AmericanFortress paper shows how ZKPs can prove crypto wallet ownership

The team at privacy infrastructure developer AmericanFortress have authored a new paper. It proposes a novel means of proving the origin of crypto wallets. Vincenzo Botta, Michal Pospieszalski, Emanuele Ragnoli and Justus Ranvier of AmericanFortress authored “Provenance Proofs: Linkable, Post-Quantum ZK Derivation Relations for Blockchain DeFi, Wallet and Identity Systems”.

In it, the researchers propose a way for a wallet to prove that several addresses or credentials belong to the same cryptographic identity. It can do so without revealing the wallet seed, private keys, derivation paths or the rest of the wallet. It’s essentially a form of selective disclosure that allows an individual to prove wallet ownership without giving away private information.

Zero-Knowledge Proofs (ZKPs) are a versatile technology. They let one party prove that a statement is true without revealing the statement itself. ZKPs were invented in the mid-80s. They are still evolving as new use cases emerge, particularly within the web3 space. The latest paper from Vincenzo Botta et al adds another application to this growing list: privacy-preserving proof of wallet ownership.

The problem the researchers were trying to solve stems from a singular characteristic of crypto wallets. These are the sort of wallets used to secure digital assets on blockchains such as Bitcoin and Ethereum. Rather than consisting of a single address, most modern crypto wallets rely on hierarchical deterministic (HD) design.

These so-called HD wallets can generate multiple addresses and keys from the same underlying secret. You create one private key, typically recording it as a 12- or 24-word mnemonic phrase. You can then generate numerous public keys, each with its own wallet address.

So how do you prove ownership of an HD wallet without revealing sensitive information pertaining to the other addresses connected to its parent private key? ZKPoSP has in fact already solved this challenge. It provides a way of proving that a public key was derived from a particular wallet material.

But the new paper goes one further, proving that two or more public values have the same hidden origin. In other words, proving that they came from the same HD wallet without disclosing the address of that wallet.

Essentially, the AmericanFortress-authored paper proposes a way of proving that several documents came from the same filing cabinet. It does so without showing anyone the combination to open the cabinet or view the other documents inside it. The paper calls this shared origin provenance. It provides varying degrees of linkability depending on how much info the wallet owner wishes to share.

Options include linking things only when necessary; keeping things unlinkable now, but making them linkable later; or making the relationship between wallets permanently recognizable. In this model, the degree of linkability selected by the user becomes a configurable property. It is no longer an unavoidable consequence of proving wallet ownership.

The approach detailed in the paper may sound esoteric, but its applications are much broader than they at first appear. Proposed use cases include anti-phishing payments. Here, Bob can prove that a new address originates from the same hidden wallet provenance as his established identity. Alice, meanwhile, can verify that an attacker hasn’t silently substituted another payment address, all without Bob exposing the rest of his wallet.

Other applications include regulatory compliance and cross-chain identity. Regulatory compliance would allow an exchange to onboard a wallet against a compliance credential. It could subsequently recognize deposits associated with the same certified wallet.

Cross-chain identity is perhaps the most interesting use case of all. It makes it possible to prove provenance across different blockchains and cryptographic schemes.

For example, take someone moving BTC to Solana. They could prove that the Bitcoin source address and Solana destination address originate from the same hidden secret. A bridge could even verify this before releasing the funds. That would make destination-address substitution considerably harder in applications that require same-user provenance. It would also mitigate threats such as wallet poisoning.

It’s all theoretical for now: the authors of the paper have yet to deploy any of their proposed implementations. But they’re confident that the tech can achieve a middle ground between total wallet pseudonymity and full disclosure of the user’s identity and account structure.

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