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Data is increasingly recognized as the lifeblood of artificial intelligence, with more personalized data often yielding better results. However, individuals are becoming more hesitant to share their personal details without receiving something in return. This reluctance could possibly hinder the growth of AI, especially as agentic AI systems become more prevalent.

One promising solution to this data scarcity lies in the submission of zero-knowledge proofs on a distributed blockchain. Midnight, a company specializing in this technology, is actively exploring this approach.

Understanding Blockchain and Zero-Knowledge Proofs

A blockchain is essentially a digital ledger that records transactions in a secure and obvious manner. These records, known as blocks, are linked together using cryptographic hashes, creating a chain of data. Once a block is added to the chain, it is distributed across all nodes in the network, making it publicly verifiable and virtually immutable.

This inherent security and tamper-proof nature make blockchain technology suitable for various applications. While cryptocurrencies like Bitcoin and Ethereum have been the most well-known use cases, other potential applications are emerging that address real-world needs.

Zero-knowledge proofs offer a particularly compelling application for data sharing and monetization. A zero-knowledge proof is a cryptographic method that allows one party to prove to another that a statement is true without revealing any additional information beyond the validity of the statement itself.

Consider the example of verifying someone’s age at a bar. Instead of presenting a government-issued ID that contains a wealth of personal information, an individual could use a zero-knowledge proof to simply confirm that thay are of legal drinking age, without disclosing their exact date of birth or other irrelevant details.

Midnight’s Innovative Approach

midnight is developing a data protection blockchain that leverages zero-knowledge proofs to facilitate secure and transparent data-enabled commerce between businesses and their customers.This approach aims to empower users with greater control over their data while enabling businesses to access the information they need in a privacy-preserving manner.

Mauricio Magaldi, Head of Product at midnight, explained the company’s unique capabilities and their potential impact on data sharing and monetization in the AI era.

The way we built this is it allows the user or the builder of an application to selectively disclose what pieces of data will be shown to a counterparty. We prevent the data from being written on the blockchain unless it’s really necessary,and what gets written on the blockchain are zero-knowledge proofs.

Mauricio Magaldi, Head of Product, Midnight

With Midnight’s technology, the actual data remains with the user, stored securely on their device.When a user interacts with a business, such as purchasing a coffee or accessing online content, the business can offer rewards or discounts in exchange for specific data points. Through zero-knowledge proofs, the user can share only the necessary information to receive the reward, without exposing any additional personal data.

Magaldi emphasized the importance of distinguishing between the data itself and the information derived from it.

Both for self-sovereignty in the sense that now you don’t have to offer your data willy nilly as we did for 20 to 30 years.

Mauricio Magaldi, Head of Product, Midnight

This approach offers significant benefits for both users and businesses. Users gain greater control over their data and can choose what information they share, while businesses can access the data they need without having to store and manage sensitive personal information.

I think that’s a very elegant approach to data privacy, because it enables businesses to continue to operate without necessarily being in touch with the data, which also saves them a lot of money to in terms of data security and data governance, because they don’t have to hold on to your data. It’s just a proof about it.

Mauricio Magaldi, Head of Product, Midnight

The Power Behind Midnight

midnight is a project of Input Output (IOHK), the company behind Cardano, a well-established blockchain platform known for its stability and security. IOHK was founded by Charles Hoskinson, who also co-founded Ethereum and played a key role in the early development of the Bitcoin community.

currently, Midnight is developing a testnet, which serves as an early version of its blockchain designed to facilitate commerce and data privacy through zero-knowledge proofs.The company plans to eventually launch a fully functional platform.

Potential Applications and the Future of AI

Zero-knowledge proofs have a wide range of potential applications across various industries.For example, gaming companies could use them to offer rewards to players, while banks could leverage them to streamline Know Your Customer (KYC) processes while minimizing the amount of personal data they collect.

Furthermore,this technology could play a crucial role in the evolving landscape of agentic AI.Magaldi believes that blockchain and zero-knowledge proofs can facilitate more data sharing in the AI world by enabling individuals to retain control over their data and be compensated for its use.

Self-custody data is a big differentiator when we’re talking about public chains. You own your data, and the way that AI agents or AI companies will start interacting with that data, which is usually higher quality, is to be able to pay rewards by sharing the revenue with whoever provided that data or access to that data.

Mauricio Magaldi, Head of Product, Midnight

Magaldi notes that some forward-thinking companies are already utilizing blockchain as the foundation for data records, enabling AI agents to access and utilize this data in a secure and private manner.

That’s the beauty of zero-knowledge proofs, is enabling data privacy on a public blockchain where others won’t. Our founder, Charles Hoskinson, says blockchains can’t keep a secret, but Midnight can, and that’s what we’re building.

Mauricio magaldi, Head of Product, Midnight