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Explaining viewing keys – Electrical Coin Firm

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Viewing keys, detailed in ZIP 310, allow the separation of spending and viewing permissions for Zcash shielded addresses. By making a separate viewing key, Zcash customers can share visibility of the transactions despatched and acquired from their shielded deal with with out compromising their personal spend key. This functionality was added to the protocol within the Sapling community improve, and RPC help was launched in model 2.1.2.

Shielded addresses enable Zcash customers to transact whereas revealing as little info on the general public blockchain as attainable. This protects customers’ privateness from dangerous actors and enterprise rivals. There are cases; nevertheless, the place it’s essential to reveal some info to a 3rd occasion, resembling for audit or compliance functions. 

Viewing keys are a crucial element of the Zcash worth proposition as a result of they permit customers to selectively disclose details about their transactions.

For shielded transactions in Zcash, viewing keys are derived immediately from a person’s spending key. There is no such thing as a central authority that controls entry to viewing keys. As soon as a viewing secret is created, it may solely be obtained from somebody who holds it. When you don’t give your viewing key out, then nobody can entry it with out your participation. 

The Zcash protocol is designed with two options to help the disclosure of knowledge:

  • Viewing keys present visibility into the transaction worth, memo subject, and goal deal with of all transactions acquired by or despatched from a particular shielded deal with.
  • Cost disclosure supplies related visibility for a single transaction. It’s a technique of proving {that a} cost was despatched to a shielded deal with, with out revealing all the transactions despatched to/from that deal with.

These options allow homeowners of a shielded deal with to share transaction visibility in a safe and confidential method. For cryptocurrency service suppliers, this implies the power to confirm transactions to/from shielded addresses, whereas preserving spending authority keys on safe {hardware}, resembling HSMs.

Viewing key use circumstances

Viewing keys allow quite a lot of industrial use circumstances for Zcash that help fully personal z-to-z transactions. A service provider may share their cost deal with viewing key with their accountant to trace gross sales income; or a charity might publish their viewing key to confirm contributions for donation matching. 

Contemplate the next examples:

  • An trade needs to detect when a buyer deposits ZEC to a shielded deal with, whereas preserving the “spend authority” keys on safe {hardware} (e.g., HSMs). The trade might generate an incoming viewing key and cargo it onto an Web-connected “detection” node, whereas the spending key stays on the safer system.
  • A custodian wants to supply visibility of their Zcash holdings to auditors. The custodian might generate a full viewing key for every of their shielded addresses and share that key with their auditor. The auditor will have the ability to confirm the steadiness of these addresses and evaluation previous transaction exercise to and from these addresses. 
  • An trade might have to conduct due diligence checks on a buyer who makes deposits from a shielded deal with. The trade might request the shopper’s viewing key for his or her shielded deal with and use it to evaluation the shopper’s shielded transaction exercise as a part of these enhanced due diligence procedures. 

Implications for Zcash

Viewing keys assist guarantee Zcash stays on the forefront of regulatory compliance by offering a mechanism by which exchanges and custodians can settle for shielded deposits whereas preserving shielded ZEC in safe chilly storage. Viewing keys enable sharing visibility of shielded transactions with auditors and, the place acceptable, with regulators. This ensures Zcash customers have privateness from criminals and dangerous actors, however that exchanges and different digital asset service suppliers can stay absolutely compliant whereas supporting shielded addresses.

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