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role of zero knowledge encryption in data privacy

The Role of Zero-Knowledge Encryption in Data Privacy

Data privacy refers to the practices developed for safeguarding personal and sensitive information from unauthorized access, disclosure, alteration, or destruction. The rules and regulations of data privacy govern the handling of stored data by different companies and service providers. This post will discuss the impact of zero-knowledge encryption on data privacy and how different industries can take advantage of this advanced cryptographic phenomenon.  

To understand the relationship between zero-knowledge proof and data privacy, it is important to examine the key principles of data privacy and figure out how zero-knowledge encryption fits in.

Key principles of data privacy

Data Minimization: Collect only the data that is absolutely necessary for the intended purpose.

  • Purpose Specification: Clearly define the purposes for which data is collected and used.
  • Data Accuracy: Ensure that data is accurate, complete, and up-to-date.
  • Storage Limitations: Retain data only for as long as necessary for the specified purposes.
  • Access Restriction: Limit access to data to authorized individuals with a legitimate need to know.
  • Data Security: Implement appropriate security measures to protect data from unauthorized access, use, and disclosure.
  • Data Breach Notification: Promptly notify individuals and relevant authorities in case of a data breach.

Laws and regulations governing data privacy

Here are some important data privacy regulations that govern the handling of data in different regions. These regulations are put in place to protect the individual’s right to privacy and prevent businesses from misusing data. 

  • General Data Protection Regulation (GDPR): The EU’s comprehensive data privacy law GDPR applies to organizations handling the data of EU residents inside or outside of the European Union.
  • California Consumer Privacy Act (CCPA): This is a U.S. state law that endows consumers with greater control over their personal information. 
  • Data Protection Act 2018 (DPA): DPA is the UK’s data protection law. It is meant to strengthen individuals’ rights to privacy.  

How zero-knowledge encryption enhances data security and privacy

The doctrines of data privacy are concerned with the consumers’ control over the intentions behind the use of their data and its security. So, if a business collects customer data, the onus of responsibility to protect that data from exposure or theft lies with the business. Zero-knowledge proof enables businesses to maximize data protection by simply storing less of it. 

How zero-knowledge encryption works

Zero-knowledge encryption is a cryptographic protocol based on the concept of zero-knowledge proof. It helps you prove that a statement is true without revealing any additional information. For instance, if you went to the movie theatre to watch an age-restricted movie, you may be asked to prove that you are of legal age.

If you show some kind of ID, you are offering additional information like your exact age, address, and whatnot. A zero-knowledge proof would allow you to prove that you are over the legal age without revealing your actual age. Zero-knowledge encryption is a mathematical expression of this logic.

💡You can also learn how zero-knowledge encryption differs from other methods of encryption

The impact of zero-knowledge proof on data privacy

While some businesses still maintain localized in-house data centres to store and manage customer data, most rely on cloud storage solutions – public clouds in many cases. Traditional data security measures often prove unequal to the task of protecting data at rest in the cloud. 

When you create an online account, the service provider asks you to create a password. This password works in two ways.

  1. It helps the server verify the identity of the real user.
  2. It helps the server deny access to unauthorized intruders.

However, to verify the identity of a user, the server needs to store an instance of the password. So, if the server itself gets hacked, there is a chance that your password will fall into the wrong hands.   

Moreover, if the user ever falls victim to a phishing attack, they might unwittingly share credentials with a malicious actor.

This is where traditional data encryption falls short and zero-knowledge encryption comes in.

Zero-knowledge proof allows the server to verify a user’s identity without asking them for the password, or without ever storing it. The zero-knowledge protocol has a prover and a verifier where the verifier asks the prover to perform certain tasks that only the honest possessor of the password can perform. Numerous iterations of this process establish a probabilistic proof of the prover’s honesty. 

Zero-knowledge encryption has three central characteristics.

  1. Completeness: The possessor of the password or decryption key will always be able to convince the verifier of the possession.
  2. Soundness: The verifier will not be convinced if the prover is dishonest in any way.
  3. Zero-knowledge: The verifier will have gained no knowledge other than the fact that the prover is honest.

Benefits of zero-knowledge encryption

  • Service providers, banks, etc., can authenticate users without storing their passwords
  • Websites can access the behavioural data of users without actually stalking users
  • Businesses can classify users based on age, location, etc., without looking into personal information
  • encrypt and decrypt sensitive data more securely and keep them away from hackers’ reach
  • Helps businesses comply with data privacy regulations
  • Allows miners and verifiers to evaluate blockchain transactions.

Zero-knowledge encryption in password managers

A handful of password managers use zero-knowledge encryption to secure their password vaults. It means the password manager doesn’t store the master password or the decryption key for all the stored passwords on the server. The key never leaves the user’s device. It implies that even if the password management tool gets hacked, the hackers cannot access the passwords stored in the vaults in plaintext. This feature makes password and identity management tools like Uniqkey a class apart.