The latest wave of cryptocurrency mania has mainly focused on bitcoin. However, let’s not forget to give some attention to some of the altcoins, like Zcash (ZEC). Since its market capitalization is smaller than that of bitcoin, there could be a setup for a quick move in the altcoin.
Some folks might not be very familiar with Zcash, so we’ll go over the basics. After learning more about it, you might appreciate its advantages compared to some other well-known crypto coins.
On the other hand, everything’s not perfect in the world of Zcash. It seems that some cryptocurrency exchanges aren’t necessarily on board with this particular token.
So, prospective investors must weigh the pros and cons before taking a position in Zcash. Plus, they should be aware of the recent price action, so we’ll cover that right now.
A Closer Look at the Zcash Price
Zcash was formally introduced in late October of 2016, and it has a “hard cap” (fixed supply) of 21 million ZEC units. Unfortunately, having a hard cap on the supply didn’t help keep the altcoin’s price afloat after its introduction.
While the Zcash price was more than $500 during its first day of trading, a sharp decline would soon follow. In March of 2017, it actually fell below $50 briefly.
The bulls attempted to push and keep Zcash back above $500 in early 2018. However, that surge was short-lived. In January of 2019, the Zcash price touched the $50 level again.
As of Jan. 11, 2021, Zcash showed signs of life as it traded near $86. But then, much of the bullish price action in the altcoin could probably be attributed to an overall bullish sentiment surrounding cryptocurrency, and particularly bitcoin.
To put it another way, a rising tide in bitcoin lifts all crypto boats, including Zcash.
Keeping It Private
One possible advantage of Zcash over Bitcoin is that it’s much less expensive. Yet, that could be said about many crypto tokens.
Really, the defining characteristic and apparent advantage of Zcash is that, as the altcoin’s website explains, “Shielded Zcash transactions are completely private.”
The website further clarifies that Zcash transactions can be verified “without revealing the sender, receiver or transaction amount.” Hence, it can be classified as a “privacy coin.”
So, if you’re a cryptocurrency user who places a heavy premium on privacy, Zcash may be of interest to you. That might sound like an obviously good advantage for a crypto token to have.
The privacy of transactions could certainly be viewed as a major benefit for some Zcash users. However, we have to see the other side of the coin (no pun intended) as not everyone might appreciate the virtues of privacy in finance.
Booted from Exchanges
The main issue with Zcash and with privacy coins generally, it seems, is the potential for money laundering and other illicit uses.
Individuals may want their privacy protected, but governments and regulators might not want financial transactions to go undetected.
And, cryptocurrency exchanges don’t want to get caught in the crossfire if government officials target privacy coins.
One prominent example would be Coinbase UK, which delisted Zcash as Coinbase’s banking partner, ClearBank, evidently felt “uncomfortable” about Zcash’s shielded address features.
Moreover, without offering a specific reason, Bittrex announced that it will be delisting Zcash.
To give you another example, Colorado-based cryptocurrency exchange ShapeShift removed Zcash and some other coins from its platform. ShapeShift Chief Legal Officer Veronica McGregor defended the move. She said, “We’ve taken down the privacy coins because of their regulatory concerns.”
The Bottom Line
With the aforementioned cryptocurrency exchanges distancing themselves from Zcash, investors might be worried that other exchanges will follow their lead.
That’s a valid concern. Therefore, it’s not a terrible idea to wait on the sidelines and carefully monitor to the Zcash price.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article.
David Moadel has provided compelling content – and crossed the occasional line – on behalf of Crush the Street, Market Realist, TalkMarkets, Finom Group, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.