In 2015, the Ethereum protocol proposed a vision for a decentralized world computer capable of rearchitecting a free and open internet – removed from the whims and constraints of centralized entities. While Ethereum has become the foundation for Web3 as we know it, its growth was underscored by the upgrades that would be required to realize its full potential. As a result, layer 2 has emerged as clear frontrunners in the race to scale the network for mass adoption.
Systems using zero-knowledge (ZK) technologies are among the most promising – and their potential isn't limited to scaling. ZK-powered technology is expected to revolutionize myriad sectors from gaming to payments, and from digital identity to enterprise solutions.
Zero-knowledge technology refers to tools that use cryptography to prove that something is true without revealing any additional information other than the fact that it is true. The value of such a tool for crypto is that it greatly reduces the costs of processing data (such as transaction data on a blockchain) without compromising the security or decentralization that make these monetary networks unique.
The application of ZK tech allows blockchain networks to prove the authenticity of their operations in the most efficient way, using the fewest possible steps. This is transformational for Web3 development because it reduces costs, increases throughput capacity and expands potential use cases far beyond what is currently possible. Ethereum co-founder Vitalik Buterin has stated outright that ZK rollups are the solution to scaling Ethereum and even proposed a ZK-based solution for preventing future FTXs.
Until recently, ZK-based scaling was limited by its incompatibility with the Ethereum Virtual Machine (EVM). It's not strictly incompatible, of course, but perhaps unfriendly. In fact, many industry participants projected that it would take more than a decade to build a performant, EVM-compatible ZK rollup. It took considerably less time than that.
Given the tech is so new and so broadly applicable – (despite the name, it has almost nothing to do with privacy but could be a way to scale Ethereum to support robust gaming, payments and other industries) – it's likely is that the most useful, groundbreaking application of ZK doesn't yet exist.
– Mihailo Bjelic, co-founder of Polygon
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