Our ZCash Wallet uses many techniques to improve your privacy. One way this is done is using the Tor network. All wallet connections are routed over the Tor onion network which greatly increases privacy. Using ZCash without Tor will severely reduce your privacy due to meta analysis.

What is meta analysis and how does it reduce ZCash privacy?

Meta analysis is the use of non-blockchain data to help deanonymize a transaction. In this case, the primary metadata is 1) IP Addresses associated with each wallet 2) Transparent addresses associated with each wallet. Using these two data points it becomes easier to deanonymize many transactions. Shielded transactions provide a lot of privacy. However, privacy can be reduced by using meta analysis.

What is an example of meta analysis reducing ZCash privacy?

For example, when you connect to a ZCash server, then that server knows your IP address. If that IP address is your residential or another address connected to you, then it effectively knows your identity.

In addition to your IP address, that server knows every Transparent address associated with your wallet. So, let's pretend you connect with your residential IP address on day 1 and you connect over a VPN IP on day 2. By using the fingerprint of your Transparent addresses that server can conclude your VPN IP is associated with your Residential IP.

Now, let's pretend you send funds from a shielded address and you even did this from a very secrete Public Wifi IP. Due to your prior connections with a wallet with the same Transparent addresses from your Residential IP, then your Residential IP can be associated with this transaction even tho it does not involve any Transparent address. In addition, the server knows what time you sent the transaction, what block it was confirmed in, and if the receiver is a Transparent address then it likely knows who you conducted business with.

How to reduce meta-analysis and improve privacy?

The ZCash Wallet improves privacy by reducing metadata analysis. It does this by routing all wallet connections over the Tor network. The Tor network is an anonymization network that routes traffic through multiple other nodes before reaching it's destination. The result is that the receiver does not know your original IP address. Due to this there is no way to associate a wallet with a specific IP address and therefore your identity.