Twitter User Cracks Zcash’s Zero-Knowledge Proof

A Twitter user appears to have cracked Zcash's privacy code making it's zero-knowledge proof capability openly challenging on the social media.

By · Jul 20, 2020 . 9min read

Privacy issues again come to the forefront as a Twitter user appears to have cracked Zcash’s privacy code making the privacy coin’s zero-knowledge proof capability openly challenging on the social media.

It all started with a tweet from the Electronic Frontier Foundation – EFF. It describes itself as a defender of civil liberties in a digital world which claims to have set up a Zcash address to accept funds and donations. A Twitter promptly responded with an unpleasant remark asking EFF to drop support for Zcash. Accompanying his claim, he posted a Cointelegraph post of how Chainalysis easily traces and cracks Zcash transactions.

Another user by the handle MoneyKnowledge0 decides to set up a challenge. He challenges anyone to track and trace a Zcash transaction he just made by posting his transaction ID.

Apparently, another Twitter user who has been following the thread responded by posting MoneyKnowledge0’s transaction address. Startled, the latter asked the poster how he was able to crack Zcash’s zero-knowledge proof.

Privacy has become a hot button topic everywhere today with surveillance from government increasing by the second. Many digital enthusiasts see cryptocurrencies as a safe haven. They see it as an avenue to keep their privacy intact from government and corporations. Many of these constantly harvest unimaginable treasure trove of data from it’s users.

Turning to cryptocurrencies is still not a guarantee especially with the transparency blockchain and it’s decentralized ledger grants users. Transacting in bitcoin, for example, is still not a guarantee as your transactions can be traced easily. Twitter’s recent hack shows this with how Chainalyis and other crypto tracers track the hacker’s addresses.

Mixed reactions from the cryptocurrency community

Due to this, A large swathe of concerned cryptocurrency users is calling out Zcash for this flaw. Many are claiming this isn’t possible with Monero, another privacy coin.

A subreddit post has also attracted a lot of reactions to this event. Some are claiming the zk – SNARKS a technical term for Zcash’s zero-knowledge proof hasn’t been cracked. They claim only the allowable transparent part for any of such transaction is compromised.

Zcash even though a privacy coin allows some parts of it’s transactions to be transparent. It implements a z-address and t-address for every transaction it facilitates. A z-address is a fully private address that uses the zero-knowledge proving system to shield a transaction and balance privacy. On the other hand, we may interpret a T-address as “transparent address”. It is similar to a Bitcoin address. As we know, Bitcoin transactions through it’s originating address are traceable. A quick look at Zchain explorer shows this.

The chart speaks for itself as Zcash shields only a tiny part of any transaction. The argument, therefore, remains, even if the shielded components of any transaction are small, it should be enough to ensure complete anonymity.

Some other concerned cryptocurrency enthusiasts are accusing Zcash of intentionally colluding with tracers like Elliptic or Chainalysis by designing their privacy protocol to be the way it is. This makes it easy for cracking and therefore protect users who are keen on protecting their privacy.

If zk-SNARKS are successfully cracked, then a whole lot more quarters and not just cryptocurrencies should be concerned

This should be of serious concerns to every other industry that depends on encryption to thrive. Zero-Knowledge Proof is a set of tools that allow anyone to validate an item of information without the need to expose the data that demonstrates it. Because we live in an age of increasing data we need zk-proof for the proper functioning of IoT (Internet of Things) or even a fraud prevention system that may require a user’s age. If zk-proof is no longer solid, then there may be a huge problem at hand.

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