As the world continues to adopt online transactions of all forms, income verification plays an essential role in building financial security and trust between individuals, businesses, and financial institutions. Verifying income in a loan application, rental agreement, or job screening is critical to evaluating an individual’s financial stability and repayment ability.
Lenders, for instance, rely on income verification to gauge a borrower’s creditworthiness and determine appropriate loan terms. In these cases, verification fraud compromises borrower income information, increasing default risks and spawning distrust between borrowers and institutions.
Income verification should be a vanguard against fraud and prevent financial risks to promote fair cross-sector practices, but rising verification breaches make that impossible to achieve.
To address income verification limits, innovators have created a breakthrough mechanism to generate proof of income known as zk-SNARKs. As one of the most promising privacy-preserving technologies developed in recent years, zk-SNARKs empowers one party to verify sensitive information without putting their data and privacy at risk. One company, VAIOT, brings this technology to the world of law to benefit users of its AI Legal Assistant.
“zk-SNARKs represent a groundbreaking paradigm shift,” says Szymon Reddig, Lead Blockchain Developer of VAIOT. “They offer a remarkable capability to generate proofs for arbitrary computations while revealing zero knowledge to the verifier beyond the validity of the statement itself.”
VAIOT combines artificial intelligence and blockchain to upgrade digital service access and securely conduct legal agreements through an intuitive user interface. Integrating zk-SNARKs enables the company’s AI Legal Assistant to verify information in a legal contract without revealing sensitive information, while also leveraging GPT-4’s text fluency when interacting with users.
Outside of the Legal Assistant, the same zk-SNARK capabilities are also now available in VAIOT’s AI Assistant designed specifically for citizen services, which shares the Legal Assistant’s AI engine.
“We’re thrilled to leverage AI to automate and expand access to legal support and citizen services, and it’s crucial to do so effectively and responsibly,” says Paweł Andruszkiewicz, COO of VAIOT. “Blockchain, and particularly zk-SNARKs, opens a world of options to verify contracts to any party without disclosing sensitive information.”
Imagine a scenario where you need to prove your monthly income to a government administrator, but you don’t want to reveal the name of your employer or any other sensitive information. With zk-SNARKs, VAIOT’s Legal Assistant can make that happen, along with a wide range of other use cases, which include:
- Proof of income: Whenever there is a need to present proof of income based on a certain legal document, VAIOT’s AI Legal Assistant can generate proof of income based on the agreement it created or based on the legal document provided by the user and verified by the Assistant.
- Confidentiality, Non-competition, and Penalty Clauses: When creating documents that include confidentiality, non-competition, and/or penalty. clauses, zk-SNARKs can be used to provide proof that the clause is present and correctly formatted, without revealing any other information about the document.
- Proof of Compliance: When a legal document requires compliance with certain regulations, a zk-SNARK could be used to prove that the document complies, without revealing the specifics of how this compliance is achieved.
But what does that mean for everyday people? The Legal Assistant alleviates some key issues that make contracts and legal bureaucracy inaccessible to the average person, including:
- Proof of Identity: zk-SNARKs can allow a person to prove that they are who they say they are, without revealing any other personal information. This can be useful for age verification, proof of residence, or similar situations where identity needs to be confirmed. VAIOT’s solutions enable users to prove their identity as part of public administration systems integration.
- Purchase Proofs: If a person buys something from a retailer that accepts blockchain transactions, zk-SNARKs can be used to verify that the buyer paid the correct amount without revealing the specifics of the transaction (like the purchased items). In VAIOT AI Legal Assistant, this enables users to present entities with proof of purchase of a certain good or service without revealing all the data behind the agreement.
- Anonymous Dispute Resolution: After a user passes the privacy-preserving proof-of-identity procedure above, zk-SNARKs can also ensure that in dispute situations on a decentralized network, such as a DAO, only verified users are voting, and only once. This eliminates users creating dozens of wallets to manipulate DAO decisions.
As Andruszkiewicz adds, “In our case, users sharing data coming from legal and formal documentation generated through our AI Assistants can rest assured knowing only information that is required by a certain entity for a particular process will be shared. At VAIOT, we understand the true potential of AI can only be harnessed when users understand their data is safe.”
VAIOT’s $VAI token has been fully regulated by the Maltese Financial Services Authority (MFSA) since 2020.