The rise of cryptocurrency has been nothing short of explosive. By the end of 2024, the global crypto market capitalization surpassed $2.5 trillion. However, alongside this meteoric rise, there has been an equally alarming increase in crypto hacks, resulting in losses of up to $14 billion.

In 2025 alone, the industry saw its largest ever breach when globally renowned crypto exchange Bybit was hacked, resulting in a staggering loss of nearly $1.5 billion. Other exchanges have also been compromised, including Phemex, which suffered losses amounting to almost $85 million, and Infini, which experienced a hack leading to nearly $50 million in losses.

Why is crypto vulnerable to hacks?

Crypto remains vulnerable to various attack vectors. High-value targets like wallets, exchanges, and startups often prioritise growth over security, leaving vulnerabilities unpatched. Exploitable infrastructure, such as bridges used to transfer crypto between blockchains, has proven to be weak points, as seen in the $190 million Nomad hack.

Additionally, private key exploitation and phishing attacks remain pervasive; once a private key is compromised, hackers gain complete control over wallets. Unlike traditional financial systems, crypto transactions are irreversible. Once funds are stolen, there is no recovery mechanism, which scammers further exploit through fraudulent recovery services.

ZKPs: A solution to crypto hacks?

This is where Zero-Knowledge Proofs (ZKPs) come into play as a formidable line of defence. By allowing users to prove their identity or ownership of funds without revealing sensitive information such as private keys or personal data, ZKPs drastically reduce risks associated with phishing and identity theft. They also enable private transactions where the sender, receiver, and transaction amounts remain concealed.

This effectively prevents attackers from targeting high-value accounts or exploiting transaction patterns. Furthermore, by minimising the exposure of critical blockchain data, ZKPs make it harder for hackers to exploit vulnerabilities in smart contracts, cross-chain bridges, and DeFi protocols.

Beyond safety: Other benefits of ZKPs

Beyond enhancing privacy and security, ZKPs offer other benefits. Scaling remains one of the most significant challenges in blockchain technology. Current networks struggle with transaction speed and throughput due to performance limitations.

ZK-based scaling solutions, such as ZK-Rollups, address these bottlenecks by transferring computations off-chain, reducing congestion on Layer 1. This technique involves bundling multiple transactions into a single Rollup block, generating a validity proof off-chain, and then submitting it on-chain for verification. The result is an increase in transaction efficiency while maintaining high on-chain security.

How is ZKP coming along in the crypto world today?

Today, ZKPs are gaining traction across the crypto world. The increasing demand for ZK-based applications, or ZKApps, is evident from rising verification fees and the growing share of ZKApps in overall transactions. As more projects adopt ZK technology, the industry is shifting from infrastructure to applications, marking ZKApps as the next major trend in blockchain development.

Notable examples include Zcash, which employs zk-SNARKs to enable shielded transactions that preserve financial privacy, and zkSync, a Layer-2 scaling solution for Ethereum that significantly reduces gas fees while maintaining security and decentralisation. StarkWare is another leader in this space, using zk-STARKs to provide scalable and secure infrastructure for decentralised applications on Ethereum.

Technological advancements are making ZKApps increasingly practical. Innovations such as domain-specific languages (DSLs) and optimised computation processes, coupled with decentralised infrastructures for proof generation, are paving the way for scalable and efficient ZK-based applications. One significant milestone in this journey is ICG’s recent release of the AE BOX for ALEO mining on February 7, 2025. As the first-ever decentralised open-source platform utilising zero-knowledge proofing, ALEO promises limitless computation and absolute privacy.

Zero-Knowledge Proofs are not only bolstering security and privacy but are also revolutionizing blockchain scalability. With the successful implementation of projects like AE BOX, the future of crypto is evolving towards a more secure, efficient, and decentralized landscape. As the industry continues to grow, ZKP technology will likely play a central role in safeguarding digital assets and expanding the potential of blockchain applications.

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