A lot of people treat “privacy” like a feature you can buy: download a privacy coin wallet, send funds, and boom—anonymous. Privacy isn’t a property of a coin—it’s the result of how you use it.
The article uses Zcash as the case study because ZEC is famous for strong cryptography (zk-SNARKs) and infamous for a practical problem: its privacy is optional, not enforced. That gap—between “what the protocol can do” and “what users actually do”—is where deanonymization happens.
The “illusion of privacy” problem
Zcash supports both transparent (t-addresses) and shielded (z-addresses). Transparent works like Bitcoin: amounts and addresses are visible. Shielded hides sender, receiver, and value. Zcash’s own docs describe these two address types clearly and note that shielded and transparent pools coexist.
Here’s the catch: most wallets and exchanges historically favored t-addresses, because they’re simpler to integrate. Zcash documentation explicitly notes that many wallets/exchanges “exclusively support t-addresses,” even though shielded support exists in some wallets.
That matters because moving in and out of the shielded pool creates correlation points. Even if the shielded pool itself remains cryptographically private, the edges—where you enter or exit—can leak patterns.
What the Arkham-Zcash debate shows
ForkLog points to a December 2025 claim by analytics firm Arkham: it said it could associate a large share of Zcash activity with known entities, describing figures like “more than 53% of transactions” and “48% of inputs/outputs” linked to subjects.
Zcash’s founder disputed the implication that shielded funds were “cracked,” and ForkLog stresses the practical lesson: analytics doesn’t need to break zk-SNARKs to deanonymize people. It can often work by observing behavior—timing patterns, predictable amounts, address reuse, and interactions with KYC’d exchange clusters.
This is the uncomfortable truth: optional privacy creates “foot-guns.” You can have world-class privacy tech, and still leak your identity through the way you move money.
Privacy is a stack: on-chain, off-chain, and you
ForkLog’s core thesis—“privacy is behavior”—is exactly how privacy professionals think about it. Here’s the stack:
On-chain linkability
Even without names, blockchains are graph-shaped. Analysts cluster addresses, follow flows, and apply heuristics. With optional privacy, the transparent portion gives plenty to work with.
Off-chain identity leaks
The biggest “doxxing” vector is usually not math—it’s institutions and metadata: KYC exchanges, payment processors, IP logs, email accounts, SIM cards, and reused usernames. ForkLog explicitly calls out exchange-KYC linkage as a common privacy failure point.
User behavior (the silent killer)
The same address everywhere, instant back-to-back transfers, clean round numbers, “same-day” patterns—these are the kinds of signals that turn “private tech” into “public life.”
A legal and practical privacy playbook for 2026
This section is about financial confidentiality, not hiding crimes. Don’t do illegal stuff. Also, rules differ by country.
Use “privacy by default” thinking—even if the protocol doesn’t force it
Seth For Privacy (a long-time privacy researcher) argues that Zcash’s split design forces users into complex decisions and that privacy often depends more on wallet UX and consistent behavior than on raw cryptography.
Takeaway: whatever tool you use, aim for consistency. The more you mix modes and identities, the more breadcrumbs you create.
Separate identities like you separate passwords
If you have a public persona wallet (donations, on-chain socials), don’t reuse it for private spending. Treat wallets like compartments: one purpose per wallet.
Minimize KYC cross-contamination where possible
If you must use KYC platforms, assume that activity can be associated with you. That doesn’t mean you can’t have privacy—it means your privacy goal should be “reduce unnecessary exposure,” not “be invisible.”
Prefer tools that support selective disclosure
Zcash (and similar systems) can support selective sharing features (e.g., viewing keys) to prove transactions to auditors or counterparties without revealing everything publicly—useful for legitimate compliance and personal security.
Mixers and “anonymizers”
ForkLog contrasts privacy coins with Bitcoin “mixers,” arguing mixers can be more “pragmatic” because they require a conscious privacy action rather than relying on protocol promises.
But this is where you need to zoom out. Global regulators explicitly flag mixers/tumblers as higher-risk tools because they can conceal transaction linkages and can fall under VASP/AML obligations depending on how they operate. FATF’s guidance describes mixers/tumblers as services designed to conceal links between sending and receiving addresses, and notes they themselves may be VASPs.
And enforcement attention is real: Reuters reported that the U.S. Treasury lifted sanctions on Tornado Cash in March 2025 after legal and policy review—while still emphasizing concerns about North Korean hacking and ongoing prosecutions involving Tornado Cash founders/developers.
So even if your intent is legitimate privacy, tools associated with laundering narratives can create counterparty risk: frozen funds, enhanced scrutiny, and compliance headaches.
Privacy isn’t “on/off,” it’s “how well did you execute?”
In 2026, the safest mindset is:
- Choose tools with strong privacy foundations,
- Assume analytics exists,
- Avoid identity leakage through sloppy habits,
- And stay inside legal and compliance boundaries.