What is Zero Knowledge Encryption And How Does It Affect Data Protection?

Zero-knowledge encryption is an emerging form of data protection that’s especially useful for sensitive company data.

Zero-knowledge encryption increases the security of your company’s data without sacrificing ease of access or operational efficiency.

With this article, you will understand what Zero-Knowledge Encryption is and how it affects data protection.

‍

Image Source: FreeImages‍

What is Zero-Knowledge Encryption?

Zero-knowledge encryption is a data protection technique in which the data are encrypted in such a way that they can be decrypted only by authorized personnel.

If the authorized personnel try to decrypt the data, they will get the same data they put in, while anyone else trying to decrypt the data will get gibberish.

Zero-knowledge encryption is frequently used in online transactions such as zero-knowledge proof of ownership and authentication.

The name “zero knowledge” stems from the fact that even the people who do the encrypting don’t know what the original data are. This might sound like a silly thing to do, but it turns out that this is a very efficient technique.

Because the people who do the encrypting don’t know the original data, they can’t be forced to give up the secret algorithm.

How Does Zero-Knowledge Encryption Work?

To understand how zero-knowledge encryption works, it helps to walk through a common example.

Imagine you’re a senior manager at a finance company and you need to send sensitive personal data to a regulator. Normally, you would encrypt the data and send them to the regulator in a secure manner. Unfortunately, that’s not enough to ensure regulatory compliance.

One regulator might ask you to send the data to them in an auditable manner, while another might ask you to send the data in a verifiable manner. Sending encrypted data isn’t enough – you need to be able to prove that you sent the correct data and that it was sent securely.

This is where zero-knowledge encryption comes in. Rather than storing unreadably encrypted data, you can store only unreadable hashed representations of the original information. These hashes can be decrypted only by users who have been specifically authorized to do so by a trusted third party, such as a senior regulator.

Each user can then use their key and the trusted party’s private key to decrypt their specific pieces of information while keeping everyone else’s secrets safe from prying eyes.

Benefits of Zero Knowledge Encryption

• Data Protection. With zero knowledge encryption, the encryption key is only known by the sender and the receiver. This means that even if someone manages to intercept the data, they’ll be unable to access it.
• Full Regulatory Compliance. With traditional encryption methods, you need to be able to decrypt and send the data. With zero knowledge encryption, you can send the hashed data to a trusted third party, such as your regulator.
• Privacy Protection. Zero-knowledge encryption allows you to send sensitive data to a third party while still protecting the privacy of the people who generated the data in the first place.

Drawbacks of Zero Knowledge Encryption

• Increased Administrative Costs. The increased level of encryption might require more administrative effort and cost.
• Non-Standard Data Retrieval may make it harder for people to find the data they’re looking for.
• Decreased Ease of Use. The complicated process for retrieving encrypted data may make it harder for people to use the data they need.

Concluding all the benefits and drawbacks of zero-knowledge encryption, it is clear that this tool is a powerful data protection technique that increases the security of your company’s data without sacrificing ease of access or operational efficiency.