The ZKs are democratizing – Most of cryptocurrencies suffer from a cruel lack protection of the private life. Fortunately, many researchers are working on solutions, such as zero-knowledge proofs. This is notably the case of a German FinTech which wishes to create a stablecoin similar to cash.
Zero-knowledge proof: privacy on the blockchain
The zero-knowledge proofsor zero-knowledge proofs, were theorized in the mid-1980s. Subsequently, they experienced a new lease of life in parallel with the development of various blockchains.
Recently, zero-knowledges have been at the heart of developments in the Ethereum ecosystem. Indeed, these solutions are central to layers 2 Rollup type. Starknet, zkSync, Optimism and many others have put them at the heart of their protocols.
In practice, these solutions allow a user to prove that something is true. This is able to generate evidence which can be mathematically verified without having to reveal its contents.
These solutions have various applications. These can be used in particular in the context of anonymized transactions.
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Etonec: a stablecoin that behaves like cash
German society Etonec just published a report in partnership with other entities, such as the Mina Foundation, outlining a privacy protecting stablecoin.
The various companies have developed a system using the power of zero-knowledge proofs to create a stablecoin that retains the properties of cash in terms of privacy, while ensuring its conformity vis-à-vis anti-money laundering and anti-terrorist financing regulations.
“This article explores the feasibility of a (fiat) stablecoin that provides cash-like privacy guarantees, while complying with anti-money laundering (AML) and anti-cash financing regulations. terrorism (CFT). »
Declaration of Etonec
A payment between Alice and Bob via this system will take the following form. Alice wants to send 50 euros to Bob. Both generate zero-knowledge proof on their respective account. Via this proof, Alice certifies that she has the funds and that the transaction respects the regulatory constraints.
Subsequently, our two protagonists will send this evidence on the network. These proofs will be intercepted by validators who will check the mathematical validity of the latter, without any confidential information on Alice or Bob not be shared.
From the registry’s perspective, the transaction does not reveal Alice’s connection to Bob, or the details of the transaction.
Of course, this system is far away founding values of Bitcoin. Nevertheless, it presents use cases that could be adapted to certain applications as well as the strength of zero-knowledges in terms of privacy protection.
In parallel, many teams are actively working on the creation of EVM-compatible environments with zero-knowledge. For example, Consensys recently unveiled its ready-to-use zkEVM solution.
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