Big Questions: What did Satoshi Nakamoto think about ZK-proofs?
From privacy coins to shiny iris-scanning orbs, zero-knowledge proofs have become synonymous with crypto, scalability and privacy.
In 2022, investors gave over $700 million in funding to companies pushing the envelope with zero-knowledge proofs. This year, ZK-proofs has arguably become one of the biggest blockchain trends, with several major Ethereum scaling protocols hitting mainnet.
ZK-proofs are a cryptographic protocol that allows one party to prove the truth of a statement to another party without sharing any of the statement’s contents.
An often-cited example is proving to a bartender that you’re old enough to drink without showing your ID or even telling them your birthdate.
Well, it seems that Satoshi Nakamoto, the pseudonymous creator of Bitcoin, once found the technology pretty interesting.
A better version of Bitcoin
In August 2010, the user “Red” on the online forum Bitcointalk asked whether there could be a way to improve the privacy of Bitcoin transactions.
“One of the things that bugs me about bitcoin is that the entire history of transactions is completely public,” the forum-goer said. Another member piped in, suggesting that zero-knowledge proofs could be the solution.
“This is a very interesting topic,” replied Nakamoto.
“If a solution was found, a much better, easier, more convenient implementation of Bitcoin would be possible.”
However, Nakamoto wasn’t convinced the tech could get around the “double-spending” problem — a fundamental flaw that exists in all digital cash protocols where a bad actor could spend the same digital tokens more than once.
“It’s the need to check for the absence of double-spends that requires global knowledge of all transactions,” said Nakamoto.
“It’s hard to think of how to apply zero-knowledge-proofs in this case. We’re trying to prove the absence of something, which seems to require knowing about all and checking that the something isn’t included,” he argued.
Years later, someone cracks the code
Little did Nakamoto know that the cypherpunks would eventually find a way to solve the problem.
Privacy-focused cryptocurrency Zcash was launched in October 2016 by Electric Coin — a firm made up of computer scientists from the formative years of Bitcoin. Zcash was built by modifying Bitcoin’s original source code.
It was also the first time zero-knowledge proofs were used in a real peer-to-peer cryptocurrency, allowing users to hide or shield the crypto wallet address sending or receiving funds.
The founding scientist of Zcash, Eli Ben-Sasson, would then go on to found StarkWare, a company known today for using zero-knowledge proofs to scale Ethereum through rollups.
Ben-Sasson tells Magazine that the early enthusiasm from Bitcoin core developers for ZK-proofs played a “pivotal role” in his eventual co-founding of StarkWare.
“The Bitcoin 2013 conference in San Jose marked my Eureka moment.”
“Mike Hearn, a then-Bitcoin developer and one of the earliest Bitcoin adopters, went as far as to declare my talk on ZK-proofs as the most crucial of the event due to its potential impact on the future of blockchain.”
“It was there that I realized the transformative potential of the Validity Proofs I was developing,” says Ben-Sasson.
Fast forward to today, Bitcoin itself now stands ready to enter the world of ZK-proofs.
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ZeroSync, a nonprofit founded by three computer scientists (and sponsored by StarkWare), is developing the world’s first ZK light client for Bitcoin.
“Long-term, we hope to bring mass scalability to Bitcoin using STARK Proofs,” said Robin Linus, co-founder of ZeroSync.
Linus said that ZeroSync has designed and is currently implementing a layer-2 protocol that could allow Bitcoin to process more than 100 transactions per second while bringing privacy properties to Bitcoin.
“This could be a major feat in bringing Bitcoin toward the scalability it needs.”
So what would Nakamoto think?
“It’s evident from Satoshi’s past remarks that he strongly favored the use of ZK-proofs for privacy,” says Ben-Sasson.
Nakamoto was a stickler for anonymity. His public interactions on Bitcointalk and his emails were all reportedly done using the IP-masking browser, Tor. It’s the main reason his public IP address could never be traced back to him.
The Bitcoin creator even dedicated a section to privacy in the Bitcoin white paper, suggesting users keep their public keys anonymous so that, even though the public can see transactions occurring, they don’t know who is involved, like a stock exchange.
“It’s clear that Satoshi would have been intrigued by the privacy innovations my peers and I contributed to at Zcash,” says Ben-Sasson.
Unfortunately, Nakamoto never approached the subject again before he vanished from the public eye on Dec. 12, 2010 — the date of his last post on Bitcointalk.
Ben-Sasson, however, believes if Nakamoto had continued to be active, he would have likely pushed to bring ZK-proofs to Bitcoin.
“While they have recently found their way into Bitcoin through ZeroSync, I believe Satoshi would have been inclined to make the necessary adjustments to integrate them further,” he says.
“After all, for Bitcoin to realize its vision as a global currency, the imperative to scale cannot be ignored, especially considering its current state of ossification.”
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According to the US Department of Justice, Wolf Capital’s co-founder has pleaded guilty to wire fraud conspiracy for luring 2,800 crypto investors into a Ponzi scheme.
Making Britain better off will be “at the forefront of the chancellor’s mind” during her visit to China, the Treasury has said amid controversy over the trip.
Rachel Reeves flew out on Friday after ignoring calls from opposition parties to cancel the long-planned venture because of market turmoil at home.
The past week has seen a drop in the pound and an increase in government borrowing costs, which has fuelled speculation of more spending cuts or tax rises.
The Tories have accused the chancellor of having “fled to China” rather than explain how she will fix the UK’s flatlining economy, while the Liberal Democrats say she should stay in Britain and announce a “plan B” to address market volatility.
However, Ms Reeves has rejected calls to cancel the visit, writing in The Times on Friday night that choosing not to engage with China is “no choice at all”.
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The chancellor will be accompanied by Bank of England governor Andrew Bailey and other senior executives.
She will meet with her counterpart, Vice Premier He Lifeng, in Beijing on Saturday to discuss financial services, trade and investment.
She will also “raise difficult issues”, including Chinese firms supporting Russia’s invasion of Ukraine and concerns over constraints on rights and freedoms in Hong Kong, the Treasury said.
But it did not mention whether Ms Reeves would raise the treatment of the Uyghur community, which Downing Street said Foreign Secretary David Lammy would do during his visit last year.
Britain’s Foreign Secretary David Lammy and Chinese Foreign Minister Wang Yi in Beijing. Pic: AP
On Friday, Culture Secretary Lisa Nandy defended the trip, telling Sky News that the climbing cost of government borrowing was a “global trend” that had affected many countries, “most notably the United States”.
“We are still on track to be the fastest growing economy, according to the OECD [Organisation for Economic Co-operation and Development] in Europe,” she told Anna Jones on Sky News Breakfast.
“China is the second-largest economy, and what China does has the biggest impact on people from Stockton to Sunderland, right across the UK, and it’s absolutely essential that we have a relationship with them.”
Read more – Ed Conway analysis: The chancellor’s gamble with China
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Nandy defends Reeves’ trip to China
However, former prime minister Boris Johnson said Ms Reeves had “been rumbled” and said she should “make her way to HR and collect her P45 – or stay in China”.
While in the country’s capital, Ms Reeves will also visit British bike brand Brompton’s flagship store, which relies heavily on exports to China, before heading to Shanghai for talks with representatives across British and Chinese businesses.
It is the first UK-China Economic and Financial Dialogue (EFD) since 2019, building on the Labour government’s plan for a “pragmatic” policy with the world’s second-largest economy.
Sir Keir Starmer was the first British prime minister to meet with China’s President Xi Jinping in six years at the G20 summit in Brazil last autumn.
Relations between the UK and China have become strained over the last decade as the Conservative government spoke out against human rights abuses and concerns grew over national security risks.
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How much do we trade with China?
Navigating this has proved tricky given China is the UK’s fourth largest single trading partner, with a trade relationship worth almost £113bn and exports to China supporting over 455,000 jobs in the UK in 2020, according to the government.
During the Tories’ 14 years in office, the approach varied dramatically from the “golden era” under David Cameron to hawkish aggression under Liz Truss, while Rishi Sunak vowed to be “robust” but resisted pressure from his own party to brand China a threat.
The Treasury said a stable relationship with China would support economic growth and that “making working people across Britain secure and better off is at the forefront of the chancellor’s mind”.
Ahead of her visit, Ms Reeves said: “By finding common ground on trade and investment, while being candid about our differences and upholding national security as the first duty of this government, we can build a long-term economic relationship with China that works in the national interest.”
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