Zero Knowledge Protocol (or Zero-Knowledge Password Proof, ZKP) is a highly secure way of ensuring that transactions are verified without private details being transferred. It protects those involved in the transaction. When both parties communicate with each other, no one else can know the content or files shared between themselves.
This is important in the crypto space because people are looking for ways to send funds without their details being made public in a blockchain and their identity being visible.
This verification method occurs between the prover and a verifier. In this type of mechanism, the prover has the ability to show the verifier that they possess a piece of data without having to tell them the data. Cryptographers utilize this style to improve the security and privacy of different systems.
When it is incorporated into a crypto platform, it allows verification of transactions without exposing the private details concerning them like the amount of money earned, and much more.
This technology is incorporated in crypto platforms like ZCash, where people need utmost privacy and security.
When authentication systems incorporate this into their platform, they can verify identities without them being exposed. Zero Proof of Knowledge system is used in the form of zero-knowledge Succinct Non-interactive Argument of Knowledge (zk-SNARK) in privacy coins.
An example is ZCash which offers crypto transactions without people having to expose their identity or transaction to the public. A typical Blockchain is designed to be transparent, allowing people to track the incoming and outgoing transactions linked to an address and the number of tokens that the address holds.
Zero Proof of Knowledge changes this when incorporated into a blockchain, as no one can look up the private details of transactions.