Chainalysis will track "anonymous coins" Zcash and Dash
Chainalysis, a blockchain analysis company, will track “anonymous coins” Zcash (ZEC) and Dash (DASH). The company announced this on its blog on June 8.
Chainalysis notes that it can track the vast majority of transactions in these cryptocurrencies, since most users do not use the privacy features in Zcash, and Dash cannot be called an anonymous coin at all:
PrivateSend in Dash splits funds into standard denominations: 10, 1, 0.1, 0.01, or 0.001 DASH. These funds are then sent to the mix transaction, where all inputs and outputs have the same denomination. The user receives the same amount of Dash back, which is mixed with the money of other users in PrivateSend.
Similar PrivateSend transactions are possible in other cryptocurrencies. This means that from a technical point of view, the level of confidentiality of Dash is not higher than that of bitcoin, therefore it is incorrect to present Dash as an “anonymous coin”. In fact, individual wallets support more advanced forms of CoinJoin and are used in cryptocurrencies that are not positioned as “anonymous coins” - Bitcoin, Lightcoin and Bitcoin Cash.
Dash Core Group CEO Ryan Taylor said: “Dash offers users highly sensitive transactions because privacy is important for mass adoption of cryptocurrencies, and it is the end users who value this functionality. At the same time, Chainalysis is a leading blockchain analysis company, the services of which are used by financial organizations that need to strike a balance between ensuring the confidentiality of user data and regulatory requirements. This contributes to the safe use of cryptocurrencies and provides access to traditional financial markets, so I'm glad that Chainalysis decided to add Dash to its platform. ”
Zcash cryptocurrency should theoretically provide a high level of user privacy, but, according to Chainalysis, only 0.9% of cryptocurrency transactions are completely anonymous: “Thus, even though obfuscation in Zcash is stronger due to zk-SNARK encryption, Chainalysis can "still provide the transaction amount and at least one address in more than 99% of ZEC transfers."
On Twitter, Electric Coin Company, a developer at Zcash, commented on Chainalysis's statement:
“Zcash allows users to select addresses in Bitcoin (“ transparent ”) or privacy-protecting (“ secure ”) addresses. Transparent addresses work like bitcoin transactions, which are also tracked by Chainalysis. Users of Zcash secure addresses get more reliable data protection compared to any other cryptocurrency that exists today. Chainalysis cannot track addresses unless the user allows Chainalysis to view transaction data using its own view key (“selective disclosure”).
At the same time, transparent Zcash addresses allow listing Zcash on exchanges. Some of the world's most regulated exchanges, such as Gemini and Coinbase, support Zcash, fully complying with all of their regulatory and banking requirements. This regulatory compliance opportunity is one of the reasons why Zcash has become one of the most widely supported cryptocurrencies in the world. Chainalysis’s Zcash support announcement further underscores this fact. ”
Chainalysis, a blockchain analysis company, will track “anonymous coins” Zcash (ZEC) and Dash (DASH). The company announced this on its blog on June 8.
Chainalysis notes that it can track the vast majority of transactions in these cryptocurrencies, since most users do not use the privacy features in Zcash, and Dash cannot be called an anonymous coin at all:
PrivateSend in Dash splits funds into standard denominations: 10, 1, 0.1, 0.01, or 0.001 DASH. These funds are then sent to the mix transaction, where all inputs and outputs have the same denomination. The user receives the same amount of Dash back, which is mixed with the money of other users in PrivateSend.
Similar PrivateSend transactions are possible in other cryptocurrencies. This means that from a technical point of view, the level of confidentiality of Dash is not higher than that of bitcoin, therefore it is incorrect to present Dash as an “anonymous coin”. In fact, individual wallets support more advanced forms of CoinJoin and are used in cryptocurrencies that are not positioned as “anonymous coins” - Bitcoin, Lightcoin and Bitcoin Cash.
Dash Core Group CEO Ryan Taylor said: “Dash offers users highly sensitive transactions because privacy is important for mass adoption of cryptocurrencies, and it is the end users who value this functionality. At the same time, Chainalysis is a leading blockchain analysis company, the services of which are used by financial organizations that need to strike a balance between ensuring the confidentiality of user data and regulatory requirements. This contributes to the safe use of cryptocurrencies and provides access to traditional financial markets, so I'm glad that Chainalysis decided to add Dash to its platform. ”
Zcash cryptocurrency should theoretically provide a high level of user privacy, but, according to Chainalysis, only 0.9% of cryptocurrency transactions are completely anonymous: “Thus, even though obfuscation in Zcash is stronger due to zk-SNARK encryption, Chainalysis can "still provide the transaction amount and at least one address in more than 99% of ZEC transfers."
On Twitter, Electric Coin Company, a developer at Zcash, commented on Chainalysis's statement:
“Zcash allows users to select addresses in Bitcoin (“ transparent ”) or privacy-protecting (“ secure ”) addresses. Transparent addresses work like bitcoin transactions, which are also tracked by Chainalysis. Users of Zcash secure addresses get more reliable data protection compared to any other cryptocurrency that exists today. Chainalysis cannot track addresses unless the user allows Chainalysis to view transaction data using its own view key (“selective disclosure”).
At the same time, transparent Zcash addresses allow listing Zcash on exchanges. Some of the world's most regulated exchanges, such as Gemini and Coinbase, support Zcash, fully complying with all of their regulatory and banking requirements. This regulatory compliance opportunity is one of the reasons why Zcash has become one of the most widely supported cryptocurrencies in the world. Chainalysis’s Zcash support announcement further underscores this fact. ”