Zero-Knowledge Proofs and Blockchain: Applying Technology to Strike a Balance between Privacy and Transparency

Abstract

A system design built on blockchain technology presents a fundamental challenge: the inherent transparency of the blockchain conflicts with the growing need for user privacy. This dissertation explores how Zero-Knowledge Proofs (ZKPs) can be strategically combined with blockchain to strike a balance between these competing demands. The dissertation analyzes the challenges of privacy and transparency and provides an overview of solutions across the privacy-transparency solution space, drawing from the author’s original research and the broader academic landscape. On the privacy-centric side, it proposes a privacy-preserving design that utilizes off-chain ZKPs. In contrast, on the transparency-centric side, it presents a transparency-enhancing design that leverages on-chain data to build trust. In the middle, it discusses a taxonomy of hybrid applications whose unique combination of on-chain privacy (via ZKPs) and blockchain transparency reveals both a disruptive potential and significant regulatory challenges.