- Dash and Zcash are the two most famous ‘privacy coins’. They account for nearly 1.5 billion dollars in daily reported transaction volume.
- Chainalysis claims that it can mark addresses and real-world entities by analyzing transactions.
- Dash and Zcash enable its users to carry out transactions with a lot of privacy but still doesn’t provide a one hundred percent anonymity.
The chainalysis team added support for the two privacy protection coins namely, Dash and Zcash, in the Chainalysis reactor. Dash and Zcash are the two most famous ‘privacy coins’. They account for nearly 1.5 billion dollars in daily reported transaction volume.
How Dash and Zcash Maintain Privacy
Unlike Monero, Dash’s main priority is not privacy. However, there is a provision for the protection of privacy of transactions, of its users. Zcash’s purpose of creation was to offer a substitute for Bitcoin. It strives to offer enhanced security and privacy.
There is a common misunderstanding that BTC transactions are private. However, it is not true. There is a maintenance of the records of the addresses and balances in public and permanent accounts due to transaction information, making the transactions traceable.
Chainalysis claims that it can mark addresses and real-world entities by analyzing transactions and using open-source intelligence to obtain compliance with regulatory investigations.
So, privacy coins have functions to make the aforementioned process more hard and difficult. It is not hard, and one can simply achieve it by adding privacy features to existing blockchain including BTC. Although, the privacy coins run completely on a new blockchain. There is a built-in feature of the privacy function into the main framework i.e. the protocol.
Balancing Compliance and Privacy
Dash and Zcash enable its users to carry out transactions with a lot of privacy but still doesn’t provide a one hundred percent anonymity. There is a room, kept vacant, usable by investigators when they feel something illegal is taking place. The provision is so that it matches the regulatory requirements. Cryptocurrency companies can now include Dash and Zcash in their compliance program knowing that it has support from Chainalysis products.
A study conducted by RAND cooperation on behalf of Zcash showed that the main purpose of these currencies is not privacy. The study showed that less than 0.2% of the cryptocurrency addresses involved in the dark web are Dash or Zcash.