Source: Bankless

Compiled by: Yuliya, PANews

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

Zcash survived its death cycle; privacy is the final piece of the encryption puzzle.

David: Mert, you've been talking about Zcash for over half a year now. Tushar, Multicoin recently 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 initially took a wait-and-see approach. I knew about the Zcash project from its inception, but for a long time, it was basically considered a "dead project" by the market and no one paid any attention to it.

Last year, I saw a sudden surge in discussion surrounding Zcash, and its price rose. But I wondered: was this just hype? Could it last? Later, the market corrected, cryptocurrencies experienced a macro bear market and a series of liquidations, and Zcash's price fell. But what surprised me was this: first, those who had previously supported it remained; second, its post-correction price support levels were much stronger than when it was ignored in the past few years. It withstood the market shakeout, the core team stayed, and the community remained, proving to me that its consensus was sustainable , which was the main reason we decided to invest.

David: Mert, everyone used to know you as a "Solana die-hard fan," but now you're practically a "Zcash ambassador." Tell me about this transformation. What have you seen in Zcash?

Mert: Two years ago, Sean Bowe, a core developer of Zcash, asked me to help evaluate their scaling solution. At the time, I also thought Zcash was dead, but after in-depth research, I found that its ZK technology was very powerful and actually useful. It's just that they did a poor job in user experience, recruitment, marketing narrative, and market positioning.

By the way, I'm still "Solana-first." My company builds Solana infrastructure, and we're even developing a privacy layer on top of Solana. My personal investment strategy is a "barbell strategy" (betting on both ends)—one end is Bitcoin and Zcash, and the other end is Hyperliquid and Solana.

Later, as cryptocurrencies became increasingly "institutionalized" (for example, with Wall Street entering the market), I began to feel lost. Everyone was getting involved in defense technology, drones, and cutting-edge AI labs. I wondered, what exactly was the crypto world doing? USDC was cool, but frankly, it was just an API interface for the US dollar. I felt that cryptocurrencies had strayed from their original purpose. I realized that "privacy" was the last piece of the puzzle that the crypto world had forgotten.

The development of cryptocurrencies has gone through several stages: Bitcoin proved that cryptocurrencies were usable; Ethereum (Vitalik) proved that they were programmable; Solana (Anatoly) proved that they could scale. However, in the struggle to legitimize cryptocurrencies by proving that "cryptocurrencies are not for criminal purposes," privacy was sacrificed . Now, with a potentially better regulatory environment, we have a window of opportunity to bring privacy back to the crypto world and allow it to return to its original purpose.

Why choose Zcash, and why now?

David: So, this really is a return to cypherpunk ideals. But there are other privacy coins on the market, so why Zcash? And now?

Mert: Zcash's current market attention is due to a variety of factors, with institutionalization being a key one . Events such as the BlackRock ETF, Bitcoin derivatives, and Jane Street have reignited market interest in privacy assets. Meanwhile, the involvement of prominent figures like Saylor has also brought Zcash greater exposure.

Secondly, there's the explosion of AI . Initially, I thought AI was overrated, but later I realized that AI is a supercomputer processing "unstructured data" (scattered information online). Previously, data was tabular; now, AI can directly uncover your true identity from scattered comments on different social networks. As cryptocurrencies become more compliant and fiat currency deposits and withdrawals increase, if you or your trading counterpart make a small mistake on-chain, exposing your wallet address, AI can trace it back and uncover your entire lifetime of on-chain transaction records. AI makes the consequences of a lack of privacy extremely terrifying.

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

Finally, and most importantly, is the maturity of ZK (Zero-Knowledge Proof) technology . Everyone in the industry knows ZK, but for many years it couldn't be widely adopted due to its slow speed and poor user experience. Only in the last two years has ZK truly become usable. Zcash is the pioneer of ZK technology, suffering many setbacks in its early stages due to its immature technology, but now it has finally made it. Zcash now has trustless shielded pools, and the Zondal (formerly Zashi) team has also created a wallet with a great user experience. You can even conduct cross-chain transactions through the Near protocol's intent, or decentralize trading on Solana and Hyperliquid, no longer needing to rely on centralized exchanges.

As for why Monero wasn't chosen? Because Monero uses "ring signature" technology, which is a kind of "smokescreen" (one genuine transaction mixed with 16 fake transactions). Faced with AI and powerful computing capabilities, this smokescreen will eventually be cracked. Zcash, on the other hand, uses ZK technology, which truly hides data cryptographically. Moreover, Zcash is a fork of Bitcoin; you can think of it as "private Bitcoin," a concept that is very easily accepted by the market.

The organization employs a "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'll make room for Zcash. Tushar, why would institutions accept Zcash?

Tushar: I think Zcash's brand positioning is very suitable for both the general public and institutions. When people mention Monero, their 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 don't want to expose all their financial records to the world. Zcash has both the hardcore spirit of cypherpunks and can be understood and accepted by the general public.

Mert: To add to that, 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 the transparent mode, which brings funds and attention; subsequently, some of this attention will be converted into the use of the privacy mode.

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

David: So the bullish logic is: there's a group of people who genuinely need hardcore cryptographic privacy, which forms the core; at the same time, Zcash's transparent model allows institutional investors to enter. Combining these two factors, will the market capitalization take off?

Tushar: That's right, but also remember this: Zcash is competing in the "store of value" arena, just like gold and Bitcoin, and store of value requires a consensus.

• Why do people value gold? Because it is rare and shiny.
• Why endorse Bitcoin? Because it was the first to solve the double-spending problem.
• Why endorse Zcash? Because it's currently the largest and most watched privacy asset by market capitalization, so naturally, people will buy the top-ranked one. As more and more people use it to store value, its consensus will grow stronger.

Privacy coins are not mass-market products.

David: Let me throw some cold water on that. If Zcash drops back to $40 in a year, everyone will definitely say, "See? Nobody cares about privacy." People have hyped up the concept of privacy before, and they all ended up failing miserably. How would you refute that?

Mert: Satoshi Nakamoto actually wanted to add privacy to Bitcoin, but the technology at the time couldn't do it. He didn't know how to prevent double-spending (spending the same money twice) while protecting privacy . From a risk-reward perspective, Zcash is currently extremely cost-effective. Even if it fails, it's still something worth doing.

Tushar: We don't need everyone to care about privacy; just a portion of people caring is enough to sustain its value. Data from the past 18 months proves that there is indeed a group of people who desperately need a private store of value. Previously, they didn't use Zcash because it was too difficult to use (requiring KYC on decentralized exchanges), but now that the technical bottlenecks have been overcome, adoption will naturally increase.

Mert: For example, ordinary people can achieve "bankless" wealth by buying ETH or SOL, but there is another group of people in the world with "offshore wealth" who need a "Swiss bank vault" in their pockets. They need absolute privacy to prevent their assets from being tracked or confiscated. As long as this group of high-net-worth individuals can be captured, the floor price of Zcash will be very high.

In the era of on-chain monitoring, Zcash is a fork of Bitcoin.

David: I interviewed TRM Labs, an on-chain tracing company, and they said that government agencies like the FBI really like blockchain now because everything is on-chain, making investigations so convenient. This gave me a bit of a chill.

Tushar: Exactly. Many people think, "Government investigations are for catching bad guys, which is great." But you must understand that the power you give to the government could one day be used against you by your political enemies. In traditional finance, the government needs a court summons to check your accounts; but on a public blockchain, they can use AI to see all your secrets without a warrant. Privacy is the last line of defense protecting ordinary people from the abuse of power.

Mert: When arrested in the US, police say, "Everything you say can and will be used against you in court." In the crypto world, it's: "Everything you do on the chain will be recorded forever and could be used against you in the future." Peter Thiel was disappointed with cryptocurrencies because the FBI felt Bitcoin was easier to monitor than traditional finance. The market for protecting individual dignity and freedom is orders of magnitude larger than the market for criminals to launder money.

David: Let's talk about Zcash's token economics. How does it differ from Bitcoin? Why is its current state actually an advantage?

Mert: Zcash is a fork of Bitcoin, so it also has a cap of 21 million tokens, uses proof-of-work (mining), and halves every four years. The only difference is that a portion of its output goes to a developer fund, which is decided by token holders to which contributing developers (such as the Sean Bowe team working on the Pacha scaling project).

Tushar: Zcash was a joke in the market for the past few years, with its price constantly falling. It used to be plagued by high inflation, difficult to use, and lacking marketing. But now, all those drawbacks have been reversed: inflation has decreased, the wallet is easier to use, it can be purchased on decentralized platforms, and macroeconomically (for example, California and the Netherlands are implementing wealth taxes), people are increasingly demanding private assets. Investing requires looking forward, not clinging to outdated ideas.

David: There's a term in the crypto world called a "perfect start," like the birth of Bitcoin or Uniswap's first airdrop. I think Zcash is a case of "perfectly forgotten." It was abandoned for over five years, its price plummeted, and early speculators had long since left. Now, it's become an uncontroversial project; aside from extreme Bitcoin purists, almost no one in the crypto world dislikes Zcash. Everyone supports it, which is a rare kind of consensus.

Mert: Yes, I've found that people working on Ethereum, Solana, and Cardano all agree on the Zcash concept. The privacy space has been suppressed for too long, and Zcash's resurgence can drive the development of the entire on-chain privacy space (such as Railgun on Ethereum) , which is good for everyone.

Advantages of quantum-resistant computing and recent catalysts

David: One last topic: quantum computing. Everyone knows that once quantum computers mature, Bitcoin's cryptography will be broken. Where does Zcash stand in this regard ?

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 can't do anything to you.

On a transparent blockchain like Bitcoin, a quantum computer can deduce the private key from the public key and directly transfer your money without your knowledge, just like losing your mnemonic phrase. Even more frightening is that data on a transparent blockchain can be "collected now and decrypted in the future." Once quantum computers are mature, all your past transaction records will be compromised. Monero's "smokescreen" cannot prevent this.

However, Zcash's shielding pool contains no physical data (it doesn't know who sent the data to whom, or the amount). Once this week's update is complete, users' funds will be safe. It is expected that by the end of this summer, Sean and Dev's team will have the entire Zcash chain fully quantum resistant. Zcash was previously ridiculed as a "cryptographer's self-indulgent sandbox," but now, having this team of top cryptographers is its biggest advantage in dealing with the quantum crisis.

David: Ethereum is also working on quantum resistance, but Ethereum is too complex. Zcash is as simple as Bitcoin, and it has top-notch cryptographers, so it's easier for it to overcome the quantum barrier than Ethereum.

Mert: Exactly. And quantum resistance isn't just about protecting against hackers; it's about providing certainty for large sums of money. Gold is the king of value stores because it's extremely stable and doesn't undergo sudden changes. Zcash's early solution to the quantum threat aims to eliminate future uncertainty and encourage traditional investors to put their money in. Google plans to achieve post-quantum readiness by 2029, so this threat isn't far off.

David: In conclusion, what other positive developments are coming for Zcash?

Mert: There are many positive developments that will be implemented soon:

• The Ledger hardware wallet will soon support Zcash's shielding pool (currently only transparent mode is supported).

• Currently, 31%-32% of Zcash's funds are in a shielded pool. As prices rise and transactions increase, this percentage will continue to rise, and the privacy network effect will become stronger.

• Zondal wallet (a privacy-enabled wallet) has secured funding led by Paradigm and a16z. This collaboration is considered a rare and powerful alliance, expected to drive further development of the Zcash ecosystem and refinement of its core technologies.

• Block time will be reduced from 75 seconds to 25 seconds, significantly improving the transfer experience.

• More and more development teams are starting to build applications on Zcash. Although Zcash's implementation based on custom cryptographic curves has some complexity, its privacy advantages are attracting more developers to join.

Cryptocurrencies without privacy betray the very essence of cypherpunks. We've been asleep for too long; it's time to bring it back.

Tushar: In summary, Zcash tells an extremely simple and easy-to-understand story: "Private Bitcoin." It possesses the core values ​​of protecting human dignity and rights, and it happens to converge on all the right conditions at a time of technological maturity and explosive macro-demand. This is why we are optimistic about it.