Privacy vs Compliance – zk Transfers with Halo2

This repository explores the trade-off between on-chain privacy and regulatory compliance using zero-knowledge proofs (Halo2 / zk-SNARKs).

The goal is to demonstrate how private value transfers can coexist with auditing, selective disclosure, and regulatory requirements.

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🧠 Problem Statement

Blockchain systems face a fundamental tension:

• Privacy → users want hidden balances and transactions
• Compliance → regulators require auditability, AML, and selective access

This project shows how zk-proofs allow both.

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✨ Key Features

• ✅ Hidden transfer amounts (zk-SNARKs)
• ✅ Commitment-based balances
• 🚧 Merkle tree for state inclusion
• 🚧 Selective disclosure (viewing keys)
• 🚧 Auditor / regulator access without breaking global privacy

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🏗️ Architecture Overview

User ├─ creates commitment (value hidden) ├─ generates zk-proof (valid transfer) └─ optionally shares viewing key ↓ Blockchain / Verifier ├─ verifies proof └─ stores commitment hash ↓ Auditor (optional) └─ verifies selective disclosure

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🔐 Privacy vs Compliance

Feature	Privacy-Only	This Model
Hidden amounts	✅	✅
Public audit	❌	❌
Selective disclosure	❌	✅
AML / audit ready	❌	✅
GDPR friendly	✅	✅

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🧪 Example Use Case

• User makes a private transfer
• Amount is hidden on-chain
• Regulator receives a viewing key
• Auditor verifies correctness without revealing other transactions

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📂 Project Structure

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🚀 Getting Started

cargo build
cargo test
📚 Resources

Halo2 Book

Zero-Knowledge Proofs (zkSNARKs)

Privacy-Preserving Compliance Research

⚠️ Disclaimer

This repository is educational / experimental
Not production-ready. No legal guarantees.

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## 2️⃣ GitHub Actions CI  
`.github/workflows/ci.yml`

```yml
name: Rust CI

on:
  push:
  pull_request:

jobs:
  build:
    runs-on: ubuntu-latest
    steps:
      - uses: actions/checkout@v4

      - name: Install Rust
        uses: actions-rs/toolchain@v1
        with:
          toolchain: stable
          override: true

      - name: Build
        run: cargo build --verbose

      - name: Test
        run: cargo test --verbose

use privacy_vs_compliance::disclosure::ViewingKey;

#[test]
fn selective_disclosure_works() {
    let vk = ViewingKey {
        tx_commitment: [1u8; 32],
        secret: [2u8; 32],
    };

    let proof = vk.disclose(100);

    assert_eq!(proof.revealed_amount, 100);
    assert_eq!(proof.commitment, [1u8; 32]);
}
# Selective Disclosure

Selective disclosure allows a user to reveal
**only specific transaction data** to a trusted auditor.

This avoids:
- full transaction history leaks
- public deanonymization
- non-compliance with GDPR

The mechanism relies on:
- commitments
- viewing keys
- zk-proof verification