ZK Rollups Bring Ethereum\'s Decentralized Vision Into Focus

Polygon founder Mihailo Bjelic makes the case for zero knowledge technology.

Layer 2 scaling solutions are emerging as key contenders in the race to enhance the Ethereum network's capabilities for mass adoption. Among these solutions, systems utilizing zero-knowledge (ZK) technologies are gaining significant traction due to their potential to not only scale the network but also revolutionize various sectors.

ZK-powered technology is expected to have a transformative impact on a wide range of industries, including gaming, payments, digital identity, and enterprise solutions. Looking ahead, 2023 promises to be the year ZK tech truly takes off.

Here's a closer look at how ZK tech is set to benefit crypto in several key areas.

ZK rollups for DeFi, payments, gaming and more

With ZK's ability to increase throughput, enhance security, and reduce fees, ZK rollups are also set to become a valuable tool for the decentralized finance sector. By leveraging Ethereum's robust security and decentralization while providing scaling capabilities in a trustless manner, ZK rollups could propel DeFi to new heights.

Similarly, zero knowledge tech could have a knock-on effect on the payments industry. Despite crypto's potential to revolutionize payments, it has yet to gain widespread adoption as a channel for business and consumer transactions, largely due to scalability limitations and high fees. However, breakthroughs such as zkEVM are poised to challenge this status quo, enabling the realization of high-performance payment stacks on the Ethereum network.

Furthermore, for blockchain gaming applications to match the volume of users seen in the mainstream gaming sector, ZK rollups will be essential for processing the hundreds of thousands, if not millions, of micro-transactions that a typical blockchain game would require to function optimally.

Another area that is ripe for the kind of innovation that zkEVM can bring is enterprise blockchain solutions. Enterprise users have been hesitant to adopt decentralized networks due to concerns over security issues, lack of oversight, and limited accountability.

ZK tech is also being applied to digital identity, providing a decentralized, privacy-first means for users to verify their credentials and identity without ever revealing personal information. Such an ID offers a decentralized solution for users to comply with know-your-customer (KYC) and anti-money laundering (AML) checks without relying on third parties to store and process their data.

In response to the collapse of the FTX exchange, Buterin proposed a ZK-based solution for preventing future FTXs. A cryptocurrency exchange could use Zero-Knowledge proofs to demonstrate solvency by publishing a proof of reserves. This would allow an exchange to confirm it has the liquidity to cover customer withdrawals without revealing the sensitive business information contained therein.

With so much potential coming from a single technological breakthrough, it's becoming increasingly clear that ZK rollups are destined to play a central role in the broad adoption of cryptocurrency. While this list of possible use cases is by no means comprehensive, it points towards the vast possibilities for innovation and application that lie ahead.

News source：https://www.kdj.com/cryptocurrencies-news/articles/zk-rollups-bring-ethereum-decentralized-vision-focus.html

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