Chainalysis says it can track 99% of transactions involving Zcash, and almost all of Dash’s – coins that both fancy themselves as private and untraceable.
Now, that’s because the majority of users do not utilize the optional privacy-enhancing features available on the two blockchains, it said in a June 8 blog, announcing support for the two cryptocurrencies.
By tracking the privacy coins – digital assets whose primary purpose is to hide financial transactions from unwanted attention – Chainalysis has made it easy for law enforcement agencies to do the same.
“Dash and Zcash allow users to conduct transactions with greater privacy, but that doesn’t mean they provide total anonymity,” asserted the U.S.-based crypto analysis company.
For example, only 0.9% of transactions processed on the Zcash (ZEC) network allow for maximum privacy, even with enhanced cryptography.
“…even though the obfuscation on Zcash is stronger due to the zk-SNARK encryption, Chainalysis can still provide the transaction value and at least one address for over 99% of Zec activity,” said the firm.
On Dash, Chainalysis is more ruthless. It says calling the cryptocurrency “a privacy coin is a misnomer.”
The percentage of Dash transactions that constitute actual transfers of funds using Privatesend, the asset’s privacy feature, is less than 0.7%, the company found.
“…from a technical standpoint, Dash’s privacy functionality is no greater than Bitcoin’s…In fact, independent wallet software provides more advanced forms of Coinjoin that are being used with major cryptocurrencies not labeled as privacy coins, such as bitcoin, bitcoin cash, and litecoin,” it states.
This is not the first time that privacy coins have been debunked. Researchers from Carnegie Mellon University have found that 99. 9% of Zcash and 30% of Monero – another so-called privacy coin – transactions were traceable.
Moreover, the majority of Dash and Zcash usage is already for non-privacy purposes. According to studies by the Rand Corporation, of the cryptocurrency addresses mentioned on the dark web, less than 0.2% were for either of the two virtual currencies.
Dash and Zcash account for roughly $1.5 billion of reported daily trading volume. Dash dropped 0.36% to $77.78 over the past 24 hours and Zcash fell 0.68% to $52.10, according to data from markets.bitcoin.com.
What do you think about privacy coins not being private? Let us know in the comments section below.
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