Zero-knowledge proofs are a key cryptographic technique used in Zcash to enable private transactions. A zero-knowledge proof allows one party to prove to another party that a statement is true without revealing any additional information beyond the validity of the statement itself.

In the context of Zcash, zero-knowledge proofs are used to validate transactions without revealing the transaction details like the sender, receiver, or amount transferred. This helps achieve a high level of privacy and anonymity on the Zcash blockchain.

How It Works

When a transaction occurs on the Zcash network, a zero-knowledge proof is constructed to prove that the transaction is valid and follows all of Zcash's rules, such as:

The transaction inputs exist and have not been previously spent.
The transaction preserves the overall supply of Zcash tokens.
The transaction correctly uses and updates the viewing keys and spending keys for the shielded addresses involved.

This zero-knowledge proof is then attached to the transaction and broadcast to the Zcash network. Miners and nodes can verify the proof to validate the transaction without needing to know the transaction details.

Learn more about Zero-Knowledge proofs in this video:

zk-SNARKs

Zcash uses a specific type of zero-knowledge proof called a zk-SNARK (Zero-Knowledge Succinct Non-Interactive Argument of Knowledge). zk-SNARKs have two main properties that make them suitable for use in Zcash:

Succinctness: The proof size is small and easily transferable, typically just a few hundred bytes.
Non-interactivity: The proof can be constructed by one party and verified by any other party without any interaction between the prover and verifier.

zk-SNARK proofs involve complex cryptographic computations, but verifying the proof is much more efficient, allowing the Zcash network to quickly validate transactions while preserving privacy.

Trusted Setup

One potential weakness of zk-SNARKs is the need for a trusted setup phase. During this setup, some random parameters are generated that allow for the creation and verification of zk-SNARK proofs.

If the setup is compromised, an attacker could create false proofs that would be accepted as valid by the network. To mitigate this risk, Zcash used a multi-party computation protocol for the trusted setup, involving participants from various organizations and countries.

While the trusted setup is a potential vulnerability, the risk is considered low, and the Zcash developers could transition to a different type of zero-knowledge proof - zk-STARKs - which does not require a trusted setup.

Zero-knowledge proofs are a powerful tool that enables Zcash and other security-focused blockchains to achieve privacy without compromising the security and integrity of the blockchain.