Hi investors, Dean (@deanliu) and Dan (@tradealert) are back and today we’re talking about what is arguably the best under-hyped privacy project in the crypto space: Zcash.
I- In a Nutshell.
Zcash (ZEC) is:
“the first open, permission-less [financial network] (1) that can fully protect the privacy of transactions using zero-knowledge cryptography (2)“.
1. An Open Financial Network.
Just like Bitcoin, ZEC is a POW open-source protocol that can be used, mined and built on top of by anybody around the world. ZEC coins are scarce (21 million coins in total) and there is currently 3,518,731 of them in circulation for a total market-cap of $859,355,102 USD at the time of writing.
2. A Private Financial Network.
Unlike Bitcoin, ZEC is private which mean that transactions on the ZEC network can be verified by miners and committed to the blockchain “without requiring users to reveal any details about their identities, the transaction value or any other metadata“.
Privacy is made possible through a cutting-edge cryptographic technique know as zk-SNARKs implemented on the block-chain by what is arguably one of the best team of cryptographers in the world.
Basically, zk-SNARKs allow for 4 types of transactions to take place on the network:
But why is privacy of transactions so important?
Being able to privately transact and maintain balances is important because it allows ZEC to be a fully fungible cryptocurrency.
Fungibility is an essential characteristic for assets assuming financial functions. In Bitcoin for example, addresses can be easily blacklisted and funds tracked along the block-chain, effectively freezing those funds and possibly compromising the identity of its owner. ZEC coins however do not have an history on the blockchain (unless its user decide it) and so can be used just like fiat money without being at risk of being tracked or blacklisted by regulators.
This visionary focus on privacy is where ZEC’s main value proposition as an investment lies.
II- Investment opportunity.
Privacy is not just an abstract fundamental human right. Privacy is in growing need for businesses and financial institutions..
To put it differently: privacy is a business opportunity.
This opportunity has already prompted JP Morgan Chase to partner with Zcash as early as March 2017 in order to integrate zn-SNARKs technology into their own Ethereum-based private ledger (Quorum). JP Chase was quickly followed by the Ethereum Foundation which announced around the same time its plan to integrate zk-SNARKs technology into their blockchain.
But privacy is also an opportunity for retail investors.
A Swiss Bank Account in Your Pocket.
In November 9, 2017 Grayscale Investments LLC announced the launch of its third investment vehicle, the Zcash Investment Trust Fund which was accompanied by a very comprehensive investment thesis.
In this thesis, Grayscale argues that ZEC will be sold to investors as a private, decentralized alternative to private Swiss bank accounts to hedge off-shore investments. In the thesis (which we recommend you read) Grayscale goes into great details to explain the advantages ZEC possess over traditional off-shore solutions and how the value of the coins could accrue in case this strategy proved successful.
Although these price projections should be taken with a grain of salt, they make a compelling case for the investment opportunity Zcash represents.
To add to this “Swiss bank account in your pocket” narrative, the Zero-Coin Electric company (the company behind Zcash) also announced in January 2018 the coming release of its Sapling upgrade which will allow for dramatic performance improvements on the network and the possibility to send shielded transactions from a mobile phone.
Finally,beside its strong fundamentals, ZEC also looks like a great trade setup:
- One ZEC is currently trading at around $240 USD, which is only x8 from its all-time-low value ($30 USD) and 3,5 times lower than its all-time-high value ($849 USD);
- ZEC has almost entirely retraced against BTC and has hit an accumulation phase which is generally the best time to buy into a trade (or an investment for that matter.
However, there are some risks associated with investing in Zcash.
III- Risks.
First of all Zcash, is not the only cryptographic privacy coin and has to put up with strong competition from projects like Monero, PIVX or ZenCash.
Second of all, Zcash’s price is slave to Bitcoin’s which is in a full-blown bear market so it’s very probable that Zcash would lose quite a bit of its dollar value in case Bitcoin decided to drop further.
With this in mind, it is definitely up to you dear readers to decide if the opportunity justifies the risk.
What do you think of Zcash as an investment?
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Also, make sure to go check out our last feature on the Celsius Wallet.
Cheers,
Dan & Dean.
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