ZKP Magic: Next Crypto Revolution

GM Readers!📪 It's BitDegree Insider, and let's talk about a revolution.

⭐️Today's selection:

• 🎩 Knowledge About Zero-Knowledge
• 👔 Institutional Investors Love Bitcoin
• 🧩️Answer To Thursday Quiz
• 👌Selected Meme of The Day
• 📰Bite-Sized News

ZERO-KNOWLEDGE

Zero-Knowledge is the most important technology that will completely change the crypto market.

Let's have less than zero knowledge about Zero-Knowledge.

In the world of blockchains, there's something known as the Blockchain Trilemma.

It means that a network cannot be simultaneously secure, decentralized, and scalable.

This is why the most secure blockchains - Bitcoin and Ethereum - are so slow and "expensive."

Let's briefly recall the possibilities of Zero-Knowledge:

ZKP stands for Zero-Knowledge Proofs. They were developed back in the 80s but have only recently become widespread in crypto.

The main feature of ZKP is that the owner of secret information can prove that they possess the information without revealing the information itself.

ZKP can be used in various fields:

• When trying to rent out an apartment, a person can use ZKP to prove that they meet certain criteria and are creditworthy without disclosing their personal data and financial information.
• This technology is even mentioned in a US Treasury publication as a solution for implementing AML/CTF obligations in DeFi (legal requirements to prevent money laundering and terrorist financing activities).
• ZKP can also be applied in the fields of payments, authentication, decentralized voting and, now, crypto.

In crypto, this technology is used to create ZK-applications and entire networks for scaling Ethereum.

There are currently only 2 such networks: Polygon zkEVM and zkSync. And 3 more will be released this year: Linea, Scroll, and Starknet.

So, how does it work?

Essentially, ZKP technology in crypto is implemented using ZK-Rollups:

• These rollups combine multiple transactions.
• Then, they process them off the main blockchain.
• Then, they return the data of completed transactions as one large transaction back to the blockchain.
• ZKP technology proves that these transactions were processed correctly.

Layer-2 networks, such as Arbitrum and Optimism, work in the same way, but they do not use ZKP technology to prove the reliability of their calculations.

Instead, they use regular rollups instead of ZK-Rollups.

ZK-Rollups do not completely solve the Blockchain Trilemma, but at the moment, they are the safest, cheapest, and fastest solution for increasing the scalability of Ethereum.

So, in conclusion: ZKP technology should significantly change the crypto market in the coming years. And not only in terms of security but also of confidentiality.

In the image below, you can see the difference between regular Ethereum transactions and the ones, processed with the help of ZK-Rollups:

TL;DR: ZKP (Zero-Knowledge Proofs) is a revolutionary technology, and it's about to change the way blockchains work. It will help Ethereum increase its scalability.

INSTITUTIONAL INVESTORS LIKE BITCOIN

2020 marked a turning point for Bitcoin in terms of adoption by institutional investors.

Major companies, funds, payment systems, and even banks started entering the market.

According to a study by Intertrust, this is just the beginning.

A survey of 100 hedge fund CFOs worldwide, revealed that by 2026, they plan to increase the share of cryptocurrencies in their portfolios to an average of 7.2%.

Only 1 out of 50 respondents had no plans to invest in crypto.

On the one hand, this might not be great news since cryptocurrencies were created for the people, not financial organizations.

On the other hand, institutional investors not only invest in the market but also develop storage infrastructure, increase adoption, reduce volatility, and improve the overall ecosystem.

In any case, the progress is here.

Currently, funds and public companies control approximately 7.8% of all Bitcoin (around 1.6 million Bitcoin).

It could be even more since companies may not disclose smaller investments.

If you're interested, more detailed statistics can be found here.

TL;DR: Institutional investors (major companies, funds, payment systems, banks) continue showing interest in crypto.

ANSWER TO YESTERDAY'S QUIZ

Yesterday we asked you to find that cute little Sui logo that we carefully hid behind Darth Vader's back.

Not surprisingly, our attentive readers didn't struggle with this one. Good job!

SELECTED MEME OF THE DAY

BITE-SIZED NEWS

• NFT Startup Cryptoys Introduces the Star Wars Non-Fungible Token Collection. The NFT collection of 15 limited edition digital toys is set to launch on May 24th.
• Israel Officials Seize 190 Binance Accounts Linked to Terrorist Organizations. Hamas and Daesh groups used Binance to hold and trade their crypto.
• Frog-Themed Memecoin PEPE Sends Ethereum Gas Fees Soaring. It is believed that since the launch of PEPE, the Ethereum gas fees increased by 50%.