Ethereum co-founder Vitalik ButerinpublishResearch on the Privacy Pool system as a tool for achieving greater privacy in financial transactions. and allows users to prove the mechanism of illicit funds through technology. zero-knowledge-proof
Initially, the document mentions one of the most popular privacy-enhanced protocols, Tornado Cash, which allows users to make deposits and withdrawals. cryptocurrencies without creating an identifiable link between the two addresses. The US authorities recently filed a lawsuit against the founder, accusing it of being widely used by malicious actors.
“The major problem with Tornado Cash is that legitimate users are fundamentally limited in their options to exclude themselves from the criminal activities that the protocol is often used for.”
The analysis then elaborated in more detail on the expansion of the Tornado Cash approach, which will allow users to publicly prove the source of their funds by using membership proofs (“I prove my withdrawals are from these deposits.” either of these) and exclusion proofs (“I prove that my withdrawals are not from these deposits”).
as the author said This concept can provide a balance between honest and dishonest users of protocols. This may help meet future on-chain financial requirements:
Based on zero-knowledge proofs, users will be able to keep themselves anonymous, including addresses related to illegal activity.
The document also presents a use case of zero-knowledge proofs for users to show that funds are not linked to illegal sources or to prove that the funds came from a particular deposit without disclosing any additional information.
“In many cases, privacy and compliance are seen as incompatible. But this document suggests that this is not necessarily the case. If the privacy-enhancing protocol allows users to prove certain qualifications about the source of their funds.”
refer : cointelegraph
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