The report identifies that Monero’s presentation of stringent safety and privacy criteria on its wider ecosystem has preserved the asset’s position as “effectively untraceable.”
The published document decides that the absence of utilization of Zcash’s privacy abilities by over 99% of users puts the network’s privacy into question even though ZEC offers “strong cryptographic features.” The document states that Zcash was created by a hardfork of Bitcoin (BTC) that intends to “to completely break the link between the sender and the receiver.”
The academics emphasize that “Zcash is not widely used” at this point in time, pointing to a survey of darknet markets published earlier this month, indicating that “it [, Zcash,] is by far not the preferred cryptocurrency on the dark web.” By adopting zero-knowledge SNARK (succinct non-interactive arguments of knowledge) protocol, ZEC avoids all kind of communication between validator and the one proving transaction, establishing “a barrier that further impedes efforts to link addresses together.”
Nevertheless, Zcash facilitates both shielded, anonymous transaction and also pseudonymous transparent transactions. Notably, only 0.09% (30-day average) of ZEC trades utilized privacy features offered by the network.
“[E]ven though cryptographically Zcash is very well-founded, the users behave in a way that does not take full advantage of the shielded pool, making them traceable. As each user in the shielded pool becomes linked to the transparent pool, the overall anonymity of the ZEC ecosystem reduces as the anonymity set shrinks drastically.”
The study identifies, “[I]t seems that the large majority of Zcash users do not yet understand Zcash’s operating model,” deciding that the “minuscule” group of ZEC users taking advantage of protected transactions makes “effectively traceable.”
The document points that a rising number of altcoins are trying to project as privacy focused cryptos and claim to provide total anonymity in transactions. However, in reality, crypto assets offer only pseudonymous transactions. The researchers observe several features of Monero designed to provide untraceability and unlinkability.
For every transaction output, a new address is used to avoid any kind of linking, while traceability is avoided through the use of one-time ring signatures, similar to zero-knowledge proof, along with deceptive inputs referred to as mixins.
The document also studies several upgrades made to the covenant from 2017 onwards, identifying that not even 1% of trades conducted through the use of XMR in the past two years can be traced as per several methods of analysis used. Nevertheless, one model was able to disclose transaction inputs with preciseness of 30%.