Friday, November 27, 2020
Home Decrypt News Gemini Moves to Embrace Zcash’s Full Privacy Potential

Gemini Moves to Embrace Zcash’s Full Privacy Potential

In brief

  • Cryptocurrency exchange Gemini now supports shielded Zcash withdrawals.
  • A shielded withdrawal is a ZEC transaction into a private Zcash address, rather than a transparent Zcash address.
  • The exchange has been looking to add this capability for over two years.

Twins Tyler and Cameron Winklevoss, are very public figures. But the cryptocurrency exchange they founded will soon allow users to keep things a bit more private.

Gemini today announced that it will allow shielded Zcash withdrawals on its exchange.

Though Zcash (ZEC) is known as a privacy coin, it’s really a Bitcoin fork with optional privacy functions. Users can set up private addresses or transparent addresses. For any transaction between two transparent addresses, users can see the addresses and the exact amount sent and received—just like Bitcoin. Private-to-private transactions, by contrast, appear on the blockchain but without the addresses or transaction amounts, which are encrypted.

But what happens when private and transparent addresses interact? 

When a private, shielded address receives funds from a transparent address, the amount sent and the originating address still appear on the public blockchain. But then that data enters something of a black hole. Other people can’t see how much money is in a shielded address—or, indeed, the account address itself.

Gemini uses transparent, t-addresses to store its clients’ ZEC. With this new feature, users can move those funds into a shielded, z-address.

The Winklevoss brothers have a reputation for playing by the book. Whereas some crypto companies left the Big Apple in the mid-2010s rather than submit to the New York State Department of Financial Services’ cryptocurrency regulations, Gemini stayed and scored a charter as a limited purpose trust company in 2015. 

The addition of shielded withdrawals is part of a years-long effort by the brothers to marry regulatory oversight with the privacy capabilities of Zcash. Gemini began listing ZEC in May 2018, claiming, “Our approval makes Gemini the first licensed Zcash exchange in the world.”

At the time, Gemini accepted deposits from shielded and transparent addresses alike, but only allowed withdrawals to transparent addresses. It noted that it was working on allowing shielded withdrawals. Two years later, it’s done it.

“This is an exciting moment for crypto, marking the first time shielded ZEC withdrawals are available on a regulated exchange,” Gemini said in a press release announcing the feature. “It also demonstrates that with the right controls in place and the proper education, regulators can get comfortable with privacy-enabling cryptos.”

Gemini is a fairly small exchange in terms of volume, logging $817 million in trades over the past 30 days, according to data from Nomics, far below Binance’s $274 billion. But it’s a consequential exchange nonetheless, given its founders’ Facebook pedigrees and their willingness to play the long game—that regulators and innovators will meet somewhere in the middle.

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