Why is Zcash positioned as "private Bitcoin," how will institutional entry normalize privacy funds, how AI and on-chain monitoring have changed the privacy debate, and why the risks of quantum computing may become a true catalyst for Zcash.

Source:Bankless

Translation: Yuliya, PANews

Editor's note: Zcash has ushered in its first real narrative moment in years. In this episode of the podcast, host David sits down with Tushar Jain, co-founder of Multicoin Capital, and Mert Mumtaz, CEO of Helius, to analyze why privacy may be the missing value storage primitive in cryptocurrency, why Zcash is positioned as "private Bitcoin," how institutional entry will normalize privacy funds, how AI and on-chain monitoring have changed the privacy debate, and why the risks of quantum computing may become a true catalyst for Zcash.

Zcash Survived the Death Cycle, Privacy is the Last Puzzle Piece of Crypto

David: Mert, you have been talking about Zcash for more than half a year. Tushar, Multicoin recently publicly announced a significant investment in Zcash. Tushar, what made you decide to invest heavily in Zcash now?

Tushar: It's mainly a combination of several factors. First, I have to admit that Mert noticed this earlier than I did, while I was initially on the sidelines. I have known about Zcash since its inception, but for a long time, it was basically treated as a "dead project" by the market, with no one paying attention.

Last year, I saw discussions around Zcash suddenly increase, and the price also rose. But at that time, I was thinking: is this hype? Will it last? Later the market corrected, and cryptocurrencies encountered a macro bear market and a series of liquidations, and Zcash's price also fell. But what surprised me was: first, the previous supporters were still supporting it; second, its price support level after the correction was much stronger than during the past few years when it was ignored. It withstood market fluctuations, the core team stayed, and the community remained intact, which proved to me that its consensus is sustainable, and this was a key reason for our decision to invest.

David: Mert, everyone used to know you as a "diehard fan of Solana," and now you are becoming a "spokesperson for Zcash." Tell me about this shift; what do you see in Zcash?

Mert: Two years ago, Zcash core developer Sean Bowe asked me to help evaluate their scalability plan. I initially thought Zcash was done for, but after deep research, I found that its ZK technology is very powerful and indeed useful. However, they were very poor in user experience, hiring, marketing narrative, and market positioning.

By the way, I still prioritize Solana; my company builds Solana infrastructure, and we are even developing a privacy layer on Solana. My personal investment strategy is a "barbell strategy"—one side being Bitcoin and Zcash, the other side being Hyperliquid and Solana.

Later, as cryptocurrencies became more "institutionalized" (such as Wall Street entering the scene), I started feeling confused. Everyone was working on defense tech, drones, cutting-edge AI labs, and I was wondering, what is the crypto space really doing? USDC is cool, but to put it bluntly, it’s just an API interface of the US dollar. I felt that cryptocurrency had deviated from its original intention. I realized that "privacy" is the last puzzle piece forgotten by the crypto world.

The development of cryptocurrencies occurs in several phases: Bitcoin proved that cryptocurrency can be used; Ethereum (Vitalik) proved that it can be programmed; Solana (Anatoly) proved that it can scale. But in the effort to prove that "cryptocurrency is not for crime" in the process of legitimization, privacy got thrown out. Now the regulatory environment may improve, and we have entered a window period where we can bring privacy back to the crypto world and return to its roots.

Why Choose Zcash, and Why Now?

David: So, this is indeed a return to the ideals of cypherpunk. However, there are other privacy coins on the market; why specifically Zcash? Why now?

Mert: The reasons for Zcash's current attention in the market are multifaceted, with institutionalization being one of the key factors. Events such as BlackRock's ETF, Bitcoin derivatives, and Jane Street have rekindled market interest in privacy assets. At the same time, the involvement of well-known figures like Saylor has also brought more exposure to Zcash.

Secondly, there’s the explosion of AI. Initially, I thought AI was overhyped, but later I realized that AI is a supercomputer processing "unstructured data (scattered information online)." Previously, data was structured; now, AI can extract your true identity from the scattered messages you leave across different social networks. As cryptocurrencies become more compliant and fiat on-ramps increase, as long as you or your trading counterpart makes a small mistake on-chain and exposes your wallet address, AI can trace your entire on-chain transaction history. The consequences of lacking privacy have become extremely frightening.

Then there's the macro environment, such as California's wealth tax and the Netherlands' unrealized gains tax, with a global trend towards extreme wealth redistribution.

Finally, and most critically, is the maturity of ZK (Zero-Knowledge) technology. Insiders know about ZK, but for many years it has been impractical for large-scale applications, being slow and offering poor experience. Only in the past two years has ZK truly become usable. Zcash is the pioneer of ZK technology; it suffered many losses in the early days due to technological immaturity, but now it has finally emerged. Zcash now has a trustless shielded pool, and the Zondal (formerly Zashi) team has developed a user-friendly wallet that even allows cross-chain transactions through the intents of the Near protocol or decentralized trading on Solana and Hyperliquid, without relying on centralized exchanges.

As for why not choose Monero? Because Monero uses "ring signature" technology, which is a form of "obfuscation" (1 real transaction mixed with 16 fake transactions). In the face of AI and powerful computing power, this form of obfuscation will eventually be cracked. Zcash's ZK technology genuinely hides data in cryptographic terms. Additionally, Zcash is a fork of Bitcoin, which can be directly understood as "private Bitcoin," a concept that is very easily accepted by the market.

Institutional Adoption and the "Trojan Horse" Strategy

David: I've heard that Zcash has a route that can be accepted by institutions. A Bitwise executive once said that once institutions push Bitcoin into the mainstream, they will create space for Zcash. Tushar, why would institutions accept Zcash?

Tushar: I believe Zcash's brand positioning is very suitable for the public and institutions. When Monero is mentioned, the first reaction is, "That's for criminals." But Zcash is positioned as "providing privacy for ordinary people."

Ordinary people need privacy not because they want to do bad things, but because they do not want to expose their entire financial records to the world. Zcash embodies the hardcore spirit of cypherpunk while being understandable and acceptable to 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 Zcash in its transparent mode, which brings in capital and attention; subsequently, some of this attention will convert into usage of the privacy mode.

Privacy is a fundamental human right. If we only promote privacy in the dark corners of the internet to marginalized groups, it will never grow. We need institutional funds as a Trojan Horse to scale the market so that privacy can truly reach the public.

David: So the bullish logic is: there are a group of people who genuinely need hardcore cryptographic privacy, which forms the underlying base; at the same time, Zcash’s transparent mode allows institutions to enter. Combining both will lead to a skyrocketing market capitalization?

Tushar: Exactly, but it’s also important to remember: Zcash competes in the "value storage" track, just like gold and Bitcoin; value storage requires consensus.

Why do people believe in gold? Because it is rare and shiny.

Why do people believe in Bitcoin? Because it was the first to solve the double-spending problem.

Why do people believe in Zcash? Because it is currently the largest and most focused privacy asset, and people naturally will buy the number one ranked asset. As more people use it to store value, its consensus will become increasingly strong.

Privacy Coins Are Not Mainstream Products

David: Let me throw a cold reality check—if Zcash drops back to $40 in a year, everyone will definitely say, "See, no one cares about privacy." There have been people who hyped the privacy concept before, and they ended up failing miserably. How do you respond?

Mert: Satoshi actually wanted to add privacy to Bitcoin back then too, but the technology of the time couldn’t manage that; he didn’t know how to prevent double-spending while protecting privacy. From a risk-reward perspective, Zcash currently offers extremely high value. Even if it fails, it's still worth doing.

Tushar: We don’t need everyone to care about privacy; we only need a portion of people to care enough to uphold its value. Data from the past 18 months shows that there is indeed a group of people who desperately need private value storage. They didn’t use Zcash before because it was too difficult to use (needing to go through KYC on centralized exchanges), but now the technical bottlenecks have been resolved, and the adoption rate will naturally rise.

Mert: For example, ordinary people buying ETH or SOL can achieve "no banks," but there is still a group of "offshore wealth" individuals who need a "Swiss bank vault" in their pockets. They need absolute privacy to prevent their assets from being tracked or seized. As long as we can capture this segment of high net worth individuals, Zcash’s floor price will be very high.

In the Era of On-Chain Monitoring, Zcash is the Forked Version of Bitcoin

David: I previously interviewed an on-chain tracking company, TRM Labs, and they said that government agencies like the FBI really enjoy the current blockchain because everything is on-chain, making investigations very convenient. This gives me a chill.

Tushar: Right. Many people think, "Government investigations are about catching bad guys; that’s good." But you must understand that the power you grant to the government can one day be used against you by your political enemies. In traditional finance, the government needs a court subpoena to investigate your account; but on a public blockchain, they can casually see all your transactions using AI, with no need for a search warrant. Privacy is the last line of defense to protect ordinary people from abuse of power.

Mert: In the U.S., when being arrested, police will say: "Everything you say can and will be used against you in a court of law." In the crypto world, the equivalent is: "Everything you do on-chain will be recorded forever, and may be used against you in the future." Peter Thiel has expressed disappointment with cryptocurrency because the FBI considers Bitcoin easier to monitor than traditional finance. The market for protecting individual dignity and freedom is several orders of magnitude larger than that for criminals laundering money.

David: Let’s talk about Zcash's tokenomics. How is it different from Bitcoin? Why do you say its current state is an advantage?

Mert: Zcash is a fork of Bitcoin, so it has the same supply cap of 21 million coins, proof of work (mining), and halving every four years. The only difference is that part of its output is allocated to a developer fund, determined by token holders voting on which contributing developers get funding (for instance, the team of Sean Bowe working on the Pacha scalability project).

Tushar: For the past few years, Zcash has been a joke in the market, with its price continuously dropping. It had high inflation, was difficult to use, and lacked marketing. But now, all these disadvantages have been reversed: inflation has decreased, wallets are user-friendly, it can be purchased on decentralized platforms, and macro factors (like California and the Netherlands implementing wealth taxes) are making privacy assets increasingly necessary. Investment should look forward, not rigidly.

David: There’s a term in the crypto circle called "perfect start," like the launch of Bitcoin or the first airdrop of Uniswap. I feel Zcash falls into the category of "perfectly forgotten." It has been abandoned for more than five years, with its price dropping to rock bottom, and early speculators have long since left. Now, it has become a non-controversial project; aside from extreme Bitcoin maximalists, almost no one in the crypto circle dislikes Zcash. Everyone supports it, which is a rare consensus.

Mert: Yes, I’ve found that whether it's people working on Ethereum, Solana, or Cardano, they can all recognize the ideals of Zcash. The privacy track has been suppressed for too long; Zcash's revival can drive the development of the entire on-chain privacy field (like Railgun on Ethereum), which is good for everyone.

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 become the first "quantum-resistant" blockchain. It already possesses "quantum recoverability"—as long as your coins are in the shielded pool, quantum computers cannot touch you.

On a transparent chain like Bitcoin, quantum computers can derive private keys from public keys and transfer your money directly, without you ever noticing, just like losing your mnemonic phrase. What’s more frightening is that data on transparent chains can be "collected now and decrypted later." Once quantum computers mature, all your past transaction records will be cracked. Monero's "obfuscation" won't protect against this.

However, there is no physical data in Zcash's shielded pool (it doesn't know who sent to whom, nor the amount). As long as this week’s updates are completed, users' funds will be secure. By the end of this summer, Sean and the Dev team are expected to make the entire Zcash chain fully quantum-resistant. Zcash was once mocked as a "sandbox for cryptographers," but now having this group of top cryptographers is its greatest advantage in dealing with the quantum crisis.

David: Ethereum is also working on quantum resistance, but Ethereum is too complex. Zcash, like Bitcoin, is simple and has top cryptographers, so it is easier for it to cross the quantum barrier than Ethereum.

Mert: Exactly. Moreover, quantum resistance is not just about preventing hackers; it’s also about providing certainty for big capital. The reason gold is the king of value storage is because it is extremely stable and won't abruptly change. By addressing quantum threats in advance, Zcash aims to eliminate future uncertainties, allowing old-school investors to feel confident about putting their money in. Google plans to achieve post-quantum readiness by 2029, and this threat is not far off.

David: To wrap up, what bullish factors are still ahead for Zcash?

Mert: There are many immediate benefits:

Ledger hardware wallets will soon support Zcash's shielded pool (currently only supporting the transparent mode).

Currently, 31%-32% of Zcash funds are in the shielded pool. As prices rise and trading increases, this proportion will grow, enhancing the privacy network effect.

The Zondal wallet (a wallet with privacy functionality) has received funding support from Paradigm and a16z, considered a rare strong partnership that is expected to drive further development of the Zcash ecosystem and improvement of its core technology.

Block times will be reduced from 75 seconds to 25 seconds, greatly enhancing the transfer experience.

More and more development teams are starting to build applications on Zcash. Although the technical implementation of Zcash based on custom cryptographic curves has some complexity, its privacy advantages have attracted more developers to join.

If cryptocurrencies lack privacy, they deviate from the original intention of cypherpunk. We have been dormant for too long; now it's time to bring it back.

Tushar: In summary, Zcash tells an extremely simple and understandable story: "private Bitcoin." It has both the hardcore values of protecting human dignity and rights, and it happens to converge with the maturity of technology and the outbreak of macro demand. That’s why we are optimistic about it.