Zcash’s Privacy Features Back In Question After User Traced Transaction

Zcash’s privacy features came into question again as one Twitter user under the name Money Knowledge0 challenged the “friendly attackers” to trace his Zcash transactions that are deemed private. Let’s read more in the upcoming Zcash news.

One simple ZEC transaction was traced in real-time this week which shows that the privacy model of this cryptocurrency failed but it also shows that some Zcash transactions are easy to be traced. However, Zcash’s privacy features were called into question because of the large-scale tracing efforts from Chainalysis and Carnegie.

Challenge someone who talks down on Shielded Zcash. If people know so much about privacy with #Zcash it’s time to put money where their mouth is.

— ⚡️ᙇ (@MoneyKnowledge0) July 11, 2020

In a ZEC community challenge, one user, Brian Deep was able to trace one Zcash transaction from MoneyKnowledge0 in less than three days. The event revealed some misunderstandings among users and the privacy of the network. Zcash relies on shielded addresses and transparent addresses. In this case, the user made a donation from his shielded address to the recipient’s shielded address so Brian Deep was able to find which transparent address the other user used for his original shielded address.

The transaction was easy to trace because MoneyKnowledge0 made the transaction in a very short period of time. Deep said that MoneyKnowledge0 was able to “divide funds and take longer breaks between transactions” in order to get more privacy. This way, the transaction is a user fault and not a problem of Zcash. The success of the tracking was called a “lucky guess” so he awarded Deep with $100 worth of ZEC for his work.

Zooko Wilcox, the CEO of Zcash explained that “pass-through” privacy methods don’t work and shielded fund storage is the exact privacy feature of the cryptocurrency, not something else. The longer gaps between transactions provide almost no benefits but users who want privacy should keep their funds in the shielded pool of Zcash. If Moneyknowledge0 used the shielded pool for storage, his transaction would not be linkable solely from the information in the blockchain, according go Wilcox.

Unfortunately, almost everyone has this backwards: they think that privacy comes from putting your money through something, which is why one of the most common uses of Shapeshift when Yousaf etal investigated was converting BTC to XMR and then back to BTC. https://t.co/OnsfmLkVgd

— zooko (@zooko) July 19, 2020

This is not the first time that the privacy of this cryptocurrency was questioned. Carnegie Mellon University suggested that about 99% of the users fail to use Zcash’s privacy features while Chainalysis also said that it was able to trace most of the transactions back in June. About 11% of the ZEC transactions are shielded according to the Zcash block explorer but the platform could encourage users to use the shielded addresses by the “on-by-default” privacy which Monero uses.