Zcash Leads the Way on Zero-Knowledge Proofs With zk-SNARKs

What Are Zero-Knowledge Proofs and zk-SNARKs?

A zero-knowledge proof is a cryptographic protocol that allows for information to be accurately verified without having to expose the underlying information itself to the entity doing the verifying. 

One such cryptocurrency that uses zero-knowledge proofs, Zcash, has been among the industry’s most innovative in applying the protocol. Zcash developers built their own technology, named zk-SNARKs, allowing users to opt for privacy when transacting with the crypto. Zk-SNARKS stands for “zero-knowledge succinct non-interactive arguments of knowledge.” There are different types of transactions open to users of Zcash, which we will investigate next.

Zcash Address Types

Zcash allows you to send both public and private transactions, with users able to hide, or shield, the cryptocurrency wallet address sending or receiving funds. There are three different types of Zcash (ZEC) addresses that you can use to transact. You will know which address you are using, based on the first one or two letters:

1. Transparent address: Starting with a “t,” transparent ZEC addresses do not offer any privacy protection (save for pseudonymity) for your transaction and will look very much the same to a bitcoin transaction.

2. Legacy Sprout shielded address: Starting with “zc,” Sprout addresses offer financial privacy protection for transactions, by shielding the wallet address, and will take between 70 and 90 seconds to complete.

3. Sapling upgrade shielded address: Starting with “zs,” the Sapling upgrade kept all of the privacy settings from the earlier Sprout protocol, but enables transactions that can now be completed in less than one second.

Zcash Transaction Types

By using different combinations of Zcash addresses, there are four types of transactions:

1. Public: A transaction sent from a transparent address to another transparent address will be as public as a transaction sent over the Bitcoin blockchain. This is the default setting in most Zcash wallets.

2. Shielding: A transaction sent from a transparent address to a shielded address. This type of transaction is useful for someone who wants to transact with another person who requires a certain level of privacy, where it is clear where the funds are coming from, but the destination is masked. 

3. Deshielding: A transaction sent from a shielded address to a transparent address. The address of the sending party would be private and the address of the receiving party would remain public on the Zcash blockchain.

4. Private: A transaction sent from a shielded address to another shielded address. These transactions allow for extensive privacy, where the address of both the sender and recipient is masked.

Future of Zero-Knowledge Proofs

The current focus on zero-knowledge proofs is on ensuring private financial transactions. However, zero-knowledge proofs could play a larger role in ensuring privacy across online activity. Privacy in online interactions is no longer guaranteed, and the advent of data mining and programs that track the behavior of online users has made solutions like zero-knowledge proofs increasingly salient.

Ensuring individual privacy has been a main tenet of the blockchain and cryptocurrency revolution, and zero-knowledge proofs and zk-SNARKs technology is poised to carry that torch. As central authorities begin to chip away at the privacy that was inherent at the inception of early crypto projects, the development of zero-knowledge proofs, by projects like Zcash, bolsters the ability for constituents to protect their financial transactions from undue censorship and oversight.