The Crypto Privacy Debate: Zcash vs Monero


The Crypto Privacy Debate: Zcash vs Monero


Contrarily to popular thinking, Bitcoin is NOT the currency of choice of criminals. At least, not for criminals who've taken the time to understand Bitcoin. Every transaction recorded on the Bitcoin blockchain can be seen by literally anyone, making it much more traceable than using fiat money, for example. People wanting to make transactions anonymously can choose to use privacy-focused cryptocurrencies. The two most advanced are Zcash (ZEC) and Monero (XMR). If the anonymity of your transactions is fundamental to you, which cryptocurrency should you use: Zcash vs Monero?

Technology


Let's first look at the differences between the technologies of the two cryptocurrencies. Both offer privacy but they do so in a different way.

Monero


Monero uses old, well studied cryptographic layers to hide the source of funds:

  • Ring signatures: this hides where the money comes from by hiding spent inputs in a transaction among others that also appear to be spent. Therefore, no one knows which sources are actually spent.
  • RingCT: this hides the value amount of a transaction.
  • Stealth addresses: this hides where the money goes to by allocating certain outputs to these addresses so outside observers do not know which addresses these belong to.
The major advantage of Monero over Zcash is that all transactions are private by default.

Zcash

Zcash has two kinds of addresses:
  • "t": transparent addresses (just like Bitcoin addresses)
  • "z": private addresses
Zcash uses a whole different technology. It uses a zero-knowledge proof construction called a zk-SNARK. This hides the identity of both the sender and the recipient as well as the amount of the transaction. The transaction metadata is encrypted, zk-SNARKs are used to prove that nobody is cheating or stealing.

Transaction fees using "t" addresses are lower so exchanges usually use these. Because the privacy is optional on the network, this reduces privacy of all users in the network. Indeed, transparent transactions will divulge what may be sensitive information to observers.

Another thing to consider is the physical location which refers to the IP address of the node that first received the transaction. This is a way that people involved in the transactions could be traced. Monero is funding the Kovri project to solve this problem eventually and it will be by default for all users.

On the other hand, transactions of Zcash could be traced by a combination of "t" address info, IP addresses info, transactions coming in and out of exchanges and other available data.

Distribution


The way a cryptocurrency is distributed is always a major concern for any coin and with good reason. Monero was launched in April 2014, it had no premine, no ICO, no presale. All minted coins are distributed to miners.

In the case of Zcash, the major difference is that 80% of the coins goes to miners and 20% goes to the founders. This is a very controversial theme for Zcash, do the founders really need this 20%? There was also a presale before the launch in October 2016.

Mining


Both of these cryptocurrencies use a proof-of-work consensus algorithm. Both communities seem to want to avoid having ASICs miners on their network. Bitmain has recently announced the availability of the AntMiner Z9 mini, an ASIC made for mining Zcash. This debate is being discussed within the community but Zooko, Zcash Company's Chief, has shown ambivalence toward ASIC resistance. He wants to know the point of view of the community but he is not sure that ASIC resistance is the way to go.

On the other hand, the Monero community has always been against ASICs to avoid centralization. The reason of the last fork, on April 6th 2018, was to change the mining algorithm and counter the new Antminer X3 developed by Bitmain that was specifically made to mine Monero.

Conclusion


To sum up, both cryptocurrencies have their own advantages and disadvantages. Put simply, Zcash provides a best theoretical solution yet to be proven and Monero provides a more secure solution as of now. If you want to get exposure to the privacy-related sector of crypto, I think it would be smart to consider holding both in your portfolio.

Posted from my blog with SteemPress : https://satoshi.blog/2018/06/19/the-crypto-privacy-debate-zcash-vs-monero-zec-xmr/

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