- Rand finds that privacy-focused cryptocurrencies are used for illicit activities far less than expected
- Zcash commissioned Rand to report on following accusations that use of ZEC tokens for illicit activities was widespread
- Lack of research in the area means it cannot be assumed that Rand’s report is 100% accurate
Rand Corporation, the non-profit consulting firm who last year reported that terrorist organizations still prefer cash over crypto, have stated in a new report that privacy coins like Zcash are not the preferred option for illegal cryptocurrency transactions. However, they urge further research into the subject of illicit use of privacy coins in order to paint a fuller picture.
Zcash Commissioned Report
Zcash commissioned the report from Rand, following heightened suggestions that the token was increasingly being used for illicit use. Being a privacy coin these assertions have always dogged Zcash, but a report by Chainalysis in January 2018 which asserted that ZEC tokens were increasingly being used by criminals sparked further scrutiny of the project.
Fed up with two years’ worth of negative commentary on privacy coins and Zcash in particular, including CoinCheck delisting Zcash and other privacy coins in June 2018, founder Zooko Wilcox hired Rand to investigate just how widespread illicit use of the token actually was.
Privacy Coins Not Preferred by Criminals
This week Rand published their results in a 65-page report, which outlined several key findings, including:
- Less than 1% of the illegal and illicit offerings that mentioned cryptocurrency even accepted Zcash
- There is little research or evidence to suggest that privacy coins are the cryptocurrency of choice for malicious actors, with Bitcoin still the preferred choice.
- Terrorist financing using cryptocurrencies is chiefly “episodic” and not as widespread as assumed or reported, especially when compared to more traditional means.
The report doesn’t let cryptocurrency or Zcash off the hook entirely however, concluding that part of the reason for Zcash’s limited illicit use is simply because it is not known well enough or understood. This suggests that, were the criminal class to wake up to the benefits of the likes of Zcash over Bitcoin, which is still the primary medium for crypto activity, they might suddenly start using it more.
Don’t Confuse Lack of Evidence with Lack of Research
The overall tone of the report is that, while privacy coins are not used for illicit activities to the extent that might be assumed, this may partly be because not enough research has been done in the area. While the report is therefore reassuring for Zcash and privacy coins, it is important that the wider community does not confuse a lack of evidence with a lack of research and exonerate privacy coins completely. Further, deeper research may yet show more illegal privacy coin usage than Rand was able to find, suggesting that we should take these results with a pinch of salt.