Grayscale Research is warning that artificial intelligence may heighten financial surveillance risks on transparent blockchains by improving the ability to link transactions with off-chain data and de-anonymize addresses.

This dynamic builds on past waves of privacy concerns tied to technological shifts, including the 1970s digitization of financial records and the 1990s rise of the internet.

Grayscale Research says a third wave is underway, driven by AI tools that could make blockchain address labeling more effective and widespread.

Bitcoin (BTC) transactions are visible by default on the public ledger, a risk noted in its white paper.

In contrast, Zcash (ZEC) offers shielded transactions that use zero-knowledge cryptography to hide sender and receiver addresses along with transfer amounts, functioning like physical cash.

Zach Pandl, Grayscale Head of Research, is stating the case for Zcash in the new AI era.

“We expect AI to create new threats to financial privacy, and to motivate a search for new solutions. Zcash, a Bitcoin-like digital currency with additional privacy features, may be one of those solutions… Shielded Zcash transactions, using the power of zero-knowledge cryptography, hide both transacting addresses and the amount being transferred. For users that prioritize privacy, this could become a ‘must-have’ feature.

At time of writing, ZEC is trading at $826.25.

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