Abstract

This paper explores how Zero-Knowledge Proofs (ZKPs) can enhance the privacy and security of decentralized supply chains. Although blockchain technology enhances supply chain transparency, it also reveals sensitive information, including supplier identities, pricing strategies, and transaction volumes. ZKPs offer a feasible approach in that subjects can authenticate data without revealing the underlying data, whilst keeping the information confidential and maintaining trust. In this study, the main performance indicators, including the time to verify a transaction (0.48 seconds), communication overhead (1.3 KB proof size), and privacy (95) in the ZKP-based system, are examined. ZKPs can enhance economic security by eliminating risks, such as industrial espionage and counterparty fraud, that can arise from publicly accessible data in historical blockchain systems. The performance of ZKP-enabled networks is also compared with that of traditional transparent blockchain systems. The major benefits are data privacy (95 % in ZKPs and 40 % in traditional systems) and scalability (80 % high and 60 % moderate). The paper also discusses how AI-based ZKP generation can speed up proof generation and automated compliance auditing to uphold regulatory compliance, including the General Data Protection Regulation (GDPR) and Anti-Money Laundering (AML). By incorporating AI into the ZKP procedure, proof generation can be sped up, yielding significant improvements in efficiency. This study finds that ZKPs can provide an effective approach to decentralized supply chain security, privacy, efficiency, and regulatory compliance, thereby making global trade activities more secure, transparent, and efficient.