Ok so we’re all here, or at least, a good chunk of us, because of the anonymity features. However there’s on thing that is bothering me. Given the nature of this project, in certain situations this can be good but also bad.
No one will be able to check funds arriving at exchanges - which is by itself one of the objectives of this project - meaning exchanges can easily frontrun the market without anyone else ever knowing.
If someone makes a deposit of a large amount of coins, odds are that person will most likely dump. However with this and the exchange being the only one aware of the transaction, it can easily manipulate the market. The user who deposited is, we assume, protected and happy since the Zcash protocol did its job and no one knows he sent the coins. However the recipient can easily manipulate the whole market, (ie, dumping before).
Imo, privacy and anonymity are priceless, but this has the potential to scale and turn out to be a serious problem, if we assume the worse happens. Will it be worth using it then?
I like to believe exchanges don’t have teh incentive to take this to the extreme and completely ruin things (ie 100 worth of Zcash being worth 5 the day after, even though it could also happen without the exchange front running) but this is a scenario that can easily happen and the issue here is no one can be held accountable.
I believe a solution could be exchanges accepting anonymous transactions but keeping their own ledger open to the public, like cold and hot wallet amounts? And then users could migrate to those exchanges as they see them as fair? Still it’s easy to trick people as there might be one other wallet no one is aware of for example.
What do you think about this situation? I think it’s in everyone’s best interest not to do this but Gox happened.