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What are zkSNARKs? | The Complete Guide

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As more people have embraced Bitcoin and the amazing technology that makes it function, they have also discovered some of its most important pitfalls. One of those is the concept of a completely anonymous transaction. While Bitcoin is often thought of being “anonymous”, it is actually only “pseudonymous”, because every Bitcoin address’s transactions are tracked on the public blockchain. There are, however, other cryptocurrencies that have been able to develop blockchains that provide for complete privacy in their protocols. One such cryptocurrency is Zcash which makes use of a revolutionary privacy implementation called zkSNARKs.

In this post we will take a look at the basics of zkSNARKs, how they hide privacy and how they will develop in the future.

Zero Knowledge of It

zkSNARKs are based on a relatively recent cryptographic principle called zero knowledge proofs. In the initial academic paper that theorized Zero Knowledge protocols, they were defined as:

“A zero-knowledge protocol is a method by which one party (the prover) can prove to another party (the verifier) that something is true, without revealing any information apart from the fact that this specific statement is true.”

So, essentially a zero knowledge proof can allow for one person to prove that they know something secret without revealing what that secret is. This has important implications for many situations in which we need to exchange a secret but cannot fully trust the party that we are sending that information to.

For example, think about the way in which your online passwords work. When you insert your password on a website, that password is sent to the server and stored in a hashed form. While hashes do attempt to obscure the password, in the hands of a competent hacker, a hash can be just as dangerous as plain text. Hence, you are disclosing a secret to a website and relying on the supposed trustworthiness of the site to protect it. Would it not be much more secure if you could demonstrate your knowledge of the password by solving some cryptographic proof?

This is exactly how zero knowledge proofs work and they are particularly important in crypto privacy protocols. You want to be able to prove to the party that you are transacting with that you do indeed hold the private key to your wallet without actually revealing that private key. According to the theory, in order for a zero knowledge proof to be valid, it has to meet the following requirements:

  • Completeness: If the input is true, the proof will always return “true”.
  • Soundness: If the input is false, you cannot trick the zero-knowledge proof to return “true”.
  • Zero-Knowledge: The verifier learns nothing more than whether the statement is true

Now that we have laid the groundwork of zero knowledge proofs, let’s take a look at how they have been incorporated into zkSNARKS.

zkSNARKs and Blockchains

zkSNARKs expand on the mathematical theory of zero knowledge proofs and allow them to be used in blockchains with reduced computational complexity. “zkSNARKs” stands for Zero Knowledge Succinct Non Interactive Argument of Knowledge. Yes, that is a mouthful but let’s break that down word by word.

  • Zero-Knowledge: Explained Above
  • Succinct Can be verified very quickly
  • Non Interactive: A proof where a single message can be sent from the prover to the verifier. There is no need for a back and forth of messages.
  • Argument of Knowledge: The prover can convince the verifier that information exists and that they are the only person that can access that information without revealing said information.

In regular transactions, when a payment is sent from one party to the other, the details of this payment are visible to all nodes on the network. This includes all the inputs and outputs to the transaction which contain information about the public addresses and amounts. However, with a zero knowledge transaction, the only information that one is able to glean is that a transaction has taken place. There is no information about the sender, recipient or amount. Below is a simple visual representation as to how Zero Knowledge Transaction work in a blockchain protocol.

Another term for these transactions is a “shielded transaction”. zkSNARKs are used to prove that the conditions of a valid transaction has been met without revealing anything. The sender of this transaction will have to construct a proof that shows the following:

 

  • Input values equal the output values
  • The sender does indeed have control of the private keys to the wallet
  • There is a cryptographic link between the private spending key and the signature to the transaction. This will eliminate the possibility that a third party can tamper with the transaction.

Of course, this is the basic theory behind zkSNARKS and zero knowledge proofs. A deeper look would require an understanding of advanced computational mathematics and cryptography (moon math according to Vitalik Buterin).

zkSNARKS in Use

Given that zkSNARKs have such an important impact on cryptocurrencies, they are already in use on a number of chains and are being considered by others. Most notably, they were popularized for their use in the Zcash protocol.

Zcash is one of the most popular cryptocurrencies in the world with a current market cap of $4.3bn. There have also been a number of forks of Zcash and forks of forks. For example, you have Zclassic which is a fork of Zcash. Zclassic has also spawned two of its own forked coins in ZenCash and Bitcoin Private. Both of these chains make use of zkSNARKs for their shielded transactions. Then, there is also the ambitions of the second most valuable cryptocurrency, Ethereum, to include zkSNARKs into their protocol. This will come as part of their Metropolis upgrade that will include a number of features like Proof-of-Stake.

Currently, the computational complexity involved with generating many of these proofs is quite high. This limits their application in many other potential use cases. Yet, as more work is done on this and computing power advances, we are likely to see similar technology in a number of privacy dependent applications.

Potential Challenges

One of the most important concerns about zero knowledge blockchains is that they have to rely on a certain “master key”. Having an active master key to a blockchain worth billions is no doubt a big deal. This is a shadow that has remained over the Zcash blockchain since its inception. Although the ZCash team has claimed that they have destroyed the master key in their Zcash ceremony, there is always a risk that it could have leaked or someone has a copy. However, there may soon be an alternative to this in the form of another unique adaption called a “zkSTARK”. The main advantage of this technology over zkSNARKs is that it would not have to rely on a master key or public key cryptography. All they would need is a simple algorithm to function. zkSTARKs could also be much more efficient in terms of the computing power required to complete the proofs. The technology is in its infancy though and is still being researched by numerous cryptographers. It would be interesting to see how the technology develops over the next few years.

Conclusion

Bitcoin was developed for a number of reasons, one of which which was to give personal financial control back to individuals. Privacy of the holder is likely to have been another of the most important considerations. But as cryptocurrency adoption has grown, so has the ability for governments and agencies to meticulously track these transactions on the very public blockchain.

With technology such as zkSNARKs, however, such transactions will be shielded and the parties will remain completely anonymous. There is also a great deal of other applications that will benefit from these technological advancements. While the technology is still new and questions do remain, one cannot discount the demand for a truly private cryptocurrency.

The post What are zkSNARKs? | The Complete Guide appeared first on UNHASHED.

Source: https://unhashed.com/cryptocurrency-coin-guides/what-are-zksnarks/

Blockchain

Ripple price prediction: XRP to retest $0.32 soon, analyst

Ripple price prediction set for $0.32. Ripple support levels rise up to $0.257. Strong resistance persist at $0.26. The Ripple price prediction by Casper suggests that XRP will soon retest the $0.32 resistance after observing a breakout above the triangle pattern. The cryptocurrency recovered price and moved towards the $0.257 mark on the 24th of […]

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  • Ripple price prediction set for $0.32.
  • Ripple support levels rise up to $0.257.
  • Strong resistance persist at $0.26.

The Ripple price prediction by Casper suggests that XRP will soon retest the $0.32 resistance after observing a breakout above the triangle pattern. The cryptocurrency recovered price and moved towards the $0.257 mark on the 24th of October.

1-Day Ripple price analysis

XRP observed a price fall from the $0.26 mark to the $0.251 level on the 23rd of October, after which it has been on a gradual uptrend. The price was marked at $0.257 at the time of writing.

What to expect from XRP?

The price has been varying above the $0.255 level on the 24th of October. Recently, Ripple observed an uptrend that lasted over three days, and the price finally moved above the $0.26 mark to test a rising resistance.

The cryptocurrency got rejected by the rising resistance, and the price returned towards the newly formed support near the $0.255 level. For its next move, Solldy expects Ripple to observe a downtrend towards the $0.247 level, which is where the bottom horizontal support lies above the ascending support level. This is a shorting opportunity for the XRPUSD pair, with a take profit marked at $0.247. However, if the price observes an uptrend towards $0.26, the trade will be invalidated.

Will Ripple return to $0.263

Another trade setup was marked on Ripple’s charts by YM Group. Per the trade setup, the cryptocurrency is well-supported by a horizontal support level near the $0.251 mark. The price prediction suggests that the price will rise towards the $0.263 resistance again.

As talked about in the previous idea, the cryptocurrency tested the $0.263 resistance on the 22nd of October, and now the price has moved towards the $0.255 level. As Ripple observed a slight increase in the price on the 24th of October, the chances are that the price will observe further increase and touch the $0.263 resistance again.

Ripple was building up this move towards the $0.263 mark for quite a while, and it finally tested it. A price rejection may have caused a pullback, and the cryptocurrency is expected to recover soon and head back above the $0.262 level.

Ripple price prediction: Upward breakout ahead?

The Trading View analyst Casper drew a descending channel inside a larger triangle pattern. The analyst expects a breakout to take place above the triangle.

The upward breakout from the descending channel should have built enough momentum for the cryptocurrency to move towards the triangle’s upper boundary. If the price breaks above this triangle, the crypto will move towards the $0.30 mark and above it, per the analyst. The analyst stated that XRP seems to be aiming to test the $0.32 resistance.

The Moving Average Convergence Divergence (MACD) line seems to have moved close to the signal line. The histogram size seems to be decreasing in the negative region, while the Relative Strength Index (RSI) closed below 60.00. This means that the coin is in the neutral region with no oversold or overbought instances.

Disclaimer: The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decisions.

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Bitcoin as a transactional currency in 5 years? Unlikely, says Galaxy Digital CEO

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During a recent interview, Michael Novogratz, CEO of Galaxy Digital Holdings, shared his views on why he doesn’t see Bitcoin being used as a currency in the next 5 years.

As a proponent of the store of value narrative for Bitcoin, Novogratz highlighted a few key reasons why he believes the price of Bitcoin will rise significantly over the next few years. According to him, the PayPal news has made big financial institutions and central banks reconsider their position and skepticism for the digital asset industry.

For instance, while Wells Fargo, JP Morgan, and Citi were down by over 20 to 60 percent, companies that invested heavily in Bitcoin have registered considerable gains – PayPal was up by 100 percent and Square was up by 186 percent.

Novogratz also said that there are a few reasons why Bitcoin’s price didn’t pump higher following the major PayPal announcement.

One reason, he noted, was that a majority of wealth in the United States of America is concentrated between people aged 45-80 years. These people are unlikely to use a Coinbase wallet to make a purchase of Bitcoin, Novogratz pointed out.

As things stand, people cannot facilitate a Bitcoin purchase by calling up the Bank of America and asking them to purchase some cryptocurrency.

As more infrastructure is put into place to allow easier access to buy it, as has just happened with PayPal, Bitcoin is very likely to note significant price appreciation. PayPal currently allows users to buy, sell, and hold crypto, but the ability to transfer crypto to other accounts is not available at this stage. This is likely due to regulatory uncertainty.

However, this may change in the future, with the Galaxy Digital CEO stipulating that the financial architecture of the USA and the world will be rebuilt around blockchain in the next 10 years. As for Bitcoin, he said,

“I don’t think BTC is going to be used as a transactional currency any time in the next 5 years. BTC is being used as a store of value as people are worried that Central Banks are debasing the value of fiat currencies.”

Even with the introduction of a CBDC, Central Banks could keep issuing more of the digital currency at their own discretion, debasing its value. According to him, this will further fuel the perception of Bitcoin as digital gold.

Novogratz concluded by stating that the price of Bitcoin is going to go higher as more people will want it in their portfolio, especially if it’s much easier to buy.

Source: https://eng.ambcrypto.com/bitcoin-galaxy-digital-ceo

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Stagnant Crypto Weekend: Bitcoin Temporarily Stopped at $13,000

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Following the past couple of days of significant price developments within the cryptocurrency space, most assets have calmed. Bitcoin remains just shy $13,000, while some of the altcoins have even retraced slightly.

Bitcoin Struggles at $13,000

The past seven days were nothing short of impressive for Bitcoin. After a brief dip to $11,400 last week, the cryptocurrency went on a roll. Promising news from PayPal only accelerated BTC’s bullish run, resulting in a fresh 2020 high painted a few days ago at $13,200.

Since then, Bitcoin has maintained a relatively robust position around the $13,000 mark. In the past 24 hours, the primary cryptocurrency has hovered around that particular level as well.

The only exception came a few hours ago when it tanked to $12,730 (on Bitstamp). However, the bulls quickly took charge and drove it back to the familiar ground.

From a technical standpoint, the new 2020 high of $13,200 is the first significant resistance in BTC’s way up. Should the asset break above it, the next ones are $13,400, $13,500, and $13,600.

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Alternatively, Bitcoin could find support at $12,550, $12,400, $12,125, and $12,000 in case the recent trend reverses and BTC heads south.

BTCUSD. Source: TradingView
BTCUSD. Source: TradingView

Altcoins Display Red

The alternative coins joined Bitcoin’s party with a slight delay last week. Nevertheless, they marked some notable gains, which ultimately increased the total market cap by over $40 billion in seven days.

The situation has changed a bit in the past 24 hours. After jumping above $415 yesterday, Ethereum has lost some value and currently trades beneath that level. Ripple (-1.6%), Bitcoin Cash (-0.8%), Binance Coin (-0.9%), and Cardano (-1.6%) have also dipped slightly on a 24-hour scale.

Polkadot has increased by about 2%, while Chainlink has gained another 3%. LINK’s impressive performance as of late has driven the asset above $12.

heatmap
Cryptocurrency Market Heatmap. Source: Quantify Crypto

The most impressive gainer since yesterday is ABBC Coin. ABBC has pumped by 21% to $0.57. Ocean Protocol (14.5%), Elrond (14%), and Yearn. Finance (11%) follow suit.

Reserve Rights (-6.5%), Energy Web Token (-6%), HedgeTrade (-6%), and OKB (-5%) have lost the most value in the past day.

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Disclaimer: Information found on CryptoPotato is those of writers quoted. It does not represent the opinions of CryptoPotato on whether to buy, sell, or hold any investments. You are advised to conduct your own research before making any investment decisions. Use provided information at your own risk. See Disclaimer for more information.

Cryptocurrency charts by TradingView.


Source: https://cryptopotato.com/stagnant-crypto-weekend-bitcoin-temporarily-stopped-at-13000/

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