Three months of a 15-fold surge, has Zcash become the "encrypted version of Bitcoin"?

Privacy Coin Zcash Surges, Reigniting Privacy Narratives and Becoming a Hot Topic in the Cryptocurrency Space. This article is based on a piece by Will Owens, compiled, edited, and written by ForesightNews. (Background recap: Privacy Coin Carnival! DASH soars 68% to $146, ZEC and DCR spike together, is compliance ushering in an alt season for privacy coins?) (Additional context: The power shift among privacy coins: Zcash’s market capitalization surpasses Monero for the first time. What underlying trends are at play?) The term “cryptocurrency” literally means “hidden” or “secret” money. However, for most of its development, privacy issues were long ignored by the industry. Only recently has this situation begun to change. In the past few weeks, privacy narratives have once again become a focal point. As one of the oldest and most well-known privacy coins, Zcash (ZEC) has gained over 700% since September, as if overnight, everyone in the community has become a privacy expert. However, some prominent figures in the Bitcoin space criticize this rally as “artificial manipulation,” warning buyers that they may ultimately become “bag holders.” Economist Lyn Alden has warned investors not to fall into the trap of “joint pump schemes.” But investor Naval Ravikant quickly countered, offering a fundamental reason for Zcash: “Transparent cryptocurrencies cannot survive under strict government crackdowns.” Remember, Bitcoin’s anonymous creator, Satoshi Nakamoto, acknowledged the network’s privacy limitations in the 2008 white paper. Although services like Samourai and Wasabi, which use CoinJoin, have been popular on Bitcoin, they now face increasing regulatory pressure. Samourai was effectively shut down after its founder was arrested, and Wasabi stopped CoinJoin functionality and blocked US users in June 2024 due to regulatory concerns. Payjoin is a simple tool that can break the “multiple inputs belonging to one person” inference and is gaining attention, but it still requires user interaction. The broader issue Satoshi pointed out relates to Bitcoin’s transparency. As a fork of Bitcoin, Zcash allows users to use zero-knowledge proofs to shield transactions, directly addressing the privacy limitations mentioned by Satoshi. Satoshi also acknowledged Bitcoin’s privacy constraints in forum posts. Key Points After years of silence, ZEC has surged approximately 8 times in the past month, far outperforming the market, forcing a serious discussion about “privacy features.” This debate echoes early Bitcoin discussions about “privacy rights” versus “regulatory realities.” Zcash’s market capitalization has surpassed Monero. User experience improvements (e.g., Zashi Wallet). Cross-chain intent channels reduce operational barriers (NEAR Intents). Anonymity sets are expanding. For the first time, over 30% of ZEC supply is stored in shielded pools. However, compared to Bitcoin, the number of full nodes for Zcash remains relatively low. Development History and Network Upgrades Zcash originated from academic research in 2013, when cryptographers at Johns Hopkins University developed the Zerocoin protocol. To improve efficiency, this protocol evolved into Zerocash and was ultimately launched in 2016 by cryptopunk Zooko Wilcox and his Electric Coin Company as a Bitcoin fork. Its goal was simple: retain Bitcoin’s monetary properties while fixing its most frequently cited design flaw—lack of transaction privacy. Unlike Bitcoin, where all transactions are publicly visible on-chain, Zcash uses a zero-knowledge proof technology called zk-SNARKs. This allows users to prove transaction validity without revealing sender, receiver, or amount. While Monero was launched earlier and uses ring signatures and other techniques to protect privacy, Zcash was the first mainstream blockchain to implement zk-SNARKs at the protocol level. Zcash employs an on-chain funding model, allocating part of block rewards to community-led projects rather than specific organizations. According to proposal ZIP 1016, 8% of block rewards go into the Zcash community fund, and 12% are managed via a voting fund by token holders. Neither Electric Coin Company nor the Zcash Foundation automatically receive a share; they must apply for funding through these mechanisms. Zcash has undergone multiple network upgrades: Sapling (2018): Significantly improved shielded transaction efficiency. Heartwood (2020): Introduced shielded miner rewards, allowing miners to receive block rewards privately. Canopy (2020): Alongside the first halving, completely reformed the funding model, replacing the original founder rewards with a four-year development fund managed jointly by ECC, the Zcash Foundation, and community grants. NU5 / Orchard (2022): The most significant milestone since launch, replacing complex trusted setup ceremonies with Halo 2 recursive proofs, and adding unified addresses to simplify privacy operations. Orchard shielded pools were also launched. NU6 (2024): Implemented protocol-internal treasury management to decentralize the management of funds, increasing transparency in the use of development funds. Next, the protocol is preparing for the NU7 upgrade. Market Performance and Current Status For most of its history, ZEC’s market performance has been poor, underperforming BTC and overshadowed by Monero. Monero is designed to provide basic privacy by default but relies on small-scale, bait-style anonymity sets, with ring signatures mixing real inputs with 15 decoys. This moderate anonymity set has been successfully de-anonymized in some studies. Regulators tend to scrutinize Monero more strictly because its privacy is mandatory. In 2020, the IRS even hired companies like Chainalysis to investigate Monero transactions. In contrast, Zcash offers optional privacy through zk-SNARKs, encrypting data when shielded addresses are used and providing a larger anonymity set. This dual-mode design also makes it easier for users to make operational security mistakes (such as misusing transparent addresses), but if used correctly, Zcash’s cryptography can provide substantially stronger, mathematically more reliable privacy. Additionally, Zcash’s privacy layer is quantum-resistant, whereas Monero’s ring signatures are not (its developers have acknowledged this issue and plan to upgrade in the future). Just looking at ZEC’s price trend tells a completely different story. The past year’s ZEC price movement. (Originally, this included a price chart showing ZEC’s price over the past year; comparison of ZEC and XMR prices; ZEC/BTC daily chart.) Technical Details Zcash follows Bitcoin’s monetary model: a fixed supply of 21 million ZEC, proof-of-work consensus, and halving approximately every four years. It uses the Equihash algorithm, designed to be more ASIC-resistant than Bitcoin’s SHA-256. Block time is about 75 seconds, faster than Bitcoin by roughly 8…