Hackathon 101: An Introduction to Zero-Knowledge Proofs (ZKPs)

EMURGO Ventures announced the largest ever Cardano blockchain hackathon, Cardano EMURGO BUILD 2023, in partnership with DoraHacks, the world’s most active multi-chain Web3 developer community with over 300,000 multi-chain developers.

EMURGO Ventures is the venture investment arm of Cardano blockchain founding entity EMURGO and invests in Web3 startups building on Cardano and those demonstrating synergy with Cardano.

The Cardano EMURGO BUILD 2023 Hackathon is an online Web3 hackathon with up to $2 million in prizes and provides an opportunity for anyone in the world to demonstrate their talents in building Web3 products and services on Cardano.

With judges from across the Cardano ecosystem including EMURGO, Cardano Foundation, and IOG, hackathon participants also have the opportunity to receive valuable feedback, network, and receive possible funding for their Cardano projects.

The idea behind the Cardano EMURGO BUILD 2023 hackathon is to promote the adoption of Cardano’s Web3 ecosystem by supporting developers to think of and build their blockchain ideas on Cardano. After the hackathon, they can continue building upon their prototypes and their communities.

In this article, we will discuss one of the three developer tracks available for participants – Zero-Knowledge Proofs (ZKPs) – to select to build upon for the hackathon.

Introduction to Zero-Knowledge Proofs (ZKPs)

A growing concern today revolves around consumer privacy and opacity in transactions, trading, and other interactions whether it is through a centralized exchange (CEX) or a traditional financial institution.

While DeFi (decentralized finance) offers anonymity and privacy, it still lacks the trust and ease of use offered by most trusted CEXs. This warrants a simple use case where user transactions and data can be verified without the need to access sensitive data.

Zero-Knowledge Proofs (ZKPs) offer a potential real use case solution.

ZKPs imply that transactions or interactions are authentic and accurate without ultimately disclosing any underlying data or information.

ZKPs and decentralized blockchains share the same core fundamental policy of providing inclusive accountability, but they both also have certain strengths and weaknesses that complement each other.

ZKPs still struggle with certain components, such as a trusted setup, but offer privacy. Blockchain, on the other hand, offers distributed ledgers with transparent trust but lacks ZKPs privacy capabilities.

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As most crypto enthusiasts do not realize that most blockchains and cryptocurrencies expose every transaction made on the blockchain, ZKPs provide a potential privacy use case by merging the technology with a decentralized blockchain.

To address this issue, individuals and institutions would benefit from an open, yet secure system that ensures the privacy of its stakeholders.

In simple terms, ZKPs create a trustless system that helps protect a user’s privacy by using mathematics to verify and authenticate interactions without revealing the sensitive information of the user.

For example, if you apply for a loan that requires you to meet certain financial benchmarks and credit scores, this can be achieved by implementing a ZKP that validates whether you meet the criteria without disclosing your actual financial statements.

Other examples of the use of ZKPs with decentralized blockchains include private smart contracts, private payments, identity management, and treasury voting.