Privacy coins are meant to be private. That’s their raison d’être. Strip away the privacy, and they simply become altcoins, and dangerous ones at that, with the potential to deanonymize their users and expose their secrets. A number of recent reports have cast doubt on the privacy features offered by coins such as zcash and monero.
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There’s Safety in Numbers
Zcash is a controversial coin for a number of reasons such as its “founders reward” that sees 20% of all coins mined in the first four years go to stakeholders. The technology that enables zcash private transactions, zk-Snarks, is widely used by privacy coins within the same family such as zclassic, zencash, and bitcoin private. The trouble with zcash, as far as privacy advocates are concerned, is that shielded (i.e private) transactions aren’t enabled by default. In fact, 85% of all zcash transactions are public, and some zcash wallets don’t even support private transactions.
The number of shielded zcash transactions has been dropping gradually.
The fewer people who opt for anonymity, the easier it becomes to deanonymize the ones who are. That’s why a network such as Tor becomes more effective the more people who use it. There’s safety in numbers, and without shielded transactions enabled by default in zcash, it makes those who voluntarily select this function automatically look suspicious to anyone monitoring web traffic, such as the three-letter agencies.
The Snowden leaks revealed that the NSA targets and stores encrypted web traffic, reasoning that if someone’s gone to the bother of encrypting their email, they must have something to hide. If Google were to encrypt Gmail by default, it would automatically fill the sub-sea cables tapped by the NSA with so much indecipherable data as to remove all suspicion associated with using encryption, rendering attempts at studying its metadata meaningless. The zcash team has spoken of its desire to have all transactions shielded by default eventually, though the words “which we hope will someday become the norm” suggest they’re in no hurry to make it happen.
Privacy is a scarce commodity
Optional Anonymity Is No Anonymity
Data consistently shows that when privacy must be enabled, most people will go with the default setting. In addition to 85% of all zcash transactions being public, 69% of all zclassic transactions are also unshielded. It’s the same with verge, a privacy coin whose privacy features have been repeatedly called into question, and which is rarely used for private transactions.
zk-Snarks, the technology which provides anonymity for the z-family of coins, is reliant on a trusted setup which requires that the coin’s creator has not retained a master private key. While there is no reason to suspect the development teams of doing so, the whole point of cryptocurrency is that it’s trustless, removing the need to rely on the goodwill of others. The obvious
