ZCash
There are so many privacy techniques, lets take a brief look at how each of them works from a higher level, looking at Zcash, Monero, Dash, Mixers (General)
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[00:00 - 00:06] This lesson we are going to look at Zcash. Zcash works by building on top of Bitcoin and adding privacy by using ZK Snox.
[00:07 - 00:16] Zero knowledge succinct, non-arguments of knowledge. In Zcash, there are two types of addresses, transparent addresses and shielded addresses.
[00:17 - 00:26] Intransparent addresses don't offer any privacy and have similar model to Bitcoin. The shielded addresses works by putting the coins in a shielded pool.
[00:27 - 00:42] And once the coins are in the shielded pool, they can be transferred with complete privacy within the shielded pool. And no one finds out any information about the funds or where they have been transferred, who has received them and who was the sender.
[00:43 - 00:50] So the sender, receiver and the amount are all hidden within the shielded pool. Let's look at an example.
[00:51 - 01:09] For example, when Alice wants to send some currency to Bob in Zcash, and if she's using the transparent addresses, it's all public. So you can go and see that Alice actually sent a transaction to Bob and Bob received it.
[01:10 - 01:16] So everything is completely public. But what instead she can do is she can enter into the shielded pool.
[01:17 - 01:35] And if Bob is also in the shielded pool, then she can make a transfer within the shielded pool, which will allow her to hide her privacy. However, in reality, most of the uses of Zcash actually only use transparent addresses.
[01:36 - 01:53] They are classified as Z addresses and T addresses, T for transparent and Z for shielded transactions. And once you are inside the shielded pool, you can make any transfers.
[01:54 - 02:13] And as long as you don't come out of the shielded pool by deshielding, you don't do any privacy. And if you stay in the shielded pool always, then you have the complete privacy and no one finds out anything about your spending and you get complete privacy for that.