According to a group of Hungarian experts who decided to examine the Ethereum network, ETH transactions turn out to be less private than BTC transactions. The experts published the results of their research after studying a bunch of several, pretty specific functions of Ethereum. Those functions usually make it possible to track the financial flows in the network.
In particular, they came to the conclusion that the Ethereum model, as opposed to the Bitcoin model of unspent output from BTC transactions (UTXO), is by default less private due to the portfolio reuse principle.
The model based on user accounts simplifies the address reuse at the protocol level. Basically, such a behavior makes the cryptocurrencies based on it yield ot UTXO-based cryptocurrencies in term of privacy, the experts conclude.
How did they study the Ethereum blockchain?
The case was investigate using the Tornado Cash mixer, which is used by cryptocurrency users to launder their assets by sending them to a new address.
Nevertheless, the researchers found out that 7,5% of the users withdrew their fund to the same source account, which basically made their laundering efforts totally useless. Up to 17% of the transactions can be identified by applying those simple methods.
On top of that, most of the connected users don't hold their funds in smart contracts for more than a couple of days, which can be used to decrease the overall anonymity. Basically, anonymity remains one of the key concerns in the cryptocurrency industry. However, they say this has to do with more conservative users.
