Zcash (ZEC) surged from under $50 to roughly $540 in just over a month.
Galaxy Digital analyst endorsed Zcash as an encrypted Bitcoin alternative with enhanced privacy features.
Privacy coins allow businesses to transact on-chain without revealing profit margins or supplier costs to competitors.
Some investors get rich while others struggle because they never learned there are two completely different strategies to building wealth. Don’t make the same mistake, learn about both here.
Cryptocurrencies are well known for being volatile assets that benefit investors who are able to get in early, and hold through momentum-driven cycles. However, for large-cap cryptos that see a 10x move in the span of a little more than a month, even some crypto investors can be taken aback.
Cue the flurry of interest around world-class privacy token Zcash (CRYPTO:ZEC).
This token has moved from under $50 per token to roughly $540 apiece at the time of writing, with a stock chart that can really only be described as parabolic. One would correctly assume that there are some strong underlying catalysts driving this move. Let’s dive into what’s moving ZEC tokens right now, and where Zcash could be headed from here.
Ground Picture / Shutterstock.com
Unlike the stock market, which provides investors with plenty in the way of analyst reports and research material, there’s typically less such information handed out in the crypto sector. That said, analysts at some boutique research firms do cover the sector, with Galaxy Digital being among the largest shops on this front.
A research note released earlier this week from Will Owens at Galaxy Digital highlighting Zcash and its value as an “encrypted Bitcoin (CRYPTO:BTC)” is certainly intriguing. The investment thesis supporting Zcash (and Owens’ endorsement of this blockchain) is that there’s actually quite a number of similarities between Zcash and Bitcoin. These borrowed foundational elements, in combination with zero-knowledge proofs (a sort of security technology which makes transactions ultra-secure), have created a situation in which the mainstream media (and analysts) are now jumping on Zcash as a potential winner moving forward.
At least, I’d argue, an alternative or substitute. Indeed, the performance gap between Bitcoin and Zcash is notable since the latter token’s inception. If we do head into a boom cycle for privacy coins, perhaps these experts are right that we could see the tables turn in terms of performance moving forward.
janews / Shutterstock.com
So-called privacy coins that utilize technology like zero-knowledge proofs to protect the identities of those transacting on-chain (everyone can see everything on the blockchain, and it’s built that way on purpose) have both supporters and detractors.
In terms of those who may be opposed to this technology, there are obvious reasons why doing so may be worrisome to many investors. Hiding everyone’s identity in any space invites bad actors looking to take advantage of a hack or act that could adversely affect others on this blockchain with reason to do so. For those looking for a place to “wash” dirty crypto that has been stolen via other vulnerabilities and hacks in the past, privacy coins are the “get away car” in which many such actors look to take their winnings and go home (after washing their tokens in various ways via other networks).
That said, most bulls on this technology will point out that fraud and scams still remain a very microscopic slice of the overall activity in the crypto sector. On top of that, privacy coins could be needed to allow for a truly vibrant community willing to exchange goods to do so.
One of the best examples I can provide is a retail store that’s looking to fully integrate crypto within its business model. It’s going to pay suppliers, take payments, and list all its goods in crypto only. Well, all the store’s inputs that were purchased on-chain will be publicly visible to all this company’s competitors. There are ways of finding out which company or individual owns a specific wallet (there are entire sites dedicated to this) – so once this entity’s wallet address has been tracked down, the entire sector will know what this company paid for their inputs, what their charging their customers, and ultimately what their profit margin and other key metrics are.
That’s going to dissuade many businesses and institutions from going on-chain. Privacy coins solve this problem.
StunningArt / Shutterstock.com
I’ve long been of the view that in order for cryptocurrency to be viewed as a true medium of exchange, it’s going to need to share more of the common properties cash provides. Cash is completely anonymous, and that’s why many individuals use this form of payment to this day. On this front, privacy tokens like Zcash are certainly intriguing as potential catalysts driving the next revolution of payments, especially on the institutional side of the ledger.
This specific call out from Galaxy Digital for Zcash has been very beneficial for investors, and the search for Bitcoin alternatives is interesting. That’s a narrative I haven’t seen in some time, though these cycles have happened before.
The fact that Zcash was forked from Bitcoin is certainly something that gives this cryptocurrency a leg up on its privacy coin peers. I’ll be watching this move closely, and how active wallets and transaction data change over time. If we do see the sort of mass adoption Galaxy Digital and others in the crypto sector suggest will materialize, perhaps this rally makes sense. That said, I’d note that this kind of volatility can end with a thud, so those out there speculating should do so carefully.
