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Zcash (ZEC) vs Monero (XMR) - Which is the Better Privacy Coin?

Published 06/06/2018, 02:31 PM
Updated 06/06/2018, 05:20 PM
 Zcash (ZEC) vs Monero (XMR) - Which is the Better Privacy Coin?

Zcash (ZEC) vs Monero (XMR) - Which is the Better Privacy Coin?

Privacy coins are considered key to the crypto movement, which aims to put people in control of their money, without governmental interference and oversight. Today the market offers several privacy coins, and two of most popular are Zcash and Monero. In this post we compare the two in-depth and see which one comes out on top.

What is Monero?

Monero (XMR) is a Proof-of-Work cryptocurrency that was launched in April 2014 and uses the CryptoNote protocol. It evolved from Bitmonero and, originally, Bytecoin. It obfuscates transactions amounts and sending and receiving addresses by default. This means that transactions cannot be linked to a user or real-world identity.

How does Monero ensure privacy?

Monero uses ring signatures, ring confidential transactions, and stealth addresses to obfuscate the transaction details including the start and end points. XMR coins are also identical and cannot be linked back to their origins using a blockchain explorer.

What is Zcash?

Zcash (ZEC) is a Proof-of-Work cryptocurrency that is capable of private transactions and was released in October 2016. It uses a public blockchain but transactions amounts and sending and receiving addresses remain private. Privacy is optional and does not come as default. It is based on Bitcoin Core’s codebase but uses advanced cryptographic techniques to ensure that transactions are accepted without all the data being visible. The technology behind it is called CryptoNote.

How does Zcash ensure privacy?

Zcash uses a zero-knowledge proof construction called a zk-SNARK to guarantee transactions without revealing all of the data. This allows transactions to be confirmed without the transaction data being revealed.

Monero - key privacy features

  • Ring signatures - Every blockchain transaction has to be signed by a public key. Public keys are pseudonymous and there is a risk the user can be identified. In a ring signature, there are a group of public keys and any one of them can authorise the transaction. This means that the transaction gets signed but the public key does not identify the user.
  • Ring confidential transactions - Monero uses multiple transaction inputs and outputs to hide transactions and ringCTs ensure that no double spending occurs during this process. A ringCT encrypts the amount being sent from one account to another. Only the person receiving the XMR can decode how much was sent. This information is transferred in the ‘ecdhInfo’ part of the transaction. However, nodes need to verify the transaction and can do this using the Pedersen commitments. This allows a node to check that in at least one of the transactions, the amount sent, minus transaction fees, equals the amount received. RingCT also makes sure that the sum of the transactions is greater than 0, ensuring that someone does not use ‘minus’ sums to balance out creating extra coins.
  • Stealth addresses - Random one-time addresses are created for every transaction on behalf of the recipient. The Monero software checks all payments to see if they belong to the recipient and if so, allows them to be accessed. This means that transactions are kept hidden from users apart from the sender and the receiver.

Zcash - key privacy feature

  • Zk-SNARK - A zk-SNARK proof allows nodes to ensure the integrity of the network even though transactions are fully encrypted. They use hashes to prove that the information is correct without revealing the information, proving to the node that the transaction is authentic and accurate. It is worth knowing that the method of randomness in Zcash was determined by a cryptographic ceremony.

Advantages of Monero

XMR are fungible. This means that each coin is exactly the same. For Bitcoin, every coin can be traced back through its entire history and could be identified with illegal activity which may be incompatible with legal requirements for businesses in relation to stolen funds. This doesn’t work for Monero as each coin cannot be tracked back to its origin by using a blockchain explorer.

As transactions are private by default and as more transactions take place, the layers of obfuscation increase. This develops the level of privacy and helps protect transactions from being uncovered. This is a strong advantage because it means the effectiveness of the privacy methods will increase over time.

Advantages of Zcash

There is much more wallet support for Zcash including Ledger and Trezor and there are multiple internet wallets available. This allows for wider adoption as users have more ways to keep their coins secure.

In theory, Zcash has potential for stronger privacy. This is because the encryption software can prove transactions are accurate without supplying the data in a public way. In contrast Monero tries to make it difficult for users to see which is the real transaction but there is a possibility of getting it right.

Disadvantages of Monero

Recently a paper was published that identified flaws in the privacy elements of Monero. Researchers managed to identify a correct transaction 90% of the time even though it was supposed to be unidentifiable. The Monero code has since been updated and this figure has since halved.

Due to its strong privacy features, there is less wallet support for Monero. However, that is a testament to its privacy by default and a positive sign for users interested in privacy. It will need development in this area for it to succeed in the long term.

Disadvantages of Zcash

Zcash uses two different types of address: ‘z’ which are private and ‘t’ which are transparent. Exchanges only use ‘t’ address, main wallet support is for ‘t’ addresses and these addresses result in lower fees. Most users use these transparent addresses making it more obvious which addresses are for private transactions. Furthermore, full privacy is reserved for transactions where both addresses are private. This is quite a serious issue for Zcash as a privacy coin as its private functions are used less and disincentivized.

Conclusion

Both cryptocurrencies use advanced techniques and algorithms to facilitate private transactions. In theory, Zcash has a lot of potential because of the strength of zero-proof transactions. Yet, its privacy elements are not used in the majority of transactions and there are varying levels of privacy depending on whether the sender and receiver are both using ‘z’ addresses. In contrast, Monero’s transactions are private by default which encourages greater use of them and ensures more security over the network. While there are some compromises in the way it achieves privacy, Monero is currently the better privacy coin in light of all.


This article appeared first on Cryptovest

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