Zcash Privacy Weakened by Certain Behaviors, Researchers Say

Researchers have identified patterns in certain kinds of zcash transactions that weaken their anonymity, according to a paper published Tuesday.

George Kappos, Haaroon Yousaf, Mary Maller and Sarah Meiklejohn found that when coins move from "Unshielded" to "Shielded" and back to "Unshielded" addresses, they lose much of the anonymity that zcash users expect.

Zcash, one of the most prominent and well-regarded privacy coins, offers two kinds of addresses: "t-addresses" are transparent or unshielded, meaning that their balances and transactions are publicly visible on the blockchain; "z-addresses" are shielded, meaning that their balances and transactions are invisible.

Transactions from one unshielded address to another are completely public, if pseudonymous, as in bitcoin.

Transactions from one shielded address to another are almost completely invisible, showing only the timestamps and fees associated with mining.

Transactions between different types of addresses introduce complications making it possible to glean some information about the z-addresses involved, according to the paper.

The reason for these transactions - and similar ones performed by miners - is that zcash coins are required to pass through the "Shielded pool" of z-addresses before they can be used for another transaction.

"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."

Currently, only a minority of transactions are shielded, and far fewer are fully shielded, with z-addresses on both sides.

According to the Zchain block explorer, 85 percent of transactions over the past month are fully public, and just 0.6 percent are fully shielded.