ZEC, the powering token for the Zcash ecosystem, fell 5% on Tuesday after the network’s Ironwood upgrade went live.

Zcash locks its biggest private pool on Tuesday when the Ironwood upgrade goes live at block 3,428,143. Your coins stay safe, but you will only be able to move money out of that pool, not inside it. The pool holds 3.76 million ZEC, worth about $1.89 billion, or roughly 22% of all ZEC in circulation. Developers say most holders do not need to do anything today.

What Changes for ZEC Holders on Tuesday

Do not rush. Your balance stays safe inside the locked pool. Your old address keeps working, because the new pool reuses it.

Wallets are still building the tool that moves your funds. Until yours is ready, that balance may look stuck.

Node operators have a real deadline. They must install the Zcash Foundation’s Zebra 6.0.0 release before Tuesday. It sets the switch-over point.

Some exchanges may pause deposits or withdrawals. Developers say that means the exchange is behind, not that Zcash is broken.

The new pool also adds a quantum safeguard from ZIP 2005. If quantum computers ever break today’s crypto math, funds in the new pool could be rescued. Coins left in the old pools could not. This is not full quantum protection yet.

The One Mistake That Can Expose Your Balance

Moving money out of the old pool is public. Anyone can see the amount. Nobody can see who sent it or who received it.

That sounds safe enough. There is a catch. Your wallet talks to a server, and that server sees your IP address.

Put the two together and someone can tie your balance to you.

“So for every user, the number one most important issue is having network-level privacy (i.e. Tor or Nym) before migrating,” Zooko Wilcox founded Zcash and wrote the project’s user guidance.

His advice is short. Turn on Tor or Nym first. Then wait until your wallet maker says it is safe to move.

He also warned about scammers. Some are already pretending to be Ironwood migration support.

Why Zcash Is Locking the Old Pool

A researcher found a bug in May. Taylor Hornby works for Shielded Labs. He spotted a flaw in the math that proves Orchard payments are real.

The bug could have let someone print fake ZEC. Nobody would have noticed.

ZODL, the Zcash Open Development Lab, patched it within days. ZEC still dropped more than 30%. It fell as low as $385.80 once the counterfeiting bug went public.

Then came the harder problem. Orchard hides every amount. So nobody could prove that no fake coins were ever made.

Ironwood fixes that. Money can now leave the old pool only through the turnstile. The turnstile is a counter. It never lets more ZEC out than went in.

Fake coins, if any exist, are stuck inside forever.

“However, rather than merely asking users to migrate away from a deprecated pool, we are effectively forcing wallets to conduct Orchard transactions in the new pool,” Sean Bowe and Dev Ojha wrote that in a joint statement from Project Tachyon and Valar Group.

Outside auditors and formal verification work back the fix.

Zcash Had This Exact Problem in 2018

This is the second time. In March 2018, cryptographer Ariel Gabizon found a fake-coin bug in Sprout, Zcash’s first private pool.

The company kept it quiet for 11 months. It slipped the fix into the Sapling upgrade that October. It only published the full story in February 2019.

That fix stopped new fake coins. It could not prove old ones were never made. Sprout was simply closed and left behind.

Eight years later, 22,747 ZEC still sit there. Nobody has ever broken the turnstile. That silence is now the best proof nothing was faked.

Ironwood learns from that. It does not ask people to leave the old pool. It gives them no reason to stay.

What to Watch Over the Next 30 Days

You can now watch the move happen. ZODL’s dashboard shows funds leaving Orchard block by block.

If people move slowly, a big chunk of private ZEC sits unusable. If everyone moves at once, the supply check gets stronger but privacy gets thinner.

Source: BeInCrypto