Zcash Surges on Nostalgia for Crypto’s Early Days

Investors seem to be pining for 2013, and not because they want to put on a peplum top, scarf a cronut and blast Lorde’s debut hit “Royals.” Instead, they’re boosting a cryptocurrency based on bitcoin but tweaked with the idea that bitcoin has strayed from its original intent. 

Zcash zoomed ahead 55% over the month to Friday and nearly 1,200% over the past year, per CoinMarketCap. Crypto enthusiasts could be tired of poking bitcoin with a stick and saying, “Do something,” as the coin hovers around $80,000. Meanwhile, bitcoin’s mainstream-ization has investors looking to Zcash as an alternative they think might stay truer to crypto’s privacy promise.

Bitcoin, But Actually Anonymous

Ten-year-old Zcash is nearly a carbon copy of bitcoin with a supply that’ll never exceed 21 million tokens, a mining system for adding new tokens, and a four-year halving cycle. But its key difference is the option to hide all transaction details by encrypting them. When using bitcoin, users have pseudonyms connected to public addresses; other details, like amounts, are viewable by anyone peeking at the blockchain. A little sleuthing can often suss out who’s who, and critics say that makes it easier to monitor users.

Josh Swihart, the CEO of Zcash Open Development Lab (a company that works on Zcash), told Consensus Miami audiences this month that bitcoin as a peer-to-peer payment method is fundamentally broken. Now, it mainly functions as a store of value and a wrapper for ETFs. That’s a far cry from its early roots as a way to anonymously buy pizza or drugs. 

Zcash’s privacy-above-all attitude has attracted investments but also pushback: 

• Cameron and Tyler Winklevoss ponied up $50 million last fall to launch Cypherpunk Technologies. It’s basically a Zcash holding company with 300,000 of the tokens. Cypherpunk also has a stockpile of Zcash’s competitor Monero. 
• On the flipside, Binance held a delisting vote for Zcash last year. The largest crypto exchange globally, Binance could be concerned about Zcash’s regulatory status. The EU’s anti-money laundering regulation will ban privacy coins like Zcash starting next summer. 

Fundamentally Opposed: The US has been friendly to privacy coins so far, with the SEC recently closing a review of Zcash without taking any action. But crypto is moving toward more transparency, not less, after the aptly named Clarity Act got pushed to the full Senate for a vote. Privacy coins like Zcash may appeal to crypto’s early users, but they’re a tough sell to regulators looking to crack down on financial crimes.