Research firm Chainalysis claims that tracking Zcash and Dash transactions is now possible. Furthermore, he alluded to the fact that the name of privacy cryptocurrencies It no longer goes with these coins.
Recently the intelligence and analysis company Chainalysis published a release. In which it reveals that it can track private transactions made with the Zcash and Dash cryptocurrencies. He also pointed out that these two cryptocurrencies, which are among the most important and popular for user privacy, will be included in their security protocols. GATS y Chainalysis Reactor. What are protocols? Know your Transaction and with which the transaction movements carried out within the web and the darknet can be identified.
Likewise, the Chainalysis report indicates that Zcash and Dash mobilize around 1,5 billion dollars in daily transactions. Therefore, the firm focuses on the analysis of these two cryptocurrencies. In order to detect illicit activities that may try to camouflage themselves through transactions with these assets.
Likewise, Chainalysis ensures that its professional investigators can track these types of transactions. But it also points out that they will do so in such a way that a balance can be maintained between the users' need for privacy and the authorities' need to comply with the law.
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How Chainalysis makes Zcash and Dash tracking possible?
In response to this, the intelligence firm ensures that the privacy features of the Zcash and Dash cryptocurrencies depend on the way they are used. Thus, although these cryptocurrencies have qualities to hide data in transactions, they do not work if users do not use them appropriately.
So it is through these “errors” of use that transactions can be traced by the firm's investigators. To the point of ensuring that they can track the operations carried out in the same way as they would be done within the blockchains of Bitcoin, Ethereum or any other cryptocurrency with a public blockchain.
“That is an oversimplification as it fails to understand the privacy features that currencies like Dash and Zcash offer and how users actually use those features in everyday transactions.”
Analysis of Dash privacy functions
In the case of Dash, Chainalysis pointed to the privacy feature of this asset (PrivateSend). Arguing that it does not fulfill a better function than mixer services like CoinJoin.
“It is possible to make mixed transactions that are functionally identical to PrivateSend in other technologically similar cryptocurrencies. This means from a technical point of view, Dash's privacy functionality is no greater than Bitcoin's. Which makes that “privacy coin” label a misnomer for Dash".
Even highlighting that calling Dash a privacy cryptocurrency is a bit of a misnomer.
Following these statements, the intelligence firm points out that even other software provides users with better forms of privacy than those provided by mixers. Pointing to Bitcoin, Bitcoin Cash and Litecoin as some of the cryptocurrencies that use these implementations.
Likewise, the analysis of Dash's privacy functions ends by pointing out that PrivateSend is used because it does not charge commissions for its services. Which is considered an advantage for users.
Analysis of Zcash privacy functions
In reference to Zcash, Chainalysis notes that it cannot track Zcash transactions as such. Although you can track user activities within the platform. Especially those who do not properly use the privacy functions.
“As we noted above, the privacy features of Dash and Zcash are optional and can be used at the discretion of each individual transaction. Therefore, real-world use of those privacy features makes a big difference in the functional privacy level of each coin.”
It should be noted that Zcash uses top-level cryptographic techniques to guarantee privacy in transactions. Therefore, it keeps the addresses involved in each transaction encrypted. This is possible thanks to the implementation of zero-knowledge protocols, also known as Zero Knowledge Protocol (ZKP).
Thus, although Chainalysis claims that it cannot fully track transactions that use this protocol, it can track a significant percentage that use it incorrectly.
“So although obfuscation in Zcash is stronger due to zk-SNARK encryption, Chainalysis can still provide the transaction value and at least one address for over 99% of ZEC activity.”
Finally, the report indicates that users will be able to continue using these cryptocurrencies to carry out private transactions, but that they will not be 100% anonymous. Likewise, he pointed out that the integration of these currencies into the KYT and Chainalysis Reactor protocols is done with the purpose of continuing to guarantee the legal use of these cryptocurrencies. Which until now are mostly used by legitimate companies and users. According to one research made by the RAND corporation, where it points out that less than 0,2% of Zcash has been used on the darknet.
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