Zcash Surging on 'Cypherpunk Principles' as Bitcoin Alternative: Galaxy Digital
Zcash is being recognized as an alternative to Bitcoin, focusing on privacy through shielded transactions and zero-knowledge proofs. Analyst Will Owens of Galaxy Digital highlights that Zcash, derived from Bitcoin's codebase, offers enhanced anonymity and addresses Bitcoin’s transparency limitations. This positions it as a 'cypherpunk' alternative amidst concerns over Bitcoin's perceived centralization via Wall Street adoption and on-chain surveillance. Despite underperforming Bitcoin historically, Zcash's value has surged recently, with its market cap reaching $6.5 billion. Interest in other privacy-focused cryptocurrencies like Dash and Decred has also risen sharply, signaling growing demand for privacy solutions in crypto.
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Zcash as an Alternative to Bitcoin
As barriers between crypto and traditional finance blur, Zcash is gaining recognition as a viable alternative to Bitcoin, according to Will Owens, a research analyst at Galaxy Digital. Although Zcash is much smaller than Bitcoin’s $2 trillion market cap, it leverages foundational elements from Bitcoin’s codebase. Owens described it as a 'spiritual successor' in a recent report, emphasizing the privacy-focused nature of the cryptocurrency, which resonates with users skeptical of on-chain surveillance or the centralization of Bitcoin through Wall Street adoption.
Unique Features of Zcash
Zcash allows users to shield transactions through zero-knowledge proofs, enabling anonymous activity on its network. This appeals to those who fear Bitcoin’s transparency or potential surveillance. Since its launch in 2016, Zcash initially underperformed Bitcoin but has recently seen a surge, with its price rising nearly tenfold to $396 from $40 over a two-month period. As per CoinGecko, Zcash peaked at a seven-year high of $376 in October, reflecting growing interest in privacy-oriented cryptocurrencies.
Criticism of Bitcoin and the Role of ETFs
Owens highlighted criticisms of Bitcoin, particularly around the erosion of its ability to serve as 'electronic cash' due to exchange-traded funds (ETFs), which rely on centralized institutions like custodians. He pointed out that while Bitcoin has always been fully transparent, ETFs have made it more intermediated. In contrast, Zcash is framed as 'encrypted Bitcoin,' returning to cypherpunk principles and addressing privacy limitations that Bitcoin’s creator, Satoshi Nakamoto, once acknowledged.
Zcash’s Technical Foundations
Zcash was forked from Bitcoin’s codebase, inheriting features such as the 21 million supply cap, a proof-of-work consensus model, and a halving issuance rate every four years. However, Zcash goes further by directly addressing Bitcoin’s privacy limitations through shielded transactions, offering enhanced anonymity. In the U.S., Bitcoin users historically turned to privacy strategies like CoinJoin, but services such as Samourai and Wasabi have faced regulatory pressure, with their founders facing legal challenges.
Community Support for Zcash Privacy Features
Despite unchanged fundamentals, Zcash’s technology and its growing community support have boosted its perception. Advocates like Mert Mumtaz, CEO of Helius Labs, emphasize that shielded transactions strengthen the network’s privacy. Owens noted that as more users engage in shielded transactions, Zcash’s anonymity set grows, making it harder to trace fund flows. Currently, 30% of Zcash’s supply is shielded, enhancing its privacy features further.
Zcash’s Market Position and Privacy Crypto Surge
According to CoinGecko, Zcash is now the largest privacy-focused cryptocurrency by market cap, valued at $6.5 billion. It competes directly with Monero and Litecoin, valued at $6.44 billion and $6.43 billion, respectively. This surge in Zcash has reignited interest in other privacy-focused coins like Dash and Decred, with Dash rising 162% to $122 and Decred jumping 139% to $41 over the past week.