If the crypto community wants more investors to purchase cryptocurrencies, something will have to be done to address the inefficiencies that are currently present in blockchain technologies. This makes sense because current inefficiencies in blockchain technology make processing financial transactions on a large scale an expensive process for high-volume users.
Stanford University’s cryptology research group is attempting to solve this problem by developing a layer-one blockchain called Espresso that uses zero-knowledge proofs to verify transactions. They believe using these proofs to verify transactions is worthwhile because it increases the efficiency of a blockchain environment by verifying a statement as being true without having to reveal the supporting evidence used to create it.
This breakthrough offers several potential benefits for blockchain technology adopters. The most important benefits include:
Increased Scalability
Using zero-knowledge proofs to verify transactions increases the scalability of blockchain technology because its unique proof structure allows users to process more transactions on the same amount of server space by reducing the amount of information that needs to be verified.
Over time, the research team hopes to improve on this breakthrough by creating computing techniques that bundle a group of transactions that can be proven true all at once using less server space. This would be a breakthrough for the crypto community because it would allow high-volume users to process more transactions at faster speeds by bundling transactions together for processing.
Lower Transaction Processing Costs
As scalability is increased, the cost of processing transactions should decrease over time because users should be able to process more transactions at a faster rate than before. This benefit is especially useful for high-volume users who want to adopt bitcoin for everyday transactions because it would give them the infrastructure needed to cheaply process and complete transactions for their customers.
Improved User Privacy
The unique proof structure of zero-knowledge proofs offers blockchain users added privacy protection for everyday financial transactions. It works by encrypting personal information in such a way that prevents it from being revealed while still being accessible in real time to the firm processing the transaction.
The research team hopes to use this benefit to enable cryptocurrency and stablecoin creators to create specialized versions of their assets for private transactions. This could be a major step towards universal adoption of cryptocurrencies because it would give users the confidence needed to use cryptocurrencies and stablecoins in more commercial settings without compromising their privacy.
Increased Decentralization of Transactions
Finally, the Stanford research team is also searching for ways to use the efficiency of zero-knowledge proofs to create increased decentralization of cryptocurrency transactions by preventing them from getting “stuck” on a centralized server while they are waiting to be verified.
Ideally, the researchers would like to find a solution to this problem that combines what they have learned about other improvements to create an application that is easy to customize. This would be very useful because it would give them ideas on how to limit the opportunity costs of integrating these solutions with each other.
One potential solution that has received a lot of attention lately is to develop data processing techniques for blockchains that bundle and verify transactions in one step.
If this solution is successfully developed, it could spur adoption of cryptocurrencies among older consumers because it would reduce the cost of processing the purchase of low-cost items and smaller orders with cryptocurrencies.