How Zcash (ZEC) Shielded Pools Work

This is a clip from our Chain Chatter podcast where we bring guests from across the crypto space to talk about the industry.

In this clip, Pacu from Zcash explains how ZEC Shielded Pools work.

Zcash is a privacy-focused cryptocurrency based on Bitcoin's codebase and shielded pools allow users to essentially hold a "claim" on ZEC without revealing their address, the amount they claim, etc.

Shielded Pools are a fascinating innovation and they allow users of ZEC to decide when they want to transact transparently versus transact with their privacy shielded from the transparent ledger.

The beauty of this pool design is that you know exactly how much ZEC is in the total pool but you don't know how many addresses claim their portion of that pool.

For example, you could have a shielded pool with 1,000 ZEC and 100 addresses each claiming 5, 10, 15 or any amount of ZEC from that pool. You can see onchain that there is 1,000 ZEC in this pool but you cannot see how many addresses have a claim on that ZEC and you also can't see how much each address can claim.

This allows people to transact in a shielded way and protect their privacy. In the real-world, we have cash and we have bank accounts. Sometimes, people want to transact with cash. Sometimes they want to use a debit or credit card. The key is that the person gets to decide how they want to transact and transacting with another person doesn't mean they get to see your whole bank balance.

Thinking about it with that mental framework is a great lens into why shielded pools matter. For example if you send someone ETH, they can see your entire ETH Address's holdings. That'd be like Venmo'ing some money to a friend and they get to see your entire checking account balance. With Shielded ZEC, you're able to send ZEC to your friends without revealing your "bank balance".

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