Zcash As A New Investment Tool

For investors who prefer a high level of anonymity Zcash introduced in 2016 is a good choice. It is a great blend of anonymity and blockchain technology. With Bitcoin facing issues such as high volatility, slow transactions and high competition from other cryptocurrencies, Zcash offers a favorable alternative for investors who are particular about protecting their privacy. At present (February 26), the price of Zcash is around $413.17. But, is it a valuable investment to consider? Let us look into the potential of Zcash.

Zcash: An overview

Zcash originated from a crypto project, Zerocoin, in 2016. Computer scientist and cryptography expert, Zooko Wilcox, is the brain behind Zcash. Blake 2, Mojo Nation, DigiCash, Sphincs are some of his well-known works.

Zcash targeted better secrecy in using cryptocurrency by improving the code base of the core technology used in Bitcoin. Thus, Zcash emerged as a cryptocurrency boasting of proofs of zero knowledge (also know by the name Zk-Snarks). The proofs helped authorize highly secure financial transactions. No information related to them was revealed.

In spite of being part of public blockchain, anonymity of the beneficiary, sender and transaction are safeguarded with Zcash. It is an open source digital currency. Its decentralized nature stresses on privacy-centric and precise transactions.

The entire supply of Zcash is 21 million, just like that of Bitcoin. It employs the same proof-of-work algorithm in authorizing and processing financial transactions. It ranks among the leading 20 cryptocurrencies. CEX.IO, Bitfinex, Kraken, Bittrex are a few reputed exchanges that allow trading Zcash.

Zcash as a better Bitcoin alternative

  • Although Zcash is a derivative of Bitcoin code, formed as a fork, it has its own separate identity and specific blockchain;
  • Zcash uses Zk-Snarks, which affords better privacy;
  • While Bitcoin uses private keys for user identification, which can expose the user easily, Zcash does not reveal any data about the transaction or user identity. It just reveals the occurrence and nothing else;
  • The selective nature of the privacy options is a big selling point for Zcash. For instance, in a transaction, you have the freedom to choose whether to reveal details of a wallet or transaction sum involved. This selective disclosure concept is a big advantage as it leaves the alternative of complying with the various rules and regulations related to the use of money.

Investing in ZEC: points to mull over

With definite advantages over Bitcoin and several altcoins, investing in Zcash is what every crypto trader would mull over. Given the volatile nature of a cryptocurrency market, investing in any cryptocurrency carries certain risks. This applies to Zcash too. Here are certain factors:

  1. Although Zcash is high on privacy, it lacks full-fledged anonymity;
  2. Since the privacy of transactions is selective, not many users will utilize it. This enables easy tracking of transactions, as the technology here is transparent in general;
  3. The Zk-Snark algorithm used by Zcash is still in its fledgling stage. It can harbor vulnerabilities, which can be exploited by hackers;
  4. Nearly 10 to 20 percent of Zcash mined in its initial 4 years of inception will be given to its creators or stakeholders of the Zooko Wilcox headed company. This kind of policy is not present elsewhere in the industry.

How wise are you in investing in Zcash?

Now that you have considered the factors outlined above, here is a closer look on what you stand to gain and lose by investing in Zcash:

During its launch, aggressive advertising led to a high level of volatility in the price of Zcash. It stood at the range of $400 to a whopping $2,200 in the initial days in 2016. At that time Bitcoin value stood at just $700. The high profile owners like Roger Ver, Fred Ehrsam, Vitalik Buterin and Gavin Andersen further helped to spike the prices.

As mentioned before, with a certain percentage of coins being rewarded to its creators, the high inflation rate of Zcash of around 876 percent is a big drawback. On the other hand, for Bitcoin, Monero and Litecoin, the value is around 20 percent.

It is backed by JP Morgan, a renowned player in Wall Street. Zcash is collaborating with the popular institution to increase privacy in Quorum, the blockchain protocol used by JPM. This collaboration is seen as a good thing, and a bad one too.

On the good side, its partnership with one of the biggest financial institutions globally is  a promising thing. But with the main ideology behind cryptocurrency being namely privacy and autonomous transactions, this partnership may deter many users from the  fairly new digital currency.

But still it owns some stellar features that users prefer, such as strong privacy, faster transactions, and more transaction volume capability, which is not the case with popular cryptocurrencies like Bitcoin. Besides, the market capitalization of Zcash is roughly $1.4 billion, making it a high-ranked cryptocurrency.

Future value predictions of Zcash

Zcash’s developer community is actively involved in further improving the assets of the digital currency. In the pipeline are concepts such as integrating the best features of Ethereum into Zcash, and by that enhancing its exclusive advantages. Also in the works is a similar concept with other blockchains and Bitcoin. The aim is to enable quick trades among the various blockchains. This collaboration is termed as XCAT (cross chain atomic trades).These measures if success can make Zcash omnipotent.

Will Zcash be profitable as an investment tool? Being high on anonymity (which only Monero had before Zcash started circulating), it is certainly a good choice to consider, especially if anonymity is a prime consideration among cryptocurrency users. With strong support from key influencers in the cryptocurrency industry, such as Vitalik Buterin, an unusual yet profitable JP Morgan partnership and future innovations being developed, Zcash shows great promise as an investment tool. However, refrain from making emotional decisions while investing in any cryptocurrency. In the upcoming years, high inflation and reliability of the support system will dictate the value of the cryptocurrency. So investing with caution is the wise thing to follow.

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