Zcash ‘Felony Analysis’ Paper Raises More Questions Than it Answers


Zcash (ZEC) was lately the topic of a analysis paper which aimed to discover the extent to which the privateness coin is used for illicit or felony functions.

Funded by Electrical Coin Co.(ECC), the corporate behind Zcash, the evaluation carried out by the RAND Company and concluded that Zcash was not frequently used for unlawful means.

Nevertheless, the essential findings provided up by RAND Corp are non-committal, imprecise, and extremely illogical in mild of Zcash’s standing as an apparently untraceable privateness coin.

Zooko Wilcox, Zcash Co-Founder. Interviewed by CryptoPotato at 2017

Absence of Proof Does Not Equate to Proof of Absence

The primary of RAND Corp’s key findings reads:

  • “Zcash is comparatively unknown within the educational analysis group, and the hyperlinks between Zcash and illicit or felony actions haven’t been considerably researched.”

In different phrases, the important thing discovery right here is that no educational analysis might be discovered, which particulars Zcash’s use for unlawful functionsas a result of no such literature exists. The researchers did discover educational literature targeted on the technical points of Zcash, significantly its privateness options.

The authors of the paper admit that this discovery quantities to little by way of proof:

“Crucially, the absence of proof doesn’t equal proof of absence, which means that the truth that there’s little proof that Zcash is used for illicit or felony functions doesn’t imply it isn’t taking place; somewhat, this exercise is solely not being detected.”

The paper’s second key discovering:

  • “This research discovered no proof of widespread illicit use of Zcash.”

The authors state there are, “definitely some indications or anecdotal proof,” that Zcash is getting used illegally, however, “no proof of widespread illicit use exists.”

As soon as once more, the researchers at RAND are trustworthy sufficient to confess that absence of proof doesn’t equal absence of proof. To date, so…what?

Zcash Falling Behind Its Friends?

The third key discovering within the paper by Silfversten, Favaro, et al. reads:

  • “Zcash has solely a minor presence on the darkish net.”

Analyzing darkish net retailers to see which cryptocurrencies are used most frequently is a extra tangible metric. Based on the paper, Zcash has solely a minor presence on darkish net marketplaces, and is used much less typically than different cash, “significantly Bitcoin and Monero.”

In an evaluation of crypto wallets used on darkish net marketplaces, the findings confirmed that clear Zcash wallets made up simply zero.09% of the full. Shielded Zcash wallets made up zero.02% of the full. Bitcoin accounted for over 90%.

However in keeping with RAND, the commonest felony exercise related, which makes use of cryptocurrency, is cash laundering (seen beneath).

Most typical felony utilization of cryptocurrency. Supply: Electriccoin.co

That leaves a large hole within the already slim literature until cash launderers determine to begin answering surveys. Not all crime utilizing digital currencies happen through darkish net marketplaces. Whereas the darkish net stats do present some context, we’re nonetheless left with one other case of “absence of proof”.

A fourth key discovering:

  • “Customers engaged in illicit actions might not totally perceive the Zcash working mannequin.”

The report states customers won’t totally perceive Zcash’s privateness options or maybe aren’t conscious of them. Two interviewees informed RAND’s researchers that Zcash’s usability was deemed to be “falling behind its friends”.

Remarkably, the report even suggests criminals purposely keep away from Zcash as a result of they don’t consider within the effectiveness of its privateness options.

Some Questions

The paper asserts that ECC has tried to rebrand Zcash to make it suitable with AML/CFT rules. This may increasingly make ZEC appear much less inviting to felony parts, the authors speculate.

This, together with a lot of the paper’s findings, invitations some apparent questions.

What precisely is Zcash, and does it fulfill its said targets? Additional, what are its targets? The RAND analysis appears to counsel Zcash isn’t match for goal as use as a privateness coin or isn’t deemed so amongst cryptocurrency’s felony consumer base.

One the one hand, Zcash is meant to be the second hottest privateness coin, a minimum of by market cap (discounting Sprint’s elective privateness). However judging by the tone of the report, the cryptocurrency which pioneered zk-SNARK’s is maybe trying to steer away from that label altogether.

And simply how is any analysis group – even one from the military-founded RAND—alleged to uncover unlawful transactions on a supposedly personal blockchain? The scraps discovered on this report are mere nibbles, however then, why would we count on something in any respect? What was the purpose of it?

On the identical day the report was revealed, ECC launched a weblog publish that despatched out a rallying name for financial freedom. The publish declared RAND’s analysis had judged that Zcash was not utilized by “unhealthy actors” world wide, including:

“However the conjecturers actually don’t know why. It’s all simply guesses.”

It’s all guesses on this finish too.

Electrical Coin Co. Responds

Electrical Coin Co. had been form sufficient to supply a response to a number of the questions posed above. Josh Swihart, VP of Development at ECC informed CryptoPotato that the report was commissioned to dispel the false notion that Zcash was used for unlawful functions. Based on Swihart:

“ECC commissioned the report with RAND in help of conversations with regulators and as a result of misinformation beforehand reported that Zcash was getting used for unlawful functions.”

Opposite to the opinions expressed on this piece, Swihart stated the RAND report provided complete proof that Zcash wasn’t getting used for illicit means. Or a minimum of, that there was little proof to help the notion. Swihart stated:

“The excellent quantitative and qualitative analysis exhibits that although Zcash is broadly supported and constantly ranks within the high 10 cash for transactions and funds, there’s little to no proof individuals are utilizing Zcash for illicit exercise.”

However because the RAND report states time and again: absence of proof doesn’t equate to proof of absence.

Josh Swihart, VP of Development at ECC. Supply: Twitter
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