Understanding T-Addresses in Zcash
Another notable cryptocurrency that emphasizes full anonymity is Monero (XMR).
By default, transactions on public blockchains like Bitcoin (BTC) or Ethereum (ETH) are fully transparent.
Although addresses are not directly linked to personal identities, anyone can see the sending and receiving addresses, as well as the exact amount transferred, for every transaction on the network.
This transparency has led to the emergence of blockchain forensics, which has made it easier to associate real individuals with their cryptocurrency transactions.
Balancing Privacy and Transparency
In response to the privacy concerns stemming from this loss of anonymity, several cryptocurrencies have surfaced that employ cryptographic technologies to enable increasingly anonymous transactions without compromising the transparency of public blockchains.
Zcash is one such cryptocurrency that leverages zero-knowledge proof (ZKP) technology, allowing one party to confirm the occurrence of an event, such as a blockchain transaction, without revealing any other information.
However, fully anonymous transactions are not always desirable in every scenario.
To address this, Zcash utilizes two types of addresses that are fully interoperable: z-addresses (private) and t-addresses (transparent).
Striking the Balance
When users wish to conduct a transparent transaction, perhaps for auditing or compliance purposes, they utilize a t-address.
Transactions made with t-addresses appear as if they were conducted on a fully public blockchain.
In contrast, z-addresses are completely anonymous, with the only publicly known information being that a transaction has taken place, while the sending and receiving addresses and the amounts transferred remain secret.