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Privacy is undoubtedly an important feature for many cryptocurrency users, and Zcash offers a host of useful features for anyone who wants to stay anonymous. However, does it have what it takes to compete in the increasingly crowded world of privacy coins?
Let’s take a closer look.
|Launch date||October 28, 2016|
Zcash price prediction
Cryptocurrency price predictions are far from simple. Digital currencies are volatile and highly complicated, with prices influenced by a host of important factors. Before deciding whether or not you should buy any ZEC, it’s important to consider the factors that could contribute to a growth or decline in the coin’s value. Some of these factors are outlined in the table below.
What could drive ZEC’s growth?
- Supply. The maximum supply of Zcash is limited to 21 million ZEC. At the time of writing (3/21/18), CoinMarketCap listed the circulating supply at 3,524,556 ZEC. This limited coin supply could potentially drive up demand for Zcash.
- Demand. You only need to take a look at the number of privacy coins available to realize that anonymity is a key feature for some cryptocurrency users. As a result, there’s clearly a market which any coin that includes privacy features can hope to target.
- Advantages over bitcoin. While bitcoin still has something of a reputation among the general population as an anonymous cryptocurrency, it’s anything but. By building on top of bitcoin’s core code and introducing zero-knowledge proofs, Zcash is able to offer users the chance to hide the sender, the recipient and the value of transactions on the blockchain but at the same time allow fully encrypted transactions to be confirmed as valid.
- Not just for illegal use. Though privacy coins are sometimes associated with illegal activities, they also serve an important purpose in the age of identity theft, data mining and other forms of digital surveillance.
- Availability. Zcash is widely available on a variety of well-known cryptocurrency exchanges, which makes it easily accessible to new cryptocurrency traders and also provides increased legitimacy and credibility to the coin.
- The Zcash Foundation. The foundation is a nonprofit entity with a mission to maintaining and improving the Zcash protocol. It’s funded by the blockchain itself, thanks to the donation of a portion of the Zcash Founders’ Reward.
- Partnerships. Zcash has partnered with Ethereum to help introduce zk-SNARKS to the larger platform as part of the Byzantium upgrade. It also partnered with JPMorgan to introduce a zero-knowledge security layer (ZSL) into JPMorgan’s Quorum blockchain.
What could hold ZEC back?
- Lack of mainstream adoption. Like any payment coin, ZEC’s success will largely depend on the level of demand. If it fails to achieve adoption and acceptance on a variety of platforms, this will have an impact on its value.
- Competition. We’ve already touched on the fact that the privacy coin sector is a crowded space and Zcash will need to compete with a host of other coins with similar features. Some are built from the ground up to offer complete anonymity, while others offer privacy as an optional feature. Check out the guide to Zcash competitors further down this page for details of other projects worth monitoring.
- Links to illegal activities. Unsurprisingly, coins that allow privacy and anonymity also gain popularity with the criminal underworld. For example, in its 2017 Internet Organized Crime Threat Assessment (IOCTA), Europol stated that Zcash (along with Monero and Ethereum) are gaining popularity within the digital underground. Such links to criminal activities can hamper the public perception of a coin and limit its widespread use.
- Regulatory threats. Criminal links also raise the threat of increased regulation. While cryptocurrencies as a whole are regularly rumored to be under threat due to government crackdowns and legislative changes, there’s also the possibility that privacy coins could be targeted by lawmakers.
- Not anonymous by default. Zcash users get the option to choose whether they want to shield their transaction details from the public blockchain, while some other privacy coins automatically make all transactions anonymous. This may be a worrying feature for anyone seeking complete privacy, while it also raises the risk that if only a small minority of ZEC users take advantage of its privacy capabilities, those transactions will be easier to trace.
- Mining rewards. Some users have criticized Zcash’s mining rewards structure, which sees a Founders’ Reward of 10% of the eventual monetary base go to the founders. This amount is distributed over the first four years of mining.
Where to buy Zcash
What’s coming up in Zcash’s roadmap
Looking to the future, the upgrades and developments a currency has in store can have a big impact on its future price. For 2018, the focus is on improving Zcash’s performance, security and usability.
Key milestones on the are:
- Overwinter: June 2018. This upgrade is focused on making itself and future network upgrades safer for users, even in the case of governance contention. According to the development team, its features will include versioning, replay protection for network upgrades, performance improvements for transparent transactions and a new feature of transaction expiry.
- Sapling: September 2018. This will introduce the Sapling protocol update, which is designed to dramatically reduce the time and memory use of shielded transactions. This will make mobile wallet support feasible.
- The future. According to the roadmap, scientists and engineers are exploring other improvements possible for Zcash and other cryptocurrencies. Possibilities include scalability improvements to allow practically unlimited numbers of transactions, novel consensus algorithms such as proof of stake, and private and scalable smart contracts.
If you’re considering buying ZEC, you’ll also need to consider how it stacks up against other privacy coins. These coins will all battle for market share and could potentially impact the level of demand for Zcash.
Coins to watch include:
- Monero (XMR). Designed to offer secure, anonymous and untraceable transactions, Monero uses ring signatures, ring confidential transactions and stealth addresses to obscure transaction details. Launched in 2014, it’s a top 20 coin by market capitalization at the time of writing.
- Dash (DASH). Dash uses a technique called CoinJoin to give users the option of protecting their private information. It also offers an InstantSend feature for transaction confirmation of less than a second and is a top 20 cryptocurrency by market capitalization.
- PIVX (PIVX). A hard fork of Dash, PIVX includes a built-in mixing mechanism to obscure and anonymize transactions. It also offers fast transaction times and minimal fees.
- Zcoin (XZC). Not to be confused with Zcash, Zcoin also uses zero-knowledge proofs to provide anonymity to its users.
- Verge (XVG). Designed with security and anonymity in mind, Verge offers its Wraith Protocol to provide optional privacy for transactions.
- Nav Coin (NAV). With a 30-second transaction time and optional private transactions, NAV is another open-source cryptocurrency worth a look.
Beyond 2022: What does the future hold for Zcash?
If you’re gazing into your cryptocurrency crystal ball to try to find out what’s in store for 2019 and beyond, don’t be surprised if the future looks a little murky. Cryptocurrencies are exploding in popularity at the moment, and privacy coins are a popular focus for many projects. This means that Zcash certainly won’t have any shortage of competition in the coming months, and picking a winner from the many coins available won’t be easy.
In the meantime, 2018 looks like it’ll be an important year for Zcash. The first milestone will be the preparatory Overwinter upgrade in June 2018, which developers have announced is “not expected to result in a fork of the blockchain or the creation of a new currency”.
This will be followed by the Sapling upgrade, which is designed to bring important security and performance improvements. The success (or otherwise) of both upgrades could play a crucial role in determining how the price of Zcash finishes up in 2018.
So, should you buy Zcash? The answer is up to you. There’s no doubt that Zcash has some impressive features, most notably the ability to combine privacy with fungibility. Its relationship with Ethereum is an interesting one, and it seems to be backed by a strong and committed development team.
However, there are plenty of other coins that include varying levels of privacy and anonymity, so whether or not Zcash has the goods to compete with them remains to be seen. Do your own research to decide whether you think this digital currency has what it takes to succeed.
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