Since the ZCash launch in 2016, there’s always been an air of how this privacy coin would compete in this environment of never ending surveillance. The mission is aimed at using cryptography to provide enhanced privacy for its users compared to other cryptocurrencies such as Bitcoin, which deals to be pseudonymous, meaning only partially private as long as nobody knows which address the user holds. ZCash, which shares Bitcoin’s code is interesting because unlike Monero, another privacy based protocol that uses a hard to read, obfuscated blockchain to maintain the privacy of the transactions, ZCash uses a type of cryptographic innovation called Zero Knowledge proof “zK-snarks” which deals with shielding the transactions in itself. ZCash coins are either in the “shielded” or “transparent’ pools in which users can choose whether or not to shield their transactions.
ZEC is attractive to investors because it acts as your own personal Swedish bank account in your pocket
-Just like Bitcoin, it’s supply is fixed to 21million. (Currently only 10M ZEC are circulating)
-Highest inflation rate of all cryptocurrencies at 12.5% annually (Bitcoin being 1.85%)
-ZEC users have choice of having full privacy with their transactions or not.
-Fungible, can used for payments and a store of value with similar Bitcoin economics.
The controversy behind ZCash price slump in the past four years can be attributed but not inclusive to the big 20% founders/dev reward that comes from all mined ZEC. Speculators and investors have been unsure about how this affects the current sell side pressure. However, with the recent halving that happened on Nov 17 2020 which happens every 4 years, Zcash’s initial block reward was 12.5 ZEC, now the new block reward will be 3.125 ZEC. Compared to Bitcoin’s halving where the rewards were split from 12.5BTC to 6.25. Additionally, following the halving event there will now be NO MORE founders reward. Now, 80% of the fees from ZEC transactions go to the miners instead of going to the founders. This is imperative in maintaining the decentralized nature of ZEC and is a big step in the right direction.
Technicals: ZEC/USD & ZEC/BTC
Comparing ZEC’s inflationary and fixed supply dynamics vs the USD hyper-deflationary money printing, there’s hardly any doubt that ZEC won’t outperform USD in the longterm. ZEC has been ranging for 761 days, over 2 years with the $100 being strong resistance. There’s an argument to be made that institutional players like Grayscale, Bitwise, Genesis are capping the market at $100 putting it into an accumulation range. As said in previous post with regards to how price behaves in a rangebound environment: The longer the consolidation period, the more explosive the breakout move. Once price breaks above $100 (current price being $82) expect a rapid +150% to the $200–250 levels, followed by a huge breakout above $500 in relation to more retail investors in the space, and the rise of the popularity with privacy coins.
In relation to how price will behave against BTC, it’s safe to say with the rise of the surveillance environment with digital currencies, ZEC will capture a percentage of Bitcoin’s market cap as a privacy focused alternative. ZEC/BTC has bled and ranged for nearly 500 days now. A decisive range breakout above the 0.006 satoshi level, would push towards the 0.01, and 0.014 levels marking it up ~3x vs BTC from the range lows.
Ultimately, Once Bitcoin reaches a total market cap of $1Trillion, putting price around $50,000. If ZCash should capture 1% of that value, it’ll be valued a $10B cryptocurrency. It’s important to note that ZEC was once trading at $5,000 in 2016, and now with better fundamentals than before, I expect stabilization of price between $1,000- $5,000 in 2021–2022.
