Ethereum Co-Founder Buterin Warns of Privacy Risks in Zero-Knowledge Proofs

Ethereum co-founder Vitalik Buterin has expressed concerns about the potential risks associated with zero-knowledge (ZK) proof-wrapped digital identities, particularly focusing on the issues of coercion and privacy. In a recent blog post, Buterin acknowledged the privacy benefits of ZK technology, which allows users to prove their identity without revealing personal details. However, he also highlighted significant challenges that come with this technology.

One of the primary concerns Buterin identified is the potential for coercion. He warned that governments, employers, or platforms could pressure users to disclose their primary identity key, linking all their activities to a single, trackable identity. This would eliminate the ability to maintain separate pseudonymous profiles, a critical aspect of online privacy. Buterin argued that in the real world, pseudonymity generally requires having multiple accounts. Without this flexibility, users could find themselves in a situation where all their online activities are de-facto under a single public identity, making them vulnerable to surveillance and coercion.

Buterin also criticized the idea of using "proof of wealth" as an anti-Sybil measure, stating that it excludes individuals who cannot afford to pay and concentrates power among the wealthy. He proposed a more balanced approach where users could obtain multiple identities at a cost proportional to the number of identities they wish to have. This would ensure that the system remains inclusive and does not disproportionately benefit the wealthy.

To address these issues, Buterin proposed the concept of pluralistic identity systems. In such systems, no single authority controls identity issuance, making them more resilient to errors and abuse. These systems could be explicit, using social-graph-based verification, or implicit, relying on multiple ID providers such as government documents and social platforms. The key advantage of pluralistic identity systems is their flexibility, which helps individuals who are stateless or unable to access traditional IDs.

Buterin argued that the best outcome would be a hybrid system that combines one-per-person identity schemes with social-graph systems. This would create diverse, global identity networks that balance privacy, inclusivity, and resistance to abuse. He warned that if any single identity system gains too much market share, it could shift the world towards a one-per-person model, which has worse properties in terms of privacy and inclusivity.

In conclusion, Buterin's critique underscores the need for a more nuanced approach to digital identity systems. While ZK technology offers significant privacy benefits, it also presents risks that must be carefully managed. Pluralistic identity systems, which distribute control and verification across multiple authorities, offer a promising solution to these challenges. By adopting such systems, we can create digital identity frameworks that protect privacy, ensure inclusivity, and resist coercion.