Is Zcash a poor investment because its technology will be co-opted?

I’ve had my eye on Zcash for a while, and I really like their technology, but I have not invested for the following reasons:

-It looks like Ethereum is going to integrate zcash’s transaction shielding technology at some point. So if the dominant blockchain of the future is Ethereum-like, then zcash will give no additional benefit over Ethereum.

-The Bitcoin developers are very concerned about privacy, even though they haven’t really integrated any privacy technology into Bitcoin yet. However, when they feel like the tech is mature enough, chances are that they’ll either integrate zcash’s technology or something better. So if a Bitcoin-like blockchain becomes dominant, it will probably be Bitcoin instead of zcash, and zcash will have no additional benefit.

In the case where Ethereum wins, I really think Zcash has no hope because the Ethereum community likes to move fast, and they won’t wait around for that long before integrating privacy tech.

In the case where something BItcoin-like wins, it’s possible that Bitcoin Core’s conservatism causes them to wait so long that Zcash can actually overtake Bitcoin’s network effect. Is this the scenario that people who think zcash is a good investment are banking on?

Is there some structural reason why it will be harder than I’m imagining for either ETH or BTC to integrate Zcash’s technology once it matures a little, but before Zcash seriously challenges their market share?

The Ethereum one is probably the more tricky to answer but there is an answer in the FAQs: https://z.cash/support/faq.html#ethereum-zk-snarks

It’s hard to say in advance how the privacy features of Zcash will compare to the analogous future planned features for Ethereum. Given that the Zcash blockchain and team are focused primarily on privacy, there’s an advantage to this specialization in terms of efficiency, security, and usability.
While we cannot provide advice for investors deciding where to place bets, the Zcash blockchain does provide users with a means for private, decentralized payments right now. Further, the Zcash team will be working to ensure that any such improvements to Ethereum benefit Zcash users and vice versa.
When asked this question, Vitalik Buterin of Ethereum points out that Zcash can more easily make development tradeoffs to optimize use of zk-SNARKs.

That seems a pretty solid argument whereas Ethereum is all things to all people Zcash is much more focused. Better yet I would hope that there may be some interoperability between the two chains and they benefit each other.

For the Bitcoin side of things firstly as you rightly mention they are very conservative and so it seems implausible to me (given the years of infighting over a simple block size increase) that they would implement any huge privacy enhancements anytime soon. Either way, they seem more focused on Confidential Transactions/CoinJoin than zk-SNARKs but this comes with various tradeoffs such as transaction size (did I mention the block size debate) and doesn’t offer the same privacy/anonymity guarantees as Zcash.

My belief is that Zcash has the best technology and that by the time the Sapling hardfork rolls around will silence many of the current criticisms of Zcash (namely the trusted setup and the usability of shielded transactions). Zcash also has the team actively developing the “something better” such as zk-STARKS - maybe the holy grail as it doesn’t require a trusted setup but it’s not close to being usable https://www.coindesk.com/zk-starks-new-take-on-zcash-tech-could-power-truly-private-blockchains/.

There’s, of course, no guarantee but the combination of the tech and the team make it a solid long-term investment in the crypto space in my opinion.

4 Likes

You have your mind in the wrong place. We are moving into a token economy. I see BTC, ETH , ZEC and several other coins all co existing in a new token economy we are all part of building out. Now with this said yes ZEC is a great tech. If ETH integrates zk snarks I see that as a good thing for ZEC. It shows the tech is great and we will always be the first coin to have zksnarks.

3 Likes