Key Insights
Bitcoin
At present, Zcash holds a market capitalization of $6.8 billion. So, if Zcash were to become the next Bitcoin, well, anyone investing heavily now could potentially see remarkable wealth in the future. Considering the risks, it’s worth digging deeper into how this scenario might unfold.
Where to invest $1,000 now? Our analysts have shared their thoughts.
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Approximately every four years, there’s a halving event. Investors should note that the supply dynamics that make Bitcoin an attractive long-term investment have also been observed with Zcash (which has increased around 160% over the last five years, significantly outpacing Bitcoin over the past decade). Importantly, Zcash has adjustments that Bitcoin lacks, which can shift demand dynamics and could make it even more appealing for buying and holding.
Every transaction on a blockchain is available and verifiable by anyone online. For this discussion, think of a public blockchain as an open database where people can pay to write new data and anyone can read it for free. Yet, existing data cannot be altered or removed, meaning information committed to a public blockchain remains there, except in exceptional circumstances.
Some might find the idea of all financial transactions being permanently visible to others quite uncomfortable. Thus, the primary difference between Zcash and Bitcoin is that Zcash offers features to protect transaction privacy; no one outside the parties involved can see who sent money to whom or even other metadata. This is made possible through a relatively new type of cryptographic proof.
When it comes to mining, Zcash has specific funding structures to ensure its ongoing development. Approximately 20% of mined block rewards is allocated toward two funds aimed at advancing the chain and supporting community initiatives. This means that while Zcash mining might be less profitable compared to Bitcoin, it contributes to continuous upgrades and a vibrant ecosystem of useful software. You can manage your Zcash and engage in transactions without giving up your privacy features.
If Zcash’s current market cap merely matched Bitcoin’s, which is around $1.9 trillion, its price would need to soar significantly. In other words, Bitcoin would need to retain its position as one of the world’s most valuable assets, while it stays relatively stagnant or declines during Zcash’s ascendancy. Expecting this transition to happen quickly would be overly optimistic.
On a different note, Bitcoin’s astonishing rise from a financial curiosity to a major asset was largely unexpected. So far, Zcash’s development approach has aimed at resolving the technical and governance issues that Bitcoin has faced, or continues to face. While those issues may have slowed Bitcoin’s ascent somewhat, they certainly didn’t stop it from becoming what it is today.
Considerations Before Investing in Zcash
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We hold positions in Bitcoin and Zcash. The Motley Fool has a stake in and recommends Bitcoin.
