How Do ‘Zero-Knowledge Proofs’ Enhance Privacy in Cryptocurrency?

Zero-Knowledge Proofs (ZKPs) allow one party (the prover) to prove to another party (the verifier) that a statement is true without revealing any information beyond the validity of the statement itself. In cryptocurrency, this can be used to verify transactions (e.g. that a user has enough funds) without revealing the amounts, sender, or receiver, significantly enhancing transaction privacy and confidentiality on the blockchain.