This Article has zero-knowledge about the Ethereum Virtual Machine (EVM)

Let’s talk about zero knowledge. In principle, it seems like a rather easy topic to discuss since no prior knowledge is required. However, as is the case with many things in life, what initially appears simple and straightforward often turns out to be more complex than imagined. You’d be surprised by the wealth of information available on the internet about zero knowledge. Okay, that’s unfair because most of the information sought out or pushed to your media devices offers little to zero knowledge despite the snazzy headlines. I promise, this is not the zero-sum equation we’re aiming for here (although I hope you find the headline snazzy).

Today, we’ll explore one of the significant technological advancements that blockchain is making these days, primarily focusing on Ethereum’s zkEVM (zero-knowledge Ethereum Virtual Machine) developments.

Right off the bat, zero knowledge is a cryptographic principle where one party (the prover) can prove to another party (the verifier) that they possess specific information without revealing any details of the information itself. This method allows the verification of data or transactions while maintaining complete privacy of the underlying content.

Before you groan and declare this technology just another tool for criminals to launder money, keep in mind that the zero-knowledge principle is not exclusive to blockchain technology and is used in various industries, including the financial sector, data privacy, authentication systems, and online gaming. In the financial industry, it is especially utilized to facilitate compliance with KYC (Know Your Customer) and AML (Anti-Money Laundering) regulations without exposing individual customers’ private information.

Different zero-knowledge is Something Else

Let’s briefly digress for the sake of clarity before delving deeper into the main topic. Especially when dealing with less tech-savvy individuals, zk-rollups are often confused with zkEVM technology, even though they are related, they are distinct concepts within the blockchain technology landscape.

The purpose of zk-rollups is to serve as more general Layer 2 scaling solutions, aiming to increase transaction throughput and reduce costs. Essentially, they achieve this by bundling multiple transactions into a single transaction and using zero-knowledge proofs to validate these transactions. This process reduces the data load on the main blockchain, thus enhancing efficiency.

On the other hand, zkEVM is a more specific application designed to maintain full compatibility with the existing Ethereum infrastructure, tools, and smart contracts. This compatibility is crucial for developers and users who wish to leverage Ethereum’s ecosystem without the need to modify existing smart contracts or learn a new programming language.

In summary, it’s important to understand that when you come across discussions about zk-rollups and zkEVM, they represent two different concepts within the same sphere.

Ethereum Virtual Machine with zero-knowledge

First of all, the Ethereum Virtual Machine (EVM) plays a pivotal role in the Ethereum blockchain network. It functions as a decentralized computing engine responsible for executing smart contracts and processing transactions. Essentially, the EVM enables developers to write and deploy code (smart contracts) on the Ethereum blockchain, which then runs in a deterministic and isolated environment. This capability empowers a wide range of decentralized applications (dApps) to operate on the Ethereum network, from simple token swaps to complex decentralized finance (DeFi) protocols. The EVM ensures that all Ethereum nodes execute smart contracts in a uniform manner, thereby preserving the network’s integrity and consensus.

Nevertheless, the Ethereum blockchain faces persistent challenges, particularly in the realms of privacy and scalability. To address these issues, the next iteration of the EVM has been under development over the past few years, known as the zero-knowledge Ethereum Virtual Machine (zkEVM). This technology harnesses zero-knowledge proofs, specifically zk-SNARKs (Succinct Non-Interactive Argument of Knowledge), to enhance the privacy and efficiency of smart contract execution and transaction processing. Similar to the traditional approach, zkEVM allows transaction validation without disclosing underlying data, thus ensuring privacy.

Furthermore, zkEVM enhances network scalability by compressing transaction data and offloading computational tasks from the Ethereum main network. This requires full compatibility with existing Ethereum smart contracts, enabling developers to migrate their applications with minimal modifications.

Zero-knowledge can have its Advantages

Ethereum faces certain self-inflicted problems that need resolution. Those who have been part of the crypto environment for some time are familiar with the frustrations that come with the OG-altcoin. Despite boasting an enormous user base, its low transaction throughput and high gas fees can be discouraging, especially in this fast-paced digital age and empty bank accounts many of us find ourselves in.

Solutions are desperately needed, particularly to maintain relevance in a young industry with plenty of competition vying for the top spot. Since the integration of zkEVM, the network has witnessed initial successes in alleviating network congestion and processing transactions at a faster rate. However, whether this technology can effectively reduce transaction costs (also known as gas fees) still requires confirmation. The next bull cycle will likely provide more insights on that front.

The positive impact of zk-technology can certainly be derived from Decentralized Finance (DeFi), where application efficiency and security can be significantly improved. Furthermore, the enhanced privacy components, especially in the financial sector, open doors for companies seeking to leverage blockchain technology while maintaining a high level of data privacy.

Last but not least, and potentially most importantly, for our current environmental state, zkEVM’s increased network efficiency can further contribute to reduced energy consumption, aligning with broader environmental sustainability goals beyond the blockchain industry.

Everybody can have zero-knowledge in Crypto

There is no doubt that within the open-source coding community, zero-knowledge technology, especially with a focus on zero-knowledge proofs (zk-SNARKs), is already widely applicable and integrated with various blockchain platforms. While the initial intention was to enhance Ethereum’s scalability and privacy features for smart contracts written on the EVM, we observe across various blockchain ecosystems that developers are employing the zero-knowledge technique to improve their own environments in similar ways.

For instance, Zcash utilizes zero-knowledge proofs to enable users to conceal details such as sender, receiver, and transaction amounts. The Mina Protocol employs zk-SNARKs to compress the entire blockchain into a compact snapshot, enabling lightweight and efficient verification. Even J.P. Morgan has a vested interest in developing zk-technology for their own Quorum, an Ethereum-based blockchain.

In any case, this opens up new possibilities for cross-chain compatibility with improved data privacy preservation and efficient transaction throughput. While this may not necessarily set Ethereum apart from the crowd, it has the potential to lead the entire industry toward a more robust ecosystem with fewer barriers between different platforms.

Risks of having zero-knowledge

With a different topic, this paragraph would look quite different. However, since we are discussing new technological developments, the path appears relatively straightforward. First of all, the complexity of zk-SNARKs, which is essential to zkEVM, might pose significant challenges in implementation and adoption on a larger scale. It boils down to the principle that the first steps are usually the hardest, as we have seen that once the technology is operational, application migration is expected to be much easier.

It is also worth noting that new technologies, despite their promising security features, always come with unforeseen vulnerabilities that could be exploited by hackers and other malevolent individuals. Therefore, it should come as no surprise that there are, of course, a wide range of regulatory issues that need to be clarified down the road. On the one hand, enhanced security and data privacy are necessary for regulatory compliance, but on the other hand, the loss of transparency could also raise concerns among regulatory bodies, as it could potentially be advantageous to those seeking legal loopholes for personal gain. It’s undoubtedly a challenging situation for regulators.

Concluding zero-knowledge is a lot of Information

It must be acknowledged that zero-knowledge proof technology is a versatile cryptographic technique with broad applications in various fields. While this article primarily focuses on the Ethereum side, where most of the development began, it’s important to note that this technology has the potential to enhance many more technology-based fields beyond blockchain networks.

We are on the verge of a monumental shift in technology, privacy, data security, and transaction processing capabilities. To claim that this article covers all the key components would be unrealistic. However, it is our hope that this article successfully contributes to raising the learning curve what the ominous “zk” stands for (Polygon zkEVM, zkSynk Era, etc.) and opening new avenues for further research and discussions.

With that in mind, we always invite you to join our Discord server if you would like to discuss this topic or any other subjects related to blockchain, technology, finance, or even gaming with like-minded individuals. You are always welcome to share your thoughts and ask questions. Together, we learn for a brighter tomorrow. Thank you for reading.