Privacy can assume many forms and occur on many levels. The technologies that blockchain architects originally envisioned for privacy coins are now being utilized by an array of crypto stakeholders, from enterprises to exchanges. What began as a means of transacting anonymously has spawned a burgeoning industry, built upon technologies designed to conceal, but which can also be programmed to reveal to a select few.
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zk-Snarks
zk-Snarks are best known for their use in privacy coin protocols such as Zcash. These “zero knowledge proofs” have far broader applications than simply masking the sender and receiver when transmitting crypto via a public ledger. A zero-knowledge proof allows one party to prove to another that a statement is true, without revealing any information about the statement itself.
To break this down into a simple analogy, imagine that Farmer Bob is selling some livestock at the market. He wishes to prove to the auctioneer that there is a cow in his trailer, but without opening the door (cos then the creature would escape). Using a heat sensor installed inside the trailer, Bob can prove that there is a living, breathing animal inside, but the auctioneer will have no way of knowing which cow it is, or even whether the animal is a cow (unless it moos and gives the game away). That, essentially, is how a zk-Snark operates: proof that something is true, while disclosing zero knowledge about the thing in question.
As for how zk-Snarks can be deployed outside of privacy coin transactions, look no further than smart contracts. Quras, for example, is using the technology to provision privacy-enabled smart contracts that run on its eponymous VM. Applications include
