Cryptocurrencies, after a decade-long existence, seem to have cemented themselves in the world’s collective consciousness as a legitimate form of currency. While cryptos like Bitcoin have peddled a variety of narratives and perhaps works best as a store of value, many altcoins have emerged to lay claim to niche use cases. The emergence of privacy coins like Zcash and Monero is an example of such a trend.

On the latest episode of the Wolf of All Streets podcast, BullyESQ, Co-founder of Alpha Marketplace and Arrow Privacy Coin, highlighted how privacy coins have precipitated fundamental shifts in the crypto-industry, expanding on how their progress affects present-day AML regulations.

He pointed out that in the case of shielded transactions such as the ones enabled by zk-SNARKs, the form of zero-knowledge cryptography which Zcash is based on, there are quite a few challenges for users and exchanges when its comes to AML compliance and KYC-related regulations. He noted,

“I think exchanges were nervous about the shielded nature of the Z addresses because they didn’t want to inadvertently run afoul of these KYC rules…They were probably nervous about that. So I think it was a combination of the computationally intensive nature of the zk-SNARKs and then sort of enforcement issues related to exchange listings.”

BullyESQ also noted that while shielded transactions are frowned upon from a regulatory perspective as they add a level of anonymity that can enable fraudulent activity, a revolutionary implementation in Zcash as well as in Arrow is the ‘view key.’

“So if you’re in control of the wallet address of a particular wallet for Zcash, and for Arrow, you can view the transactional details related to even shielded transactions. So it’s almost like a master key to be able to view the transactional details.”

This implementation enables the shielded transaction to exist solely between the individual. He elaborated,

” So the idea is…

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