Investing Idea: Zcash

Hacked has argued before about the long-term utility of privacy coins and their role in facilitating offshore deposits and anonymous wealth transfers in an age where blacklisting and government encroachment on private property are all too common. But whereas our previous conversation centered on Monero (XMR), our current discussion will look at another ascendant privacy coin: Zcash (ZEC). While not the only games in town, Monero and Zcash are considered the pre-eminent privacy-focused cryptocurrencies based on market cap, technology and overall utility.

Although Zcash is not private by default, many have argued that it provides more enhanced security features than Monero. Privacy guarantees offered by zk-SNARKs, a novel form of zero-knowledge cryptography that can prove possession of certain information without any interaction between prover and verifier, allow the entire transaction history on the Zcash blockchain to be encrypted.

While Zcash and Monero may be considered ‘natural competitors,’ the addressable market for both is likely huge. This means the choice between the two isn’t either/or, but rather which combination is superior as an accessible offshore investment opportunity. Privacy-centric investment baskets may also consider other cryptocurrencies that aim to achieve similar goals.

Zcash Value Metrics

  • Current Price: $71.00
  • All-Time High: $5,941.80
  • All-Time Low: $26.15
  • YTD Performance: +25%
  • Market Cap: $439.4 million
  • Market Cap Ranking: 22nd
  • ROI Since Launch: -98.4%
  • Primary Markets: LBank, BCEX, HitBTC, Coinbase

Investment Case

As a fork of the bitcoin protocol, Zcash grew out of the desire to increase anonymity and privacy in blockchain transactions. In addition to updating bitcoin’s proof-of-work consensus model, Zcash has led the rush for zero-knowledge proofs to enhance privacy.

Zcash is an attractive protocol for any user who wants to keep his or her transaction history private. This is where the anti-crypto brigade chime in: Basically, this means Zcash is used for money laundering and to evade law enforcement, right? Not really. Not at all, actually.

The Zcash protocol prioritizes anonymity but doesn’t endorse criminal behavior. What people choose to do with this toolkit doesn’t reflect on the viability of the project. (The same anti-crypto brigade said the same thing about bitcoin four years ago until it became too big to simply lump in with the criminal underworld. In fact, the author used to cover bitcoin back when mainstream media considered it merely as a tool of the dark web.)

In reality, there are many reasons why businesses and individuals may choose to keep their transaction histories private. Unless you are a publicly-traded company, there’s really no reason to make a public list of payments, transactions or clients – at least not to the level of detail that the blockchain provides. The need for privacy coins stems from the very same need for privacy in general. Usually nobody questions why individual privacy is important but they lash out on the idea that our financial transactions and wealth should also be the individual’s sole discretion.

Zcash is highly attractive because of its advanced cryptography, proven track record in the crypto industry and widespread availability on major exchanges. In other words, it is primed for mass adoption once privacy-centerism reaches critical mass.

Also read: Zcash: Why It Could Be A Better Bet Than Bitcoin.

Analysts at Grayscale, a crypto-focused investment fund, believe Zcash could increase more than 150-fold by 2020 should the market for offshore deposits continue to grow. This is a daring forecast, as it assumes ZEC can garner a huge chunk of offshore wealth. But the potential is definitely there, especially as the market for offshore deposits continues to grow.

From Grayscale:

“[T]he privacy-enhanced features that ZEC offers perhaps make it even more resilient as a store-of-value than BTC, since selective disclosure reduces susceptibility to government intervention. We think of ZEC as the first globally accessible “offshore” investment opportunity, or a Swiss bank account in your pocket, so to speak.”

Read more: Is Zcash the Swiss Bank Account of Cryptos?

Analyst’s Take

An increasing focus on privacy and anonymity suggest there is a huge addressable market for both Zcash and Monero. The role of cryptocurrency in facilitating offshore investments put ZEC and XMR in the same category as bitcoin in terms of their store-of-value characteristics.

One area in which Zcash stands apart from other privacy-centric coins is the sheer number of investment opportunities available. ZEC is not only available on fiat-to-crypto exchanges like Coinbase, it can be bought through Grayscale’s dedicated trust. The Grayscale Zcash Trust, which has more than $7 million in assets under management, offers ZEC shares that track the underlying private of the privacy coin.

At $70 a unit, ZEC is sitting at less than a tent of its bull-market high in January 2018. The coin had an extremely bullish launch in October 2016, where it reached a colossal high near $6,000.

At current prices, a $500 investment in Zcash get you just over seven ZEC units. A return to January 2018 levels would result in a tenfold increase on your investment. The emergence of a privacy-focused future makes Zcash a low-risk investment at current price levels.

Disclaimer: The author owns Bitcoin, Zcash and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Chief Editor to and Contributor to, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi