Is Zcash truly more Secure and Anonymous than Bitcoin?
Zcash is a new digital currency created by an impeccable team of developers. Many of them, such as Matthew Green and Zooko Wilcox, are worldwide recognized cryptographic experts, joined by numerous other scientists holding positions at John Hopkins University, MIT and Tel Aviv University.
In the past four years, they have invented a new cryptographic scheme, zero-knowledge Succinct Non-interactive Arguments of Knowledge (zk-SNARKs) or zero knowledge proofs. According to the peer reviewed whitepaper, this allows “users to directly pay each other privately: the corresponding transaction hides the payment’s origin, destination, and transferred amount.”
However, due to a bug in Zcash, private transactions, called z-addr transactions, are currently not possible, but, in theory, a zcash private transaction should look as in the image below:
Rather than a public address, a hash is shown on the left side which is comparable to, say, a reddit nickname being turned into random number and letters, preventing us, therefore, from knowing the pseudonym. The same applies to the right side. That is all we can see. No amount is shown, no public address, therefore there is no way to gain any information whatever from this transaction. An incredibly strong privacy guarantee as it allows no tracking, making Zcash, arguably, more private than paper money.
Does it Really Provide Anonymity?
On the security front, there have been a number of audits, but, fundamentally, the entire network has just been born. As such, it is difficult to say Zcash is more secure than bitcoin. Bugs, set-backs and other battle testing events should be expected as Bitcoin itself had a number of them in its early days, including transaction malleability which slightly contributed towards MT Gox’s downfall.
On the other hand, Zcash is built on top of Bitcoin. It is likely, therefore, to have around the same level of security, but unlike bitcoin, the new currency continues the quest for one of the holy grails in the blockchain space: full privacy, promised by Bitcoin, Monero, as well as tumblers and mixers, without much success.
Zcash, perhaps, can deliver where others have failed. If it manages to do so, it uniquely promises full privacy from the public while at the same time allowing regulators, employees, customers, or anyone else, to see transparently any transaction, solving a very serious problem with much market demand.