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Cryptocurrencies are established on cryptography. This is why developments in cryptography often have wide-reaching impacts on blockchain technology as a whole. This article examines some opinions of industry experts on what the latest advances in cryptography are and what the implication is for cryptocurrencies.
According to Andrew Peolstra, the Director of Research at Blockstream, a blockchain firm in an interview with Cointelegraph, zero-knowledge proof systems are an interesting area of development that is catching the attention of stakeholders in the cryptography space. Z-K proofs are famous for being the basis of the high level of privacy associated with cryptocurrencies, particularly Zcash (ZEC), the alleged anoncoin. Poelstra commented that cryptographers had made notable progress in the integration of this technology.
Also, Suterusu, another blockchain firm, is currently working on the implementation of ZK-proof technology as a second-layer solution on the Ethereum and Bitcoin blockchain. Huang Lin, the Chief Technology Officer of the company who is said to have studied cryptography for over a decade, also confirmed the significant improvement efficient zero-knowledge proofs would bring to decentralized anonymous payments.
Also, the co-founder and current managing director at Jelurida, Lior Yaffe, has reiterated the possible positive effects of ZK proof systems on scalability. According to him, rather than generating large blocks of transactions and propagating them through network miners, sellers could use Zero-knowledge proofs to come up with small data sets showing changes in the account balance. Jag Sidhu, co-founder and the current lead core developer at Syscoin, stated that the new recursive ZK-proof systems could permit cheaper and faster private transactions.
ZK-Proof-enabled Bitcoin sidechains
Poelstra also stated the possibility of ZK-Proofs in the development of untrusted sidechains. This would bring some of the functions of altcoins to Bitcoin. In illustrating some of the requirements to make this happen in an interview with Forbes, he stated that there would be a need for efficient, all-purpose ZK proofs. Apart from this, Bitcoin validators would also be required to confirm what’s going on the sidechain be allowing pegs to come back. When asked about the developments in these ZK-proof sidechains, he explained that more work was needed before more systems were feasible. He explained that efficient ZK-Proofs would ensure the verification of adherence to the rules of the other blockchain.
Although, Poelstra further explained that integrating these approaches for the verification of sidechains would require more efficient proof systems. Apart from this, researchers would also be needed to address the problems of incentive. While the goal looks workable, there is still a lot of work to do to achieve it.
ZK-Proofs Can Improve the Privacy of Bitcoin
Also, Poelstra also mentioned the possibility of using ZK-Proof systems to improve the privacy of Bitcoin using Taproot as an example. He explained that Taproot could make it possible to make transactions indistinguishable from each other on the platform. Although, he still noted that the number of transactions and transaction graphs was still exposed, and these were harder problems to address.
According to Lin, Suterusu focused mainly on the development and implementation of more efficient Z-K proof schemes creating a fast platform for confidential payments. The system of the firm also permits the movement of cryptoassets from the main blockchain to a second network. He further suggested that more stakeholders should focus better on privacy.
Apart from Z-K proof schemes, post-quantum cryptography is another area that is gaining attention. This cryptography focuses largely on making sure that data can still be encrypted and kept safe even at the peak of quantum maturity. It also gives assurance to speculations that advances in quantum computing may lead to the end of cryptocurrencies.
Several post-quantum cryptography designs algorithms in a way that tries to wipe out the advantages of quantum computing, particularly when compared to traditional computing. All this points to the fact that Bitcoin was designed with possible threats of quantum computing in mind. Satoshi, in developing Bitcoin, created one-way hashes as an address rather than using public keys. Public key cryptography is more susceptible to quantum brute attacks. This also explains why there is a change address strategy for all wallets.
Impacts of Developments in Cryptography on Cryptocurrency
Multiparty computation (MPC) is currently one of the most active areas in cryptography with respect to research. MPC allows entities who do not trust each other to perform computations together and agree on a result. Consensus algorithms are one example of multiparty computation.
With all these developments in cryptography, it is believed that with more studies, they can lead to appreciable developments in cryptocurrency eventually.