There are three different flavors of "Project Alchemy"

I just sent an email to a journalist in reply to their questions about Ethereum​:left_right_arrow:Zcash integration, and I thought part of my email should be more widely posted:

There are three different but related R&D efforts going on in parallel here. (I know that's confusing.)

  1. Zcash-on-Ethereum (“ZoE”) — a project to upgrade Ethereum to support zk-SNARKs, and the Zcash protocol on top of the Ethereum blockchain. Note that zk-SNARKs might be useful for other things in addition to Zcash, such as for example privacy-protecting digital identity systems.

  2. ZRelay — a project to upgrade Ethereum to support the Zcash Proof-of-Work (which includes algorithms named “Equihash” and “BLAKE2”) so that smart contracts running on the Ethereum blockchain can process the Zcash blockchain.

  3. Cross-Chain Atomic Transactions (“XCAT”) — a way to make a transaction which executes across multiple blockchains. This could be used, for example, to create decentralized exchange between Ethereum, Zcash, and Bitcoin blockchains.

We are supporting all three of these efforts, but I want to draw your attention to the last one — XCAT — because:

  • It works with Bitcoin in addition to Ethereum and Zcash.

  • It doesn't require any upgrade to the Ethereum, Zcash, or Bitcoin blockchains. It can run on the current blockchains. That means that we can deploy it and users can start using it and building on top of it sooner.


Here's my view on it:
The second and third points may indeed be "safer" in terms of Zcash's incentives,
Though I would argue the first is good for a few reasons:
- Maintaining and operating this technology requires a lot of expertise, and I view the Zcash company as becoming a provider of this technology to the fintech/blockchain world.
- The first point can strengthen the third. Concretely, when snarks can be verified on Ethereum, we could do XCATs that are private on the Zcash side - i.e. an eth contract that exchanges ether for an unknown and untracable amount of zec
-Working with (the highly talented) Ethereum people in a spirit of free collaboration could bring unexpected positive results.
It's worth mentioning also that regardless of Ethereum, the Zcash circuit was intentionally designed in a way that anybody can potentially use it, and use the public parameters for it that we painstakingly generated through the ceremony. We already don't have exclusivity regardless of Ethereum - Zclassic is already using these for private transactions via a fork of Zcash.


I think that cryptocurrencies are more complementary than alternative to each other (although everything is both a little bit complementary and a little bit alternative to everything else).

The more people discover the existence of Bitcoin, the better for Zcash. The more different applications get built on top of Ethereum, the better for Zcash. The more usage Monero gets, the better for Zcash. And vice versa.

One way to think about this that all cryptocurrencies, including Bitcoin are tiny. Bitcoin's market cap of $15B is tiny. Bitcoin's user base — around 20M maybe? tiny tiny tiny Barely enough to sustain a small industry. Maybe too little to sustain a small industry. And that's to say nothing about the other non-Bitcoin cryptocurrencies, which are all clearly too small at the moment to sustain any industry.

Compare Bitcoin's market cap of $15B to gold (around $10T), or fiat currency (around $30T, not counting loans, certificates of deposit, bonds, etc. etc. etc. Just counting coins, paper cash, and checking accounts).

So if Zcash grew to ⅒ of cryptocurrencies, and Bitcoin shrank to ⅒ of cryptocurrencies, at the same time that cryptocurrencies grew to be ⅒ of the gold market, then Bitcoin and Zcash would each be worth about $5000 per coin. Along with eight other cryptocurrencies also worth $5000 per coin.

Bitcoin's user base — maybe (?) somewhere around 10–30M. Compare to the number of holders of credit cards — about 1.5B. Paypal has about 179M active accounts.

Or if you want to compare to a product that is similarly new as Bitcoin is, look at Apple Pay, which is about two years old: about 12M users (active each month).

Let's face the harsh truth: a very plausible future outcome is that all cryptocurrencies dwindle into irrelevance. The best way to avoid that outcome and to maximize the chances of the opposite outcome — that cryptocurrencies become the fabric of the global economy and global society, and become worth hundreds of trillions or quadrillions of dollars — is to focus on creating value for mainstream users instead of focusing on competing with other tiny, fragile, low-value "competitors".


Hear, hear!

Fun bit of math: if you price 1 BTC at US$1million, a satoshi is a penny, and BTC is roughly equal to M1 (or was it M2? whichever :slight_smile: )