Earn up to 12% APY on Bitcoin, Ethereum, USD, EUR, GBP, Stablecoins & more.

Start Earning Interest
Ad: Bybit - Join the Bybit community and claim up to $600 in rewards. #NextLevelTrading Learn more

This crypto forensic firm will now trace Zcash transactions, notes Dash privacy is akin to Bitcoin

This crypto forensic firm will now trace Zcash transactions, notes Dash privacy is akin to Bitcoin

Photo by Markus Spiske on Unsplash

Bybit Welcome Bonus: Up to $600 in Rewards

Ever since crypto-crimes and criminals using Bitcoin and other cryptocurrencies to launder money became a thing, the field of crypto-forensics has come up as an unlikely โ€œevil good.โ€

The field has, somewhat, proven most cryptocurrencies are not fully private as previously imagined. A userโ€™s transactional behavior can be mapped and worked backward to provide personal identities of the owners of suspicious crypto wallets or transactions.ย 

Chainalysis has emerged as the top contender in the crypto-forensics space, with their solutions targeted at governments, crypto institutions, and private agencies for insights into cryptocurrency transactions and to develop anti-money laundering mechanisms.

Now, the firm is moving ahead to track Dash and Zcash transactions โ€” two of the largest privacy protocols that made use of various security features. Zcash uses the innovative zk-Snarks framework in its protocol to mask transactions and protect identities.

What privacy?

Chainalysis, the 2014-founded, New York-based firm announced on June 8 its foray into investigations and compliance support for Dash and Zcash:

A blog post on the subject noted users do not implement the privacy features available on both Dash and Zcash, with Chainalysis even calling the privacy on Dash a โ€œmisnomerโ€ and no better than currently-used โ€œmixingโ€ services like CoinJoin.

For Dash, Chainalysis noted the protocol sends all requested transactions into a bigger โ€œpool,โ€ making it difficult to connect input addresses with the output. However, this occurs only when a user selects the โ€œPrivateSendโ€ feature โ€” which is technically similar to any other cryptocurrency using CoinJoin โ€” with all โ€œnormalโ€ Dash transactions being unmixed by default.

Only 9 percent of all Dash transactions use the PrivateSend feature. Chainalysis adds:

โ€œ(This) is larger than the share of Bitcoin transactions that use CoinJoin or mixing techniques, but is still a relatively small and declining percentage of Dash transactions.โ€

Users donโ€™t have to use the output of these mixing transactions to perform a PrivateSend transaction. Instead, they can opt to use them with non-mixed funds. The percentage of Dash transactions that constitute actual transfers of funds using PrivateSend is less than 0.7 percent.

Addressing any potential โ€œFUDโ€ stemming from the Chainalysis report, Dash Core Group CEO Ryan Taylor noted user privacy is still intact if PrivateSend is used. He tweeted in the regard:

Zcash emerges “stronger”

Chainalysis said only 14 percent of all transactions used one of Zcashโ€™s two shielded pools โ€œin some way.โ€ However, only 6 percent of those were completely shielded, meaning all input and output data is encrypted.

The metric represented only 0.9 percent of all Zcash transactions, Chainalysis noted.

However, the firm points out Zcash is โ€œstrongerโ€ due to its zk-SNARK encryption. Regardless, transaction values and โ€œat least one addressโ€ for over 99 percent of ZEC activity can be recorded by Chainalysis, the firm claimed.

CryptoSlate reached out to the Electric Coin Company, which oversees Zcash development, for comments on the topic. The firm referred:ย 

ECC further noted the Zcash protocol has inbuilt features to ensure users utilizing shielded addresses get the “strongest protection against data leakage,” while exchanges get “easy” deployment and regulatory compliance.

Meanwhile, Jonathan Leto, an independent developer whoโ€™s previously worked on Bitcoin Core and Zcash as a contributor, expressed on Twitter about the apparent lack of privacy:

Get an edge on the cryptoasset market

Access more crypto insights and context in every article as a paid member of CryptoSlate Edge.

On-chain analysis
Price snapshots
More context
Join now for $19/month Explore all benefits
Posted In: , , Privacy
Bybit Welcome Bonus: Up to $600 in Rewards

Like what you see? Subscribe for updates.