Privacy and Zero-Knowledge Innovations BDC Practice Questions (Page 4)

Questions 16–20

1. 16foundation · easy

   How do zero-knowledge proofs help balance privacy with regulatory requirements such as AML/KYC?

   • AThey eliminate the need for KYC procedures entirely.
   • BThey allow a user to prove that they have passed KYC checks without revealing their personal identity data.
   • CThey allow regulators to decrypt all transaction data at any time.
   • DThey require all transactions to be fully transparent to comply with regulations.
   Reveal Solution Discussion Select an answer first
2. 17application · medium

   A supply chain consortium wants to verify that a shipment's temperature never exceeded a certain threshold during transit, without revealing the actual temperature readings to competitors. They plan to use a zero-knowledge proof. Which property of zero-knowledge proofs is most relevant to this use case?

   • ANon-interactivity: the proof can be verified without back-and-forth communication.
   • BZero-knowledge: the verifier learns nothing beyond the truth of the statement.
   • CSoundness: an invalid statement cannot be proven.
   • DCompleteness: a valid statement will always be accepted by the verifier.
   Reveal Solution Discussion Select an answer first
4. 18application · medium

   A fintech startup is building a blockchain-based payment system where customers must prove they have sufficient balance for a transaction without revealing the actual balance. The team expects high transaction volume and wants to minimize on-chain verification costs. The development lead proposes using zk-SNARKs. Which additional consideration is most important when choosing zk-SNARKs over zk-STARKs for this system?

   • AQuantum computers can break the underlying security assumptions.
   • BProof sizes are larger, increasing on-chain storage requirements.
   • CVerification time scales linearly with the size of the computation.
   • DA trusted setup ceremony is required to generate the proving and verification keys.
   Reveal Solution Discussion Select an answer first
5. 19application · medium

   A fintech startup is building a blockchain-based lending platform. They need to verify that a borrower's monthly income exceeds a threshold without revealing the exact income or other financial details. The platform will run on commodity hardware and must minimize ongoing computational overhead for verification. Which zero-knowledge proof system should they choose?

   • APlain digital signature with selective disclosure
   • BBulletproofs without trusted setup
   • Czk-SNARK with a trusted setup ceremony
   • Dzk-STARK with transparent setup
   Reveal Solution Discussion Select an answer first
6. 20application · medium

   A bank is implementing a privacy-preserving system for customer credit scoring. They need to prove to a regulator that a customer's credit score is above a threshold without revealing the exact score. The regulator must be able to verify this proof without interacting with the bank. Which approach should be used?

   • AGenerate a non-interactive zero-knowledge proof (NIZK) that the credit score is above the threshold and provide it to the regulator
   • BEncrypt the credit score and send the decryption key to the regulator
   • CUse an interactive zero-knowledge proof where the regulator challenges the bank in real time
   • DUse a trusted third party to verify the score and issue a signed attestation
   Reveal Solution Discussion Select an answer first