The Crazy Security Behind the Birth of Zcash, the Inside Story

“How would you feel about donating your phone to science?”

When Zooko Wilcox posed this question to me in October, what I heard was: Can I take your phone and hand it over to a hacker to riffle through its contents and sniff all over your data like a pervert who’s just opened the top drawer of a lady’s dresser?

At least, that’s how it felt.

“I think I’d rather donate my body,” I said.

What Wilcox really wanted to do with my phone was to run forensic analysis on it in the hopes of determining whether someone was using it to spy on us. Wilcox is the CEO of a company called Zcash which designed and recently launched a new privacy-preserving digital currency of the same name. On the weekend he asked for my phone we were both sitting with a two-man documentary film crew in a hotel room stuffed with computer equipment and surveillance cameras.

A secret ceremony was underway. Before the company could release the source code of its digital currency and turn the crank on the engine, a series of cryptographic computations needed to be completed and added to the protocol. But for complex reasons, Wilcox had to prevent the calculations from ever being seen. If they were, it could completely compromise the security of the currency he had built.

Over the course of the two-day event, everything went pretty much as planned. Everyone and everything did just what they were supposed to do, except for my cellphone, which in the middle of the event exhibited behaviors that made no sense at all and which planted suspicions that it had been used in a targeted attack against the currency.

The story of Zcash has already been roughly sketched by me and others. The currency launched 28 October onto the high seas of the cryptocurrency ecosystem with a strong wind of hype pushing violently at its sails. On the first morning that Zcash existed, it was trading on cryptocurrency exchanges for over US $4000 per coin. By the next day, the first round of frenzied feeding had subsided and the price was already below $1000. Now, a month later, you’ll be lucky if you can get $100 for a single Zcash coin. Even in the bubble-and-burst landscape of cryptocurrency trading, these fluctuations are completely insane.

Some hype was certainly warranted. The vast majority of digital currencies out there are cheap Bitcoin imitations. But the same cannot be said of Zcash. The project, which was three years in the making and which combines the cutting edge research of cryptographers and computer scientists at multiple top universities, confronts Bitcoin’s privacy problems head on, introducing an optional layer of encryption that veils the identifying marks of a transaction: who sent it, how much was sent, who received it. In Bitcoin, all of this data is out in the public for anyone to see.'''

Source: http://spectrum.ieee.org/tech-talk/computing/networks/the-crazy-security-behind-the-birth-of-zcash