ultimately become protocols that you can package and sell.”
Technologies that develop into cornerstones of consumer adoption often have substantial foundations in military utilisation. Before the Internet was giving the world unrestricted access to eBay auctions, online dating and a wealth of knowledge on Wikipedia, it saw early development through the medium of the military’s ARPANET infrastructure.
Now, the military is also investing in zero-knowledge proof R&D. In July 2019, the U.S. Defense Advanced Research Projects Agency (DARPA) announced its Securing Information for, which aims to further develop the zero-knowledge proof framework into state of the art military applications, such as verifying military capabilities in large, complex proof statements that could be billions of gates or more.
Illustrations by Kseniya Forbender
To contact the editor responsible for this story:
Margarita Khartanovich at [email protected]
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