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How Zcash Can Fill Ethereum's Privacy Gap

How Zcash Can Fill Ethereum’s Privacy Gap PegaSys’ R&D discusses how Ethereum can use Zcash’s breakthrough Sapling release.

Crypto enthusiasts want to tokenize everything, but that’s tricky with Ethereum’s current privacy model. “Privacy” for blockchains is a catch-all and earlier this year, I wrote a primer about the variety of privacy approaches for the decentralized web. While Ethereum 2.0 focuses on scalability and proof of stake, there is a growing demand for privacy on private networks. Many projects can’t realistically take off if transactions are visible to all participants.

The privacy problem is two-fold:

How do we privately transfer a “token” between parties? That is, how do we keep the sender, recipient, denomination, and value of the token hidden, yet guarantee mass conservation (no double-spend) and transaction graph confidentiality (unlinkability and untraceability of transactions)? If this transfer is private, how can validators (i.e the blockchain) publicly enforce business logic on it?

Ethereum is a great platform on which to implement many use cases. Voting, supply chains, compliance checks, financial products, and so much more can all be codified into smart contracts. Simple logic is straightforward: you can write rules like “if amount is bigger than constant, provision 20% taxes”. Now, if “amount” is hidden by a privacy-preserving scheme, implementing such a rule is much less intuitive, and there is no framework to do that, yet.

We need such a framework to enable accountable privacy. In other words, one wants both the goodness of the blockchain (decentralized consensus, cryptographic authenticity) and strong privacy-preserving techniques to allow confidential business deals while permitting audit and compliance checks.

I believe marrying the Zcash protocol with Ethereum is a great way to BUIDL that. Quorum ZSL (zero knowledge security layer) is a fork of Quorum (Oct 2017) which is implementing ...

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