A team of researchers from the University College of London has published an investigation that describes how "most users are not taking advantage of Zcash's main privacy function at all". To reach this conclusion, the researchers identified the transactions made by the founders and miners, determining that only 31% of private transactions belonged to the user community.
Zcash is a chain of blocks that offers its users a degree of privacy in the transactions carried out with the ZEC cryptocurrency. However, a study published this week does an analysis of the proportion of use of private transactions within the block chain.
The research was titled An Empirical Analysis of the Anonymity of Zcash and its authors were George Kappos, Haaroon Yousaf, Mary Maller and Sarah Meiklejohn. To facilitate its understanding, a summary of the study was also published in a specialized blog.
It explains that this blockchain allows users to choose between two types of addresses: t-addresses and z-addresses. The first group allows to perform a type of traditional transactions, similar to those made in Bitcoin, since they are visible in the public block chain. The z-addresses are the particularity of Zcash and use a zero knowledge protocol to hide the amount of money sent or received and the identity of the sender or receiver; what has made this one of the cryptocurrencies that has worried the police authorities in Europe. It is possible to make transactions between both types of addresses, but any transaction that links funds to an exit or entry t-address loses the privacy properties.
The authors of the study used simple heuristics to identify certain patterns of use, which made it possible to determine that the founders and miners are the ones who perform the most armored transactions because they are forced to use an armored pool for the newly mined cryptocurrencies, therefore they perform 69% of the armored transactions made in the block chain.
The researchers determined that in the chain there was a 75% deposit made by the founders with a value of 249.9999 ZEC, the equivalent of about 100 rewards for each block. Among the withdrawals none was found with this value, but 1,953 whose exact value was 250,0001 ZEC. The researchers determined that every z-to-t transaction (a type of unsuspecting transaction that sends coins from a z-address to a t-address) performed by 250,0001 ZEC belonged to the founders.
Regarding the miners, the identification factor was the fact that the mining pools interact in a predictable way with the armored group and that the miners receive their reward directly from a "coingen", those new coins that are created in a new block at the time of mining.
"AN ECOSYSTEM ARMORED FOR THE FUTURE OF THE INTERNET OF MONEY"
In a publication, Zcaso Wilcox and Josh Swihart, founders of Zcash, congratulated the initiative of these researchers, which follows other research carried out by analysts at the University of Michigan.
In this communiqué, the founders urged the community to use armored addresses for both the sending and receiving of ZEC, in this way, the methods used by the researchers would not have been effective:
It is valuable to understand how much privacy is lost when using shielded addresses as a transfer mechanism, so its use is not recommended in that way. Instead, you must store your Zcash in an armored address. When you pay someone, send Zcash from your armored address to your armored address. If Zcash is processed in this manner, the results of this document do not apply and the privacy of the transaction is maintained.
Similarly, they said that their priority is the launch of the Zcash Sapling update, which is scheduled for the end of the year and with which it is intended that z-addresses are the main way to make transactions with Zcash on any platform. They also noted that "it is imperative that an armored ecosystem be established to guarantee the future of the money internet".
Excellent. That's great to hear it's still secure, and not only that but a blockchain technology got enough interest from a major university for a team of researchers to study it.