Zcash $ZEC was once seen as the 'fortress' of anonymous transactions but has now become the center of debate as Arkham announced the ability to label a majority of activities on this blockchain. A recent report suggests that the privacy level of ZEC may not be as 'robust as rumored', especially in the context of the recent surge in ZEC prices.
Attention to ZEC has exploded following a series of cases related to money laundering using Bitcoin in the US. The administration of President Donald Trump seized 127,000 BTC in the case of the chairman of 'Prince Group' Tran Chi (Chen Zhi), while also arresting Qian Zhimin, who is suspected of operating a money laundering ring involving 60,000 BTC. When major incidents like these arise, investors often turn to coins that maintain anonymity, making ZEC the focal point of speculative money flow and driving the price up to a peak of 750 USD.
While the market is excited, a surprising report from Arkham has dampened expectations. The on-chain analysis platform stated that they have tracked and labeled both shielded transactions—which is Zcash's strength—and unshielded transactions. The total value of labeled transactions amounts to 420 billion USD, raising significant questions about the project's traceability. This indicates that a large portion of information previously considered untraceable has now had its owner identified.
What does Arkham reveal?
53% of transactions on the Zcash network have been labeled.
48% of input and output amounts can be attributed to specific entities.
37% of the total circulating ZEC, equivalent to approximately 2.5 billion USD, has been marked.
This data raises concerns within the community as Zcash is built on zero-knowledge proof technology, one of the most modern security methods to ensure users can transact without revealing information.
Arkham's ability to 'decode' a significant portion of activity on the ZEC network shows that today's blockchain analysis tools are becoming increasingly powerful and can directly impact privacy-focused projects. For investors, this development not only affects confidence in ZEC but also opens up a broader debate about the future of privacy coins in an increasingly stringent surveillance environment.
