An Analytical Guide To Investing In Zcash In 2021
Where will Zcash price go in 2021?
With the crypto market on the rise, investors look forward to cryptocurrencies that offer something new and different. Zcash, a hard fork of Bitcoin, is known in the market for the privacy it offers for transactions. But to maximise profit, or minimize risks, in crypto investment, one must establish the drivers of the said cryptocurrency’s price. So what drives the price of Zcash?
The three factors that determine the price of Zcash are:
- Competing coins
- Zcash traction
- The transaction issues
But first, let’s delve a little into why Zcash?
Zcash is a hard fork of Bitcoin. The founder, Zooko Wilcox, was very impressed with the blockchain technology of Bitcoin. Still, after seeing some evident flaws, he decided to fork a coin out of Bitcoin with numerous improvements that would make it stand apart from the original cryptocurrency.
The issue that Zcash mainly focused on resolving was privacy. As Bitcoin’s blockchain is public, it lacks the anonymity or privacy of transactions. According to Zooko, this was a factor that contributed to the stopping of Bitcoin from becoming a global phenomenon. Hence, the hallmark feature of Zcash is its privacy.
Zcash believes in privacy, especially when it comes to financial data, as it is crucial for economic opportunity, equality and freedom. Through Zcash, users can make completely anonymous transactions, neither the details of the sender or the receiver are revealed. It is the first confidential open-source network. The network does not compromise on the security or reliability either.
Although Zcash is an open-source cryptocurrency, it is still backed by a private entity, called the Zerocoin Electric Company. The company is named so because Zcash was originally known as Zerocoin. Moreover, a strong team of capable individuals behind Zcash are constantly striving to improve the coin.
Zcash is a digital currency which can be utilised to buy everyday items and for storing wealth. It can be bought, traded and earned.
Zcash also has a hard-capped supply of twenty-one million tokens, just like Bitcoin. And the supply is expected to deplete by 2032. Like Bitcoin, the network also has a system of reward-halving to keep the supply of the coin in control.
What Sets Zcash Apart?
Zk-SNARKs technology is what ensures the privacy of transactions on the network. The zk-SNARK is a new protocol which runs on zero interactivity and zero-knowledge. The user and the verifying nodes do not have to interact at all for transactions to be processed.
To address some of the concerns accompanied by anonymous transactions, Zcash also has a solution called the “View Key”. Users on the platform have their view key through which their transaction history can be accessed. It can also be given to other users, but of course, consent of the user would be required.
The network offers two kinds of transactions: transparent transactions and shielded private transactions. There are two distinct kinds of addresses on the network. The first is the original address of a user called the t-addr while the second one is for users that do not want their transaction details to be public. Such users can opt for a shielded address called z-addr. Both the sender and receiver can opt for different addresses for one transaction. For example, a sender with t-addr can send funds to a receiver with z-addr or both the sender and receiver can proceed with z-addr.
The choice between transparent and private transactions provides more flexibility as everyday users can encounter problems with shielded private transactions.
Apart from the core feature of privacy, Zcash also offers greater scalability and better speed. When it comes to fairness, between the king of cryptocurrencies and Zcash, Zcash would most probably win. Both the coins utilize the Proof of Work mechanism for mining. But where Bitcoin miners use advanced and expensive hardware, Zcash is not compatible with such advanced hardware. In fact, Zcash is mined through ordinarily available hardware. This provides more fairness to the Zcash network as mining is accessible to everyone, not just people with deep pockets.
Would You Consider Investing In Zcash?
The Drivers Of Zcash Price
Many factors play a role in determining the price of Zcash, but mainly these factors are all from the demand side. As the supply of the cryptocurrency is predetermined, it plays no significant role in price determination. So, in essence, any factor that affects the demand of the cryptocurrency will ultimately be affecting its price. However, a few key factors stand out when analysing the price of Zcash. These factors are:
Factor 1: Competing coins
Being a hard fork of Bitcoin Zcash is technically competing with Bitcoin. This alone could pose some problems for the altcoin as Bitcoin is the original cryptocurrency and the market leader. Competition with Bitcoin can harm the value of Zcash, but with the unique and different offering of Zcash, both Zcash and Bitcoin lie, somewhat, in different domains. As a hard fork, the basic structure of both the cryptocurrencies is similar, but the similarities do not extend to their features.
Being the market leader, Bitcoin plays a vital role in the general market sentiment and has a hold on almost all major cryptocurrencies, including Zcash. Hence, positive changes in the value of Bitcoin will affect the price of Zcash positively as both coins also have a positive correlation.
Zcash is primarily focused on providing higher privacy to users while transacting. This puts the network in strong competition with cryptocurrencies like Monero and Dash that also targets the privacy of transactions. A surge in prices and adoption of the competing coins can devalue Zcash.
Factor 2: Zcash traction
A major driver of the price of the cryptocurrency is the perceived value in the minds of investors. Increases in the demand of Zcash will drive its price upwards, and demand is nothing more than perception. The more investors and analysts are hopeful about the future of Zcash; the higher will be its perceived value. As the coin gains more traction and users increase spending through and via the platform, we can witness a surge in prices.
The anonymity feature can both drive its price up or drive. As the increased privacy of transactions can discourage some industries, where transparency is important, from adopting Zcash but on the other hand it will also encourage industries that value privacy to adopt Zcash and Zcash might prove itself to be a viable option for large-scale adoption in such industries.
Factor 3: The transaction issues
There are a few problems that accompany private transactions on the network. Majorly, it can become a hotspot for illegal activities, and that would land the network in trouble with the authorities. Zcash has proposed a solution in the form of view key, but it is not a viable one as the consent of the user would be required to access his view key. Then, Zcash also has problems with scalability. The transactions per second are from 6 to 26, which is not that high, albeit better than that of some major coins. To sum it up, Zcash has a few issues here and there which the team is tirelessly working on. Hence, the value of cryptocurrency is also dependent on how quickly the team develops solutions for the problems it faces.
Zcash Price Predictions
Zcash is currently priced at $61.46. 2020 has been very rocky for Zcash as it ranged from $25 to a high of around $97. Zcash was priced at around $5000 at the time of launch, so the ears have not been kind to it, but analysts hope that they will, once again, get to see Zcash at soaring levels. According to eToro, the 1-year rate of return is 156%.
According to Walletinvestor, the short-term Zcash investment may not be profitable as the coin is not expected to have a significant growth in 2021. In the figure below, the Zcash trend line seems to keep a similar shape like the one in 2020.
Short term price prediction of Zcash by Walletinvestor
Walletinvestor’s long-term forecast also does not look optimistic. By 2025, Zcash might be very close to $1.
Long term price prediction of Zcash by Wallet Investor
Long Forecast predicts a rise in short term prices and 2021 could see a growth in the price of Zcash. Long Forecast predicts an average price of around $95 for the year 2021. However, the long term predictions are not as hopeful, and it is expected that Zcash will only devalue over the course of years. In 2025, according to Long Forecast, Zcash could have a price of $50.
Long Forecast’s Zcash Price Prediction for 2021
Trading Beasts expect the price of Zcash to stay, somewhat, stable around the $60 mark with a gradual increase over the years. The price may rise to $80 or above in 2025.
Zcash predictions are very confusing, and you might be wondering whether or not Zcash is a good investment. This question does not have a definite answer, but Zcash does seem to have potential. Its hallmark features set it apart from other major cryptocurrencies, and Zcash could invalidate all predictions in rising to its all-time high once again.
Pros and Cons of Zcash
Pros of investing in Zcash:
✅ Zcash is a hard fork of bitcoin which means it has many features of bitcoin but also has many upgrades.
✅ Zcash offers secure, anonymous transactions through zk-SNARK technology.
✅ Zcash charges nominal transaction fees.
✅ The Zcash network is fast and reliable.
✅ Zcash is one of the largest cryptocurrencies in the market ranked 37th in CoinMarkeCap list.
✅ The mining of Zcash is accessible to the majority of people as it does not require advanced hardware.
✅ It offers private transactions as well as normal transparent ones.
✅ The platform also has a feature called “View Key” through which users can view their transaction history.
Cons of investing in Zcash:
❌ Zcash lacks when it comes to scalability as it can only process around 26 transactions in one second.
❌ Zcash can come under the scrutiny of regulations because of its private transaction offering.
❌ The network can also be abused by criminals for illegal activities.
❌ A percentage of all mining rewards goes to investors.
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- Zcash was launched in 2017 by Zooko Wilcox. It is a hard fork of Bitcoin but with various upgrades.
- It is an open-source cryptocurrency but has a private organisation behind it.
- The drivers of the price of Zcash are competing coins, Zcash traction and the transaction issues.
- Zcash is focused on solving the lack of privacy that Bitcoin has.
- Through the zk-SNARK technology, the network is able to process transactions with no interactivity and no knowledge all while ensuring the security.
- The network offers regular transactions and private shielded ones as well.
- Zcash also offers nominal transaction fees of 0.0001 ZEC tokens.
- Unlike Bitcoin, Zcash has made its mining accessible to everyone as no expensive high-tech hardware is required.
- Zcash has a hard-capped supply of 21 million tokens, similar to Bitcoin.
In this article, we hope that you have found the answer to many questions you have had about ZCash. If you are interested in knowing more about cryptocurrencies, check out our crypto article sector. Or if you want to start learning crypto trading, check out of courses here.