Written by: The Rollup

Translated by: Baihua Blockchain

"Bitcoin is the insurance of fiat currency, and Zcash is the insurance of Bitcoin." — This classic assertion by Naval Ravikant, coupled with the momentum from various KOLs, has led to a rush of capital into Zcash.

With an astonishing increase of over 10 times in just two months, Zcash, the "returning king" of privacy projects, is shaking off the "dark ages" of performance and regulation.

Why are even the most steadfast Bitcoin supporters starting to flock to Zcash? In this interview, Zcash CEO Josh Swihart will delve into how Zcash addresses interoperability challenges and his perspective on the ultimate battle between "fintech coins" and "freedom coins."

The Birth of Zcash and the Core of Privacy

Host: Can you tell us about the "founding fathers" of Zcash and the origin story of going from "0 to 1"? How did these scientists come together to invent this new technology?

Josh: Great question. Zero-knowledge cryptography has been around for over 30 years, but it was mainly theoretical, lacking practical applications in academic settings. When Satoshi Nakamoto launched Bitcoin, he had studied zero-knowledge and particularly wanted to enhance Bitcoin's anonymity or privacy, but he couldn't figure out how to implement it using zero-knowledge cryptography. Hal Finney was also fascinated by zero-knowledge cryptography and had been trying to apply it to Bitcoin.

However, the mathematics was too complex, so scientists around the world began to research independently. There were scientists from various universities, including Johns Hopkins University, the Technion in Israel, and MIT. They eventually figured things out, wrote some papers, and brought their findings to the Bitcoin core team, but the core team said, "It's too new, we can't do it, but you can try it on another chain." So they forked the Bitcoin codebase, added zero-knowledge encryption, and that’s how Zcash was born.

Strong Recovery: Capital Inflow and Interoperability Breakthrough

Host: Zcash recently achieved better interoperability through Near Intents. Do you think this is the most critical factor for Zcash's recent success, or are there other factors at play?

Josh: I think it's a convergence of multiple factors. For the past few years, Zcash struggled with performance, scalability, and user experience, mainly because the cryptography was so new, and we had a lot to figure out. A few years ago, we resolved these issues, and with the activation of Orchard through "Network Upgrade 5," we really began to build the upper-layer ecosystem.

When I decided to become the CEO of ECC in January 2024, we focused on enhancing the user experience. Of course, we will continue core development. The ECC core development team was formed by Zuko. We developed a wallet called Zashi. If you look at the timeline, Zashi is set to launch at the end of Q1 2024, and after that, the shielded transactions or tokens in the shielded pool began to grow exponentially. We partnered with Keystone to provide hardware support, further increasing the growth rate of the shielded pool. By December 2024, we added a swap feature in Zashi (about eight weeks ago).

If you look at the chart of the shielded pool, it’s almost a straight line upwards. This indicates that it’s not serious speculation—it's not that someone bought tokens on a centralized exchange, chased the K-line, and placed orders; they withdrew the tokens from the exchange, fell into fear, self-custodied, and used it as intended. So it has risen significantly, but the truly important chart is the amount of ZEC in the shielded pool, which has almost gone vertical.

Host: Can you explain what a "Shielded Pool" is for new users? How does it operate within Zcash's mechanism, and how does it help achieve privacy?

Josh: As I mentioned, Zcash is a fork of the Bitcoin codebase, so it has the same token economics: a fixed supply of 21 million. There are some adjustments to block time and other parameters, slightly larger to accommodate. There are other innovations, but the foundation is Bitcoin.

You take Bitcoin and add privacy—previously, we knew Bitcoin was traceable. People do not want their wealth exposed on the internet. For example, if you have Bitcoin at a certain address, that address can be tagged. If you bought it on an exchange and then withdrew it to your own, that address becomes associated with you. If you traded with someone who did something wrong (not your fault), then that Bitcoin becomes "tainted" and is no longer fully interchangeable. Transparency brings these issues.

What people want is a secure place to store wealth: untraceable, uncensorable, and fully interchangeable, which is what cryptography provides. Zcash offers two types of addresses: transparent addresses (T-address) and shielded addresses (Z-address). This way, you gain privacy. In Zcash, when you transfer tokens into a shielded address, you gain privacy protection. The shielded pool is the total amount of Zcash stored in shielded addresses.

Host: Where does the term "shielded" come from?

Josh: I think it was coined by Paige. She is no longer with ECC, but as far as I know, she suggested the term "shielded" to Zuko before I joined ECC. I don’t have all the details, but that’s my understanding.

Host: Some have compared Zcash's potential market to the $2 trillion in private funds held by Swiss banks. Is this comparison reasonable? What do you think Zcash's TAM (Total Addressable Market) should be?

Josh: Using Swiss banks to define TAM is a bit problematic; I think it’s too small. Zcash's goal is to store wealth in a way that you can self-custody without needing a third party, but you can still spend it.

We see this in our wallets as well. Near Intents did something clever; they allow us to send a precise amount.

Typically, the conversion works like this: if I exchange 1 BTC for Zcash, I get a numerical amount based on liquidity and current price.

But they allow us to set it up: for example, I want to receive 10 (like 10 USDC), and then the system automatically calculates how much BTC is needed to achieve that. This allows me to sell a T-shirt for $10, only accepting USDC, and I can send you exactly 10 USDC directly from my shielded storage. It’s super simple, just a few clicks in the wallet.

I store it in my "pocket Swiss bank," but I can also spend it easily, with very low fees, very quickly, and you receive the exact amount you want. So, the TAM is for billions of users, not just for a few who can move money to offshore accounts, but for anyone who wants to solve and securely store wealth and interact with people around the world.

Host: Many seasoned Bitcoin supporters and crypto influencers (like Mert) are now starting to get excited about Zcash. Have you talked to them? How does it feel to see the popularity of the Zcash community soar?

Josh: I know Mert; he’s amazing. He’s very important in spreading the word. You mentioned that people first get interested when they see the price rise; that’s very reflexive, and then they start to dive down the rabbit hole and research: what is this token? How does it work? Mert is a huge driving force in this regard. He’s like a machine, talking everywhere about why privacy is so important.

So I’m very grateful to him and the people in the ecosystem. There are some I haven’t met yet, but there are indeed key figures and influencers, both public and many I know privately, who don’t like to be publicly exposed but take what we’re doing and what we’re building very seriously and participate in their own ways.

Host: You previously mentioned the capital flow on Zashi. Did Bitcoin really contribute most of the funds flowing into Zcash?

Josh: I have data from a few days ago. Zashi has been live for about 8 weeks, but the feature for swapping into ZEC has been live for a shorter time, just a few weeks. We first launched the feature for swapping out of ZEC, then cross-chain payments, and only later the swap into ZEC.

So in 8 weeks, we drove about $100 million in capital flow through Near Intents, averaging $2.2 million per day. In terms of currencies, the amount of USDC flowing into ZEC is far ahead, about $11.5 million, then BTC at $6.6 million (data from a few days ago). BTC is in second place. Then there’s Solana, USDT, and ETH, basically in line with market cap expectations. USDC is first, BTC second, and the amount of USDC is twice that of BTC.

So that statement—many hardcore Bitcoin supporters are now switching over—does have some correlation in the data, but the amount of USDC flowing into Zcash is twice that of BTC, with $100 million flowing in over 8 weeks.

Host: Are these small numbers? Or have they exceeded your wildest expectations?

Josh: I don’t think they are small numbers because we are targeting billions of people. I’m very pleased to see this amount of capital, especially since we just launched these features, clearly indicating product-market fit. Obviously, people want to swap in and shield their wealth. It’s great to see this level of usage and adoption. I expect this to continue to grow.

Ecosystem Development, Regulatory Response, and Future Vision

Host: How is the developer ecosystem on Zcash now? What applications are already live or about to launch?

Josh: The Zcash ecosystem now has multiple core development organizations. It wasn’t like this before, but now there’s the Zcash Foundation (an independent 501c3), Shielded Labs (a Swiss charity), and Zuko’s team, including Nate, Jason McGee, and others. They are working on the core protocol. There are also companies like QEDIT that are strengthening cryptography for Zcash.

Bridging is also underway. Some are developing an Avalanche bridge, which I expect will launch soon. There’s a wrapped token on Solana that doesn’t provide privacy but can access some DeFi services. Some are not worth it, like Aztec, which is working on interoperability, and StarkWare has published papers on potential interoperability.

I think one cool point is that we have a very good relationship with the Near team; we are tightly united. Everyone is starting to realize that this is not a zero-sum game. If we want to build a Web3 ecosystem, there won’t be just one chain that eats everything. There’s a unique outcome for each, and we are doing well. We stay focused and don’t try to do what others have already done well. Then we interoperate. Once interoperability is achieved, it unlocks various paralyzed things. This is what is happening in the Zcash ecosystem. I think it will grow exponentially from here.

Host: In the early days, privacy projects were a primary target for regulation. How did you navigate that high-pressure environment? How do you maintain innovation while ensuring compliance? Has the situation changed recently?

Josh: It's really difficult. I think this question is very good, and I believe it might be underestimated how hard it is. We write code, publish code, and in the U.S., this is protected as free speech. This has always been an important decision, and we have done it this way. But we have to make a decision: we do not operate infrastructure. If you operate infrastructure, some politicians or certain people might consider you a money services business (MSB). I don't think so. If you are not holding funds under FinCEN guidelines, you are not an MSB. But some people in the Department of Justice hold this position. So sometimes you are not even sure what the rules are. I know I can write code; that is sanction-free, but only to that extent.

Now the situation is becoming clearer. Certain countries, like… I'll just say the U.S., I have spent a lot of time going back and forth to Washington, Tokyo, and Singapore, meeting with regulators. In some jurisdictions, Zcash is either banned or stifled. Regulators have recognized that transparent blockchains are actually a national security issue; they just haven't had good tools to address it. You can't solve it by putting backdoors in the code, nor can you solve it by enforcing KYC on global public goods.

So I think we still have challenges ahead. But I feel a bit safer now. I'm no longer worried that the FBI will suddenly show up at my door like in those dark days.

Host: Tucker Carlson recently said he doesn't like Bitcoin, believing it to be a CIA-created surveillance tool. Do you think he would be interested in Zcash?

Josh: I think he should be interested. I heard him say he can't use Bitcoin because it actually creates a Panopticon. I 100% agree. It is the preferred tool for law enforcement and government tracking. The problem is, when I communicate with the U.S. government, I find that if you can see people's transactions and history completely, your adversaries can too.

Host: You mentioned that you have had conversations with the U.S. government and other regulators. How do these conversations usually go? Are they really open to the value Zcash can provide, or are they determined to shut it down?

Josh: Like anything, it depends on their motivations. But I think we have done something very important. Someone on my team named Paul has been in Washington, D.C., with a computer science background and a law degree from Georgetown University. He taught me this. Basically, you can't just fly into these places, and this applies anywhere. You can't just walk in and talk to regulators, expecting them to believe what you say or care about your relationships. It takes years to build relationships.

Paul has been building relationships in Washington and just created a project called "Pretty Good Policy," which brings regulators, policymakers, and industry people together for dialogue. We organize these conversations and events to get to know each other and slowly build trust, even though our viewpoints are vastly different. For example, I attended a roundtable with people from the CIA and FBI, and then there were people like me who want completely free privacy currency, discussing issues. This gives us the opportunity to speak the truth when necessary.

Host: You are about to host a hackathon called Ziper Punk. What projects or applications do you hope to see emerge from it?

Josh: Mert is driving this hackathon; it wasn't initiated by us. Previously, everything had to be initiated by ECC, and we couldn't even make announcements. Now… I see various things everywhere, completely unaware of what's happening; the ecosystem is so vibrant. So it's great, I've been sleeping a little less. But without a hackathon… I only saw the full announcement yesterday, so I really have no objections, so I might not be the right person to ask.

Host: For those who are just starting to take an interest in Zcash, what is the best entry point? What do you most want them to know first?

Josh: Start by downloading a wallet and using it; that's where you'll learn the most. There is a lot of FUD and misinformation about Zcash, some of it very intentional. There are some good responses to FUD where people say, "The fact is this." But some people continue to spread the same FUD even when they see the facts.

Follow the right people on Twitter; you can get some information, but download the Zashi wallet. Post on Twitter, "Hey, I'm a Zcash newbie." Share your unified address, send it out, and see what happens. Because you will start receiving some Zcash in your wallet, along with encrypted messages. One feature supported by Zcash is sending messages with money. You can send a 0 ZEC transaction with a message to someone else.

Then you will see people starting to send messages they received from others. As a wallet holder, you may not necessarily see the source unless they tell you in the message. But I think this is a way to start understanding how Zcash works. Its privacy attributes. You take the transaction ID of the message you just received; it’s in the mining block explorer, and you will see nothing, untraceable back to you. You can also see the impact on the shielded pool and how your participation enhances the privacy of the owners. So I think this is the best way to get started.

Host: What is your vision for the "endgame of privacy"? What do you predict the ecosystem will look like in three to five years?

Josh: I think we have a global window of opportunity for attention. I'm not good at predicting, but I can tell you what we are doing. We want to push this technology and capability to the limit—secure currency that protects people's rights.

To do this, it must be scalable. First, at the foundational level, there is a cryptographer and engineer named Shawn Bo, who initiated a project called Project Tachyon. Shawn is a master-level autonomous figure, and Tachyon will fundamentally change how the underlying technology works. There is something called a "waste device," which I won't go into detail about, but it will allow us to serve hundreds of millions of users. He has very ambitious goals, aiming to launch within the next 12 months. Then we can have ultra-fast transactions, etc. So it will not only be better than Bitcoin in terms of privacy, but it will also scale.

On the side, we are building a powerful set of tools to make it easy for people to use ZEC. Our goal is to make it easy for ordinary people to get started, use it, and gain experience. It won't be another multi-currency crypto wallet filled with uncertain flashy things. It will be very simple and user-friendly, but we also need richer features. For example, if I have stored a lot of Zcash and then I die? Can my family access my keys if they don't know where they are? Things like that. How to make it super simple—understanding this is easy to obtain, but how to make the process easy to access? These are examples we will unlock in the coming time.

In my view, it is a better Bitcoin. And Bitcoin has already been captured by fintech. That will be the battleground: you either choose fintech coins or freedom coins. The goal is to be that option for everyone in the world.

Host: One of Zcash's "founding fathers," Eli Ben-Sasson, is now at Starknet, and they are trying to create Bitcoin Fi, which may rely on Bitcoin activating OPCAT. Do you think activating OPCAT for Bitcoin poses a risk to Zcash?

Josh: If you want to encrypt Bitcoin, you will get it on Zcash; you will get it using Zcash. There will be other mechanisms to move things between different chains for different use cases, but fundamentally, Zcash is different from Bitcoin. Bitcoin will never have these attributes; you can try to wrap it with other things, but essentially, it is what it is, and it will remain true to its nature.

How to Participate in Zcash: The Path from 0 to 10 Billion

Host: Zcash has already attracted $100 million in capital inflow. How do you turn that into $1 billion, or even $10 billion?

Josh: We continue to work hard. We keep doing our thing at ECC. And we have good friends like Near. There are also others bridging. Maya is another DEX that now supports ZEC; we need more options like this outside of traditional financial systems. So we can continue to build bridges.

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