Cryptocurrencies cannot exist without cryptography. Advances in cryptography may have a profound impact on blockchain technology and its potential. In this article we will look at industry experts' views on the latest advances in cryptography and their potential impact on cryptocurrencies.
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Zero-knowledge proof: more than just privacy
Andrew Poelstra, head of research and mathematician for blockchain company Blockstream, said that the zero-knowledge proof (ZK-Proof) system is "one of the most exciting development areas" in the field of cryptography. As we all know, this cryptographic technology is the foundation of privacy protection solutions.
ZK-Proofs is the foundation of the privacy protection technology contained in the so-called anonymous coin Zcash (ZEC). According to Poelstra, cryptographers have made significant advances in the efficiency of the application of this technology and now "adopt a more robust and accepted cryptographic assumption".
Blockchain company Suterusu is currently working on the privacy implemented by ZK-Proof as a second layer solution on top of the Bitcoin and Ethereum blockchains. The company's chief technology officer, Huang Lin, who claimed to have done more than a decade of research in cryptography, told Cointelegraph:
"Applying a valid zero-knowledge proof to distributed anonymous payments can significantly improve its privacy and performance."
Jorurida's co-founder and managing director Lior Yaffe (the company behind the blockchain NXT, Ardor, and Ignis) also stated that ZK-Proofs can have a very positive impact on scalability. He explained:
"Miners can use ZKP to generate small data sets without displaying a large number of transactions and spreading them over the network, but only showing changes in account balances and a cryptographic proof that no double payments have occurred."
Jag Sidhu, co-founder and chief core developer of Syscoin (SYS), said the new recursive ZK-Proofs could allow private transactions that are cheaper, smaller, and as fast as ordinary transactions.
Bitcoin sidechain to achieve zero-knowledge proof
In the past, Poelstra stated that ZK-Proofs can also allow the development of sidechains that do not require trust, which may introduce the functionality of altcoin to Bitcoin (BTC). In February 2019, he clarified the requirements of such a system when speaking to Forbes:
"I think now, if we want to do a true two-way anchor, we may need to obtain a complete, efficient, and universal zero-knowledge proof, and we need a way for the Bitcoin validator to verify what is happening on the sidechain Way of things. "
When Cointelegraph asked him about the progress of ZK-Proof-based trustless sidechains, Poelstra explained that much work had to be done before such a system could become viable. He explained that efficient ZK-Proofs will enable you to verify that you have followed the rules of another blockchain, taking the Ethereum extension solution Plasma as an example.
Nonetheless, Poelstra also explained that adopting such technologies for sidechain verification "will require a new proof system that is many orders of magnitude more efficient." In addition, to implement such a system, researchers first need to solve complex incentive problems. He concluded:
"As a community, we continue to work towards these goals, but we still have a long way to go."
Although the development prospects are broad, so far, the Bitcoin sidechain has achieved only limited success. In fact, as of mid-October 2019, only nearly $ 77 million in Bitcoin (about 0.054%) was locked on the sidechain. In the same month, Adam Back, CEO and co-founder of Blockstream, said that one obvious reason for the slow development of sidechains is the greater financial incentive to create a type of altcoin compared to creating a sidechain on Bitcoin. .
Zero-knowledge proof can make Bitcoin more private
Poelstra told Cointelegraph that ZK-Proofs can also make Bitcoin more private, using Taproot as an example. He explained that Taproot could potentially make any transaction on the blockchain almost indistinguishable from each other. He still noted that "transactions and charts still exist, which are more difficult problems to resolve."
Lin explained that Suterusu is committed to developing and implementing a "setting-free, efficient zero-knowledge proof program with a nearly constant proof size, tailored for confidential payments in smart contract platforms."
The company's system allows crypto assets to be removed from the main blockchain on its second-tier network and moved while hiding "sender and receiver identity and transaction amount". In addition, the solution supports smart contracts. He also said that the cryptocurrency industry should pay more attention to privacy.
Sidhu also suggested that the latest developments in post-quantum cryptography (cryptographic algorithms that can resist quantum computer attacks) are worth studying. The focus of this cryptography is to ensure that once quantum computing matures, data can still be encrypted and secured. It also removes concerns that recent advances in quantum computing could lead to the end of cryptocurrencies.
In general, the purpose of post-quantum cryptographic design algorithms is to make quantum computing less advantageous than traditional computing. He also suggested that Bitcoin be designed with the threat of quantum computing in mind:
"Satoshi Nakamoto saw this happening, which is why he created a hash as an address instead of a public key, because public key cryptography is vulnerable to quantum brute force attacks. […] That's why every wallet has a change of address policy. "
The development of cryptography and its impact on cryptocurrencies
Yaffe said that multiparty computing (MPC) is one of the most active fields in cryptographic research. He explained the power of MPC to Cointelegraph in the following ways:
"MPC enables entities that do not trust each other and may even be easily overlooked or malicious to perform calculations and agree on results."
The blockchain consensus algorithm is an example of MPC, and progress in this field can bring different progress to the cryptocurrency field. Yaffe also cited Verifiable Delay Function (VDF) as another major development, explaining that it is similar to an algorithm that allows proof-of-work (PoW) mining, "but unlike mining, VDF cannot be parallelized as a small miner Possibility of balancing the competitive environment and opening up the potential. "Yaffe and Cointelegraph shared his predictions on how the blockchain will work in the future:
"Using all of the above, I expect that future blockchain products will provide similar information to external viewers, while users who actually hold the key will be able to view the full history of their transactions. Some of these technologies have not yet been It is ready for mainstream use, but in the last few years there have been many improvements in this area and they are constantly improving. "
Although Sidhu's Syscoin bridge technology is not a side chain, it allows users to transfer value across the blockchain without the need for intermediaries or custody based on the principle of passwords only. He explained:
"This is a step in the direction of the cross-chain consensus vision we have, and users should be able to move freely in any chain with various attributes such as chain security, convenience (performance) and technical characteristics. Move. "
Poelstra also cited interactive multi-signature and explained that this technology significantly simplifies the complex contracts required for Lightning Network to function properly, such as escrow fees or hash time lock contracts. More precisely, this encryption technology allows such contracts to be expressed as a single signature.