Certain Usage Patterns Can Degrade Zcash Privacy – Research Paper

Research Paper Finds Transaction Patterns Can Degrade Zcash Privacy

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  • The research team from UCL discovered that certain usage patterns can diminish Zcash privacy.
  • However, some Zcash users are less concern about the privacy issue.

London: A recent report from a research team from the University College London (UCL) on the analysis of “shielded” and “unshielded” Zcash transactions, showed that whenever a user switches between the two forms of transactions, Zcash anonymity is reduced. The research team concluded that though transactions carried out with Zcash can be private, there is a possibility for this privacy to be diminished if such user chooses some certain usage patterns.

The researchers, 4 students from the UCL – George Kappos, Mary Maller, Sarah Meiklejohn, and Haaroon Yousaf, published a report titled “An Empirical Analysis of Anonymity in Zcash.” The paper states that certain patterns of Zcash use can “shrink” Zcash privacy. Basically, transactions carried out with Zcash can either be conducted privately (shielded) or in a totally transparent manner (unshielded). Any user who moves his Zcash to and fro between shielded and unshielded manner may as well be losing quite some certain degree of privacy they desire.

According to the research paper:

“We investigate all facets of anonymity in Zcash’s transactions, ranging from its transparent transactions to the interactions with and within its main privacy feature, a shielded pool that acts as the anonymity set for users wishing to spend coins privately. We conclude that while it is possible to use Zcash in a private way, it is also possible to shrink its anonymity set considerably by developing simple heuristics based on identifiable patterns of usage.”

The research team concluded that for the cryptocurrency to fully maintain its anonymity, it must “require all transactions to take place within the shielded pool,” more so, the Zcash team must expand the usage of the shielded pool significantly. This finding has been positively accepted by Zcash team as  Josh Swihart, the team marketing director, and Zcash’s founder, Zooko Wilcox, on 8th May, responded by calling the research paper an “insightful new paper.” Also, the Zcash team members described an earlier analysis which has similar findings. They replied:

“This research demonstrates different ways to pierce the veil of your privacy if you, or the people that you transact with, move money from a transparent address to a shielded address and then move some of that money back to a different transparent address — Similar analysis was released several months ago — However, this research includes new techniques that can heuristically link patterns of ‘unshielded to shielded to unshielded’ transactions. It is valuable to understand how much privacy is lost when using shielded addresses as a pass-through mechanism but using it in that way is not recommended — Instead, store your Zcash in a shielded address. When paying someone, send Zcash from your shielded address to their shielded address — If Zcash is transacted in this way, the results of this paper do not apply and transaction privacy is maintained.”

Zcash users didn’t seem to show much concern about the report, as one of them wrote last Friday that:

“I have read the original paper, I don’t think it will make a difference when all transactions are shielded, which is where we are headed to anyway — Furthermore, nobody is stopping anyone from using multiple shielded addresses now.”

What is your opinion about the research paper about Zcash privacy? Tell us in the comment box.

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