Privacy-Preserving Noninteractive Compliance Audits of Blockchain Ledgers with Zero-Knowledge Proofs
Bertalan Zoltán Péter, Imre Kocsis · Acta Polytechnica Hungarica · 2024
Privacy and auditability have been conflicting design requirements for blockchainbased distributed ledgers since the inception of the field.As purpose-built blockchains with permissioned consensus and client access are developing in a broad and diverse range of industries, a specific form of this dichotomy is emerging: the need to audit the handling of regulated on-ledger financial assets, such as central bank digital currencies, while preserving the privacy and confidentiality of transactions as much as possible.This paper proposes a novel, privacy-preserving, noninteractive-zero-knowledge-proof-based protocol for a blockchain-based distributed ledger, to prove conformance with fundamental compliance requirements to external auditing parties.We present an extendable implementation and demonstrate the practicality of the approach.