Mining pool censorship could make Zcash "mostly unusable"

Published on by Cryptoslate | Published on

There is evidence that the second largest Zcash mining pool is censoring shielded transactions.

If more pools begin censoring shielded transactions it would make the privacy coin "Mostly unusable," according to one analysis.

Lev Dubinets, a former software developer at AWS, noticed that F2Pool-the second largest Zcash mining pool, which controls 18 percent of the network hashrate-has been censoring private transactions since April 2017.

According to Dubinets, out of more than 86,000 shielded transactions year-to-date F2Pool only mined 120 of them.

Given the pool's hashpower it should have mined roughly 15,000 shielded transactions.

These numbers indicate that F2Pool is likely opting not to mine shielded transactions.

Reuben Yap, the COO of privacy coin Zcoin, theorizes the choice could stem from fundamental challenges related to processing shielded transactions.

"My initial guess was that F2Pool engineers determined that not processing shielded transactions gave them some advantage in mining blocks. Or that it was something to do with not wanting to deal with the complexities of verifying the zk proofs. Wang Chun's recent post on Twitter indicates it to be the latter".

If additional pools censor shielded transactions it would make Zcash "Mostly unusable," as said by Dubinets.

"There are two approaches which privacy coins take, one is to have privacy opt-in and the other to have privacy on by default. Although an incident like this is an argument to have privacy on by default to make it difficult for miners to censor transactions, there are many other considerations at play. For example, allowing transparent transactions allow easier adoption in many ecosystems such as exchanges and wallets and also can serve to allow traceability where required giving the coin more utility. ZK-proof privacy systems also do not suffer as much as decoy based privacy systems when privacy is opt-in since the anonymity set is always increasing," said Yap.Potential fixes.

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