(https://blog.acolyer.org/2018/09/14/an-empirical-analysis-of-anonymity-in-zcash/)
In their report, the researchers categorized the 2,242,847 transactions according to their transaction type (which includes the four types above, with some additional combinations for mined coins, etc.) as seen in the table below.
The researchers graphed the total number of transactions within each transaction type category over time, as seen in the figure below
Totals of transaction types over time
It is evident from the graph above that the number of transparent transactions has significantly grown, and much more so than the other types of transactions. Notice also that the total number of fully private (z-to-z) transactions is so tiny in comparison that they are barely noticeable at the bottom of the graph (light blue line).
It is clear from the above graph that Zcash’s actual privacy is very poor, and that in practice, the vast majority of transactions are fully public and transparent, very much like we see in Bitcoin. As we have written about in many of our reports, transparent coins like Bitcoin are, in effect, “surveillance coins” which are studied by governments and their big data blockchain analytics corporate contractors.
In the paper’s abstract, the researchers said this:
“We conclude that while it is possible to use Zcash in a private way, it is also possible to shrink its anonymity set considerably by developing simple heuristics based on identifiable patterns of usage.”
The researchers later concluded: “…our study has shown that most users are not taking advantage of the main privacy features of Zcash at all. Furthermore, the participants who do engage with the shielded pool do so in a way that is identifiable, which has the ef ect of significantly eroding the anonymity of other users by shrinking the overall anonymity set
This research paper was referenced in a Motherboard Vice article,
“Cryptocurrency Transactions May Uncover Sales of Shadow Broker Hacking Tools”
(https://www.vice.com/en/article/j5k7zp/zcash-shadow-brokers-uncover-hacking-tool-sales)
and included a case study analyzing possible Zcash payments sent to The 9Shadow Brokers hacking group who were selling stolen code from the NSA.
From this university research study, it is evident that Zcash’s claims of privacy have been significantly exaggerated. In contrast, the Monero (XMR) community takes its privacy claims much more seriously. Several experts in the Monero community have also addressed Zcash’s major flaws in this Reddit thread, some of which were shown in that same academic paper as well.
(https://www.reddit.com/r/Monero/comments/9fpv4o/an_empirical_analysis_of_anonymity_in_zcash/)
Another research paper, On the linkability of Zcash transactions (Jeffrey Quesnelle, University of Michigan-Dearborn, 2017) examined some fascinating metrics concerning the utilization of Zcash’s shielded addresses. In the study, the author observed that the majority of ZEC sent to shielded (z) addresses are sent back to transparent (t) addresses in the future, as seen in the diagram below.
(https://arxiv.org/pdf/1712.01210.pdf )
“Improper use of z-addrs can lead to transaction linkability.”
This pattern of transaction activity revealed an existence of a large number of round-trip transactions (RTTs), where “the same, or nearly the same number of coins are sent from a transparent address, to a shielded address, and back again to a transparent address.” After performing a search for these RTTs, the researcher performed a heuristic analysis which enabled them to link “31.5% of all coins sent to shielded addresses.” The author argued that the habitual usage of these so-called round-trip transactions “exhibits high linkability, especially when they occur nearby temporally.”
The Monero community has also made some interesting observations regarding this research paper, and apparently, the paper’s author collaborated with the Monero Research Lab on it as well. BTC Manager published a helpful article about this research, and Bitcoin developer Peter Todd on it in .
Zcash Shielded Transaction Traced by a Smart Twitter User in July 2020 In addition to the academic papers showing the privacy weaknesses in Zcash, there was recently an incident on Twitter where a Zcash supporter dared people to trace the T-address of the origin of the ZEC funds sent in the transaction ID for his donation to the EFF. A smart user responded to the tweet by guessing the correct T-address of the origin of his funds, essentially unmasking a shielded transaction
Traced by a Smart Twitter User in July 2020 (https://www.reddit.com/r/Monero/comments/huif8h/monero_ftw/)
As seen in this example, this kind of heuristic “guessing” can be surprisingly effective due to Zcash’s transparent-by-default blockchain. In order to utilize Zcash’s privacy features, its users are required to actively choose to manually shield their transactions and move funds into the shielded pool. Most Zcash wallets don’t include this feature, and it is very rarely enabled by default in the vast majority of ZCash wallets.
Since most users tend to be lazy in regards to their operational security, prone to bad habits, and don’t proactively take extra precautions to hide their transaction patterns, it is easy for an outside observer with additional insight (such as an exchange) to track transactions, especially if users aren’t careful to move their funds into the shielded pool and keep them in there. Also, most services (such as exchanges) only allow t-address transactions, which can erode users’ privacy. They tend to look with suspicion on users who move funds to/from the shielded pool (z-addresses).
I wonder if Snowden still feels the same way About Zcash?
