Lets take a moment away from the short term but hectic fluctuations in the crypto market and fix our gaze a bit further on the horizon. Looking at it from long term perspective - which is what most of us should be doing anyway - what are the coins that truly have the potential to overtake Bitcoin (BTC) somewhere down the line?
That is the million dollar question and nobody really knows of course. But what many of us think we know is if any coin is going to overtake BTC, it should add something unique, something special that is not already delivered by BTC. That could be anything, from smart contracts used mainly by enterprises to lightning fast and easy payment processing for both customer and seller. There are numerous of these coins available, with a lot of potential, but there is one in particular I would call out: Zcash (ZEC).
Why ZEC? Isn't it already quite expensive?
Well no, not really. But before I explain that, let me describe why I think this is (one of) the coin(s) of the future.
- Privacy through encryption of shielded transactions. Zcash uses a technology called zk-SNARK (also known as zero knowledge cryptography) which allows checking the validity of transactions without revealing the involved parties or the amount of the transactions. The zk-SNARK technology is explained in detail on Zcash's website in the technology section, but the core is really summarized in the following statement:
"In a zero-knowledge "Proof of Knowledge" the prover can convince the verifier not only that the number exists, but that they in fact know such a number - again, without revealing any information about the number."
The Technology is highly advanced and very fast (few milliseconds) and has proven so potential that Ethereum is now also incorporating it. It is thus no surprise it is considered to be the best privacy technology to date by many experts, including high profile characters such as Edward Snowden who confirmed on several occasions that Zcash could "solve Bitcoin's surveillance problems" and it is the "most interesting Bitcoin alternative".
Indeed, Zooko Wilcox, founder of Zcash, has stated in an interview that surveillance in the world is many times stronger now than it was in communist Eastern Germany. And it is now being controlled largely by private companies. These actors would not have a problem getting the required data from the BTC block chain. However from the ZEC block chain this is currently impossible.
The second reason why I think Zcash is better than BTC is the fact that it uses regular GPU mining rather than ASIC mining (which is by the way the main reason for the Bitcoin Gold fork). ZEC mining is way more decentralized and therefore much less risky than BTC or BCH for that matter.
Third, prices of ZEC have slumped recently. There was a quick surge in the en of September due to rumors of listing on Korean exchanges but the price compared to BTC has been going down gradually in the past 4 months.
As you can see, the price is around 0.05 BTC with lots of potential upwards.
- Transactions at least 4 times quicker due to faster blocktimes (2.5 min for ZEC vs 10 min for BTC) and cheaper 20-25 times cheaper with ZEC (given current prices).
So given the fact that ZEC is underperforming in price compared to BTC, has a far superior product in terms of privacy and is faster and cheaper than BTC, I think ZEC does have a shot of overtaking BTC in the very long term (5-10 years). Yes there are other currencies out there who bring something else that is unique, but certainly, privacy is on for which Zcash is leading the charge.
Are they no doubts about Zcash then?
Actually there are and I welcome the reader to comment on the following. Given the fact that the Zcash team is working with Ethereum devs to incorporate zk-SNARKS into ETH, do you think ZEC may lose it's competitive advantage? Or do you think ETH is more a smart contract platform that will not steal the thunder of a more traditional crypto coin?
Also there is Monero of course, which is also privacy focussed which doesnt allow non shielding of transactions, something that Zcash does. Although I believe that zk-SNARKS are better technology (and Monero may switch to it eventually) it remains a strong contender on the privacy space.
I would be very interested to hear your thoughts on the above, so please let me know below what you think about ZEC, the challenges you see for ZEC or privacy coins in general or anything else on your mind really.
And stay tuned of course!
References:
https://z.cash/technology/index.html
https://z.cash/technology/zksnarks.html
http://www.newsfactor.com/story.xhtml?story_id=023000EHTAA0
https://cryptopotato.com/zcashs-encrypted-blockchain-satoshis-vision-interview-zooko/
https://www.coindesk.com/edward-snowden-zcash-is-most-interesting-bitcoin-alternative/
Images:
https://bittrex.com/Market/Index?MarketName=BTC-ZEC