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Chainalysis added support for monitoring transactions of the privacy coins DASH and Zcash

According to a report from Chainalysis, it seems they have added support for two privacy coins, Zcash (ZEC) and Dash (DASH) in two different products. Specifically, Chainalysis Reactor, as well as its Know Your Transaction (KYT) offering can now track two new coins. The company announced as much yesterday, June 8th.

The blockchain analysis firm revealed that its software can track DASH and ZEC

As such, anyone using this software can easily track compliance for a combination of the daily trading volumes of these currencies, for $ 1.5 billion.

After Chainalysis researched both cryptocurrency projects, it was found that the encryption used by Zcash offers better privacy than mixing. Despite its security features, Zcash can still connect inputs and outputs on some transactions using PrivateSend. In some cases, it may even identify an address from which the coins came.

Meanwhile, Chainalysis has studied Dash’s PrivateSend function. This service is mixing the transactions of a pool of users to disguise the identity of users. By this, users receive the same amount they have sent, but the coins get blended with other funds. That way, a user can disguise their identity and make it more difficult to track their transactions.

In that sense, Chainalysis claims that Dash’s PrivateSend function is no different or better than other mixing services used by other cryptocurrencies.

The report stated:

“This means from a technical standpoint, Dash’s privacy functionality is no greater than Bitcoin’s, making the label of privacy coin a misnomer for Dash. In fact, independent wallet software provides more advanced forms of CoinJoin protocol that some Bitcoin wallets such as Wasabi use.”

chainalysis-added-support-for-monitoring-transactions-of-the-privacy-coins-dash-and-zcash

Example of a Dash PrivateSend mixing transaction. Eight inputs all of 0.1 DASH, eight outputs all of 0.1 DASH. The owner of each of the inputs owns a corresponding output

So, how can Chainalysis track private coin transactions?

This is a groundbreaking discovery, showing that it is still possible to successfully investigate a transaction using PrivateSend. Not only that, 0.7% of transactions using Dash and its PrivateSend and mixing only make around 9% of all DASH transactions.

For Zcash, about 14% of its transactions use one of the protocol’s protected groups. But, only about 0.9% of all ZEC transactions are completely encrypted. In other words, less than 1% of users have protected senders, recipients, and transactions. The obvious conclusion is that people simply don’t use the protocol’s privacy features. At the same time, Chainalysis can still track these transactions despite the significantly stronger security features that Zcash has.

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