From “Project Death” to Institutional Heavy Inventory: Zcash Strikes Back with a Private Bitcoin Narrative
Author: Bankless
Compiled by Yuliya, PANews
Original title: Opinion: After surviving the death cycle, why can Zcash, the origin of privacy, return to the mainstream view?
Editor's note: Zcash has had its first true narrative moment in years. In this podcast, host David sits down with Multicoin Capital co-founder Tushar Jain and Helius CEO Mert Mumtaz to analyze why privacy may be a missing value storage primitive in cryptocurrencies, why Zcash is positioned as a “private Bitcoin,” how the entry of institutions will normalize privacy funds, how AI and on-chain surveillance are changing the privacy debate, and why the risks of quantum computing may become Zcash is a real catalyst.
Zcash survives the death cycle, privacy is the last puzzle of encryption
David: Mert, you've been talking about Zcash for more than half a year. Tushar,Multicoin also recently publicly announced a heavy Zcash position. Tushar, what made you decide to invest in Zcash on a large scale now?
Tushar: Mainly a combination of several factors. First of all, I have to admit that Mert paid attention to this earlier than me, and I had a wait-and-see attitude at first. I've known the Zcash project since its inception, but for a long time, it was basically treated as a “death project” by the market, and no one paid attention to it.
Last year, I saw a sudden increase in discussions surrounding Zcash, and the price went up. But I was wondering: is this hype? Can it last? The market later recovered, and the cryptocurrency experienced a macro-bear market and serial liquidations, and the price of Zcash also fell. But what surprised me: first, those who supported it before are still supporting it; second, its price support level after the pullback is much stronger than when no one paid attention to it in the past few years. It has withstood the market wash, the core team hasn't left, and the community is still there, which proved to me that its consensus is sustainable, which is the main reason we decided to invest.
David: Mert, everyone used to know you're a “Solana die-hard fan,” but now you're almost a “Zcash spokesperson.” Tell me about this transformation, what are you seeing in Zcash?
Mert: Two years ago, Sean Bowe, the core developer of Zcash, asked me to help evaluate their expansion plans. I also thought Zcash had cooled down at the time, but after thorough research, I discovered that its ZK technology was excellent and really useful. It's just that they're doing a poor job in user experience, recruitment, marketing narrative, and market positioning.
BTW, I'm still a “Solana First”; my company works on Solana's infrastructure, and we're even developing a privacy layer on Solana now. My personal investment strategy is a “barbell strategy (two-way bet)” — Bitcoin and Zcash on one end and Hyperliquid and Solana on the other.
Later, as cryptocurrencies became more and more “institutionalized” (such as the entry of Wall Street), I began to get confused. What kind of defense technology, drones, and cutting-edge AI laboratories were everyone working on. I was wondering, what exactly is the coin industry doing? USDC is cool, but to put it bluntly, it's just an API interface for the dollar. I feel that cryptocurrencies have strayed from their original purpose. I realized that “privacy” was the last piece of the puzzle forgotten in the crypto world.
Cryptocurrency development has several stages: Bitcoin has proven that cryptocurrencies can be used; Ethereum (Vitalik) has proven that it can be programmed; Solana (Anatoly) has proven that it can be expanded. However, in the process of legalizing “cryptocurrencies are not used to commit crimes,” everyone lost their “privacy.” Now that the regulatory environment is likely to improve, we have ushered in a window where we can bring privacy back to the crypto world and return it to its roots.
Why Zcash, and why now?
David: So, it's really an ideal return to cryptopunk. However, there are other privacy coins on the market, so why Zcash? Why now?
Mert: There are many reasons why Zcash is receiving attention in the current market, and institutionalization is one of the key factors. Events such as BlackRock ETF, Bitcoin derivatives, and Jane Street have once again heated up the market's focus on private assets. At the same time, the participation of famous people such as Saylor also brought more exposure to Zcash.
Next is the explosion of AI. At first I thought AI was overrated, but then I realized that AI is a supercomputer that processes “unstructured data (scattered information online).” Previously, data was tabular, but now AI can directly extract your true identity through your scattered comments on different social networks. As cryptocurrencies become more and more compliant, there are more and more fiat deposit and withdrawal channels. As long as you or your counterparty makes a small mistake on the chain and reveals your wallet address, AI can go through the trouble and pull out all of your lifetime on-chain transaction records. AI has made the consequences of a lack of privacy extremely frightening.
Then there is the macro environment. For example, California is taxing wealth, the Netherlands is taxing unrealized gains, and there is a global trend towards extreme wealth redistribution.
Finally, and most critical, is the maturity of ZK (Zero-Knowledge Proof) technology. Everyone in the industry knows ZK, but over the past many years, it has not been able to be applied on a large scale at all. The speed is slow and the experience is poor. It wasn't until the last two years that ZK really became easy to use. Zcash is the originator of ZK technology. In the early days, it suffered a lot of losses due to immature technology, but now it has finally made it through. Now that Zcash has a shielded pool without trust, the Zondal (formerly Zashi) team has also created a wallet with great experience. You can even trade across chains with the intention of using the Near Protocol, or decentralized transactions on Solana and Hyperliquid, without relying on centralized exchanges.
As for why not choose Monero (Monero)? Because Monero uses a “ring signature” technology, this is an “obscuring method” (1 real transaction mixed with 16 fake transactions). In the face of AI and powerful computing power, this obstacle will sooner or later be broken. The ZK technology used by Zcash actually cryptographically hides the data. Also, Zcash is a fork of Bitcoin, and you can directly understand it as “private Bitcoin,” a concept that is very easily accepted by the market.
Institutional adoption and “Trojan horse” strategies
David: I've heard that Zcash has a route that can be accepted by institutions. Bitwise executives have said that when institutions push Bitcoin into the mainstream, they will make room for Zcash. Tushar, why are institutions accepting Zcash?
Tushar: I think Zcash's brand positioning is perfect for the public and institutions. When it comes to Monero, everyone's first reaction is “it's for criminals.” However, Zcash's position is to “provide privacy for ordinary people.”
Ordinary people need privacy, not because they want to do bad things, but because they don't want to expose all of their financial records to the world. Zcash has both the hardcore spirit of cryptopunk and can be understood and accepted by the public.
Mert: To add, Zcash has a “Trojan horse” strategy. It has both a transparent mode (like Bitcoin) and a privacy mode (shielded pool). Institutions can first buy the transparent model of Zcash, which brings in capital and attention; then, some of this attention will be converted into the use of the privacy model.
Privacy is a basic human right. If we only promote privacy in the dark corners of the internet with marginal people, it will never do much. We need institutional funding as a Trojan horse to expand the plate so that privacy can truly reach the public.
David: So the bullish logic is: there is a group of people who really need hardcore cryptographic privacy, which forms the basic market; at the same time, Zcash's transparency model allows institutions to enter the market. If the two are combined, will market capitalization take off?
Tushar: Right, but keep in mind: Zcash competes on a “store of value” circuit. Just like gold and Bitcoin, a store of value requires a consensus.
Why do people agree with gold? Because it's rare and shiny.
Why do you agree with Bitcoin? Because it was the first to solve the double flower problem.
Why choose Zcash? Because it is now the privacy asset with the largest market value and the highest level of attention, people will naturally buy the number one. As more people use it to store value, its consensus will grow stronger.
Privacy coins are not a popular product
David: A splash of cold water. If Zcash drops back to $40 after a year, people will definitely say, “Look, nobody cares about privacy at all.” In the past, there were also people who hyped up the concept of privacy, but in the end, they all died very miserably. How do you refute it?
Mert: Satoshi Nakamoto actually wanted to add privacy to Bitcoin back then, but technology couldn't do it at the same time. He didn't know how to protect his privacy while preventing double spending (spending a sum of money twice). Judging from the risk-reward ratio, Zcash is now extremely cost-effective. Even if it fails, it's something worth doing.
Tushar: We don't need everyone to care about privacy; just a few people care enough to support its value. The past 18 months of data prove that there is indeed a group of people who are in dire need of a private store of value. Previously, they didn't use Zcash because it was too difficult to use (requires KYC on decentralized exchanges), but now that technical bottlenecks have been cleared, the adoption rate will naturally rise.
Mert: For example, ordinary people can achieve “no bank” by buying ETH or SOL, but there are also a number of “offshore wealth” people in the world. What they need is a “Swiss bank vault” in their pockets. They need absolute privacy to prevent assets from being traced or confiscated. As long as it can beat this group of high-net-worth individuals, the reserve price of Zcash will be very high.
In the era of on-chain surveillance, Zcash is a forked version of Bitcoin
David: I've previously interviewed TRM Labs, an on-chain tracking company. They said that government agencies like the FBI really like the current blockchain because everything is on the chain, so it's so easy to investigate cases. It made me shudder a little bit.
Tushar: Exactly. Many people think “the government is investigating the case to catch the bad guys, which is very good.” But you must understand that the powers you give to the government may one day be used against you by your political opponents. In traditional finance, the government also requires a court subpoena to check your accounts; but on public blockchains, they can use AI to look at all your underwear without a search warrant at all. Privacy is the last line of defense for ordinary people from abuse of power.
Mert: When you're arrested in the US, the police will say, “Every word you say will be evidence in court.” In the crypto world, it's: “Everything you do on the chain will always be recorded and may be used against you in the future.” Peter Thiel was once disappointed with cryptocurrencies because the FBI felt that Bitcoin was better monitored than traditional finance. Markets that protect personal dignity and freedom are several orders of magnitude larger than markets where criminals launder money.
David: Let's talk about Zcash's tokenomics. How is it different from Bitcoin? Why is it an advantage in its current state?
Mert: Zcash is a fork of Bitcoin, so it's also capped at 21 million units. Proof of Work (mining) is halved every four years. The only difference is that a portion of its output will be used as a developer fund, and token holders vote to decide which developers to contribute (such as Sean Bowe's team working on the Pacha expansion project).
Tushar: Zcash has been a joke in the market for the past few years, and the price has been falling. It used to be highly inflated, difficult to use, and unmarketed. But now, all of these shortcomings have been reversed: inflation is down, wallets are easy to use, can be bought on decentralized platforms, and at the macro level (for example, California and the Netherlands are subject to wealth taxes), people increasingly need private assets. Investments need to look ahead; they must not seek swords out of the blue.
David: There is a term called “perfect start” in the crypto world, such as the birth of Bitcoin, Uniswap's first airdrop. I think Zcash is “perfectly forgotten.” It has been abandoned by everyone for more than five years, the currency price has bottomed out, and the early speculators have long since disappeared. Now it's an uncontroversial project; apart from extreme Bitcoin fundamentalists, almost no one in the crypto community hates Zcash. It's a rare consensus that everyone can support it.
Mert: Yes, I've found that people who make Ethereum, Solana, and Cardano agree with the Zcash philosophy. The privacy circuit has been suppressed for too long, and Zcash's recovery can drive the development of the entire on-chain privacy circuit (such as Railgun on Ethereum), which is good for everyone.
Anti-quantum computing advantages and recent catalysts
David: Last topic: quantum computing. Everyone knows that once quantum computers mature, Bitcoin's cryptography will be cracked. What is Zcash's position on this issue?
Mert: Zcash will almost certainly be the first “quantum-resistant” blockchain. It now has “quantum recoverability” — as long as your coins are in a shielded pool, quantum computers can't do anything about you.
On a transparent chain such as Bitcoin, quantum computers can calculate the private key from the public key and directly transfer your money, and you can't even notice it, just like you've lost the mnemonic phrase. What's even scarier is that the data on the transparent chain can be “collected now and decrypted in the future.” When quantum computers mature, all of your past transaction records will be broken. Monero's “eye blocking law” can't prevent this either.
However, there is no physical data at all in Zcash's shielded pool (no idea who sent it to whom, no idea how much). As soon as this week's update is complete, users' funds are safe. By the end of this summer, Sean and Dev's team are expected to make the entire Zcash chain fully quantum-resistant. Zcash was previously mocked as a “cryptographer's self-indulgence sandbox,” but now, having this group of top cryptographers is its greatest advantage in dealing with the quantum crisis.
David: Ethereum is also doing quantum resistance, but Ethereum is too complicated. Zcash is as simple as Bitcoin and has top cryptographers, so it's easier to cross the quantum barrier than Ethereum.
Mert: Exactly. Moreover, anti-quantum resistance is not only to prevent hackers, but also to provide certainty for large sums of money. The reason why gold is the king of value storage is because it is extremely stable and does not mutate abruptly. Zcash solved the quantum threat ahead of time to eliminate future uncertainty and give old-school investors the courage to put their money in. Google plans to achieve post-quantum preparation in 2029, and this threat is not far off.
David: To sum it up, what are the next benefits of Zcash?
Mert: There are many advantages of being able to implement it right away:
The Ledger hardware wallet will soon support Zcash's blocked pool (currently only transparent mode is supported).
Currently, Zcash has 31% to 32% of its capital in the shielded pool. As prices rise and transactions increase, this ratio will get higher and higher, and the privacy network effect will become stronger and stronger.
The Zondal wallet (a wallet that supports privacy features) has received financial support co-led by Paradigm and A16z. This collaboration is considered a rare and powerful alliance, and is expected to drive further development of the Zcash ecosystem and refinement of core technology.
The block generation time will be reduced from 75 seconds to 25 seconds, and the transfer experience will be greatly improved.
More and more development teams are starting to build apps on Zcash. Despite the complexity of Zcash's technical implementation based on custom cryptographic curves, its privacy benefits have attracted more developers to join.
Without privacy, cryptocurrencies deviate from the original purpose of cryptopunk. We've been sleeping too long and now it's time to bring it back.
Tushar: In summary, Zcash tells an extremely simple and easy-to-understand story: “private bitcoin.” It both protects human dignity
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