Zcash: uses, advantages, drawbacks and future compared with Bitcoin

Daniel Platteau zcash

Introduction

Zcash, whose symbol is ZEC, was launched on 28 October 2016 with a particular goal: to enable digital payments offering more confidentiality than those made on the Bitcoin blockchain [1].

At first sight, Zcash looks like Bitcoin. Both networks have limited issuance, operate without a central bank and rely on a public blockchain. But their technical philosophies differ sharply. Bitcoin prioritises simplicity, transparency and the robustness of the ledger above all. Zcash seeks to add advanced cryptographic privacy, notably through zero-knowledge proofs.

The central question is therefore: can Zcash's superior privacy allow it to overtake Bitcoin?

The short answer is a cautious one: Zcash has particularly interesting technology, but it would have to overcome considerable obstacles in terms of adoption, regulation, liquidity, awareness and network effects to dethrone Bitcoin.

Warning: this article presents how the network works and possible scenarios. It is not a recommendation to buy or invest. Cryptocurrencies can fluctuate extremely and lead to a significant loss of capital.

What is Zcash?

Zcash is a decentralised cryptocurrency inspired by Bitcoin's code. Its monetary unit is the ZEC. Like Bitcoin, it lets users transfer value directly between themselves, without any mandatory financial intermediary.

What sets Zcash apart is the ability to choose between several levels of transparency:

• transparent transactions, whose essential information is visible on the blockchain;
• shielded transactions, in which certain data is encrypted;
• transactions using unified addresses or shielded pools, depending on the features supported by the wallet used [2].

So Zcash does not automatically make every transaction private. Privacy depends in particular on the type of address used, the wallet chosen, the exchanges and the user's habits [2].

This nuance matters. Many people present Zcash as a fully anonymous currency. In reality, it is more accurate to speak of configurable or cryptographically enhanced privacy. The protocol does not necessarily hide all external metadata, such as the identity known to an exchange, the IP address or information kept by the wallet.

How does Zcash's privacy work?

zk-SNARKs

Zcash uses cryptographic proofs called zk-SNARKs. The term stands for Zero-Knowledge Succinct Non-Interactive Argument of Knowledge.

The general principle is this: a person can prove that a transaction is valid without publicly revealing all the information that makes it possible to verify that validity [3].

In a shielded transaction, the network can verify in particular that:

• the funds being spent exist;
• the sender is authorised to use them;
• the amount spent is correct;
• the same coins are not being spent twice;
• the total amount balances.

However, addresses, amounts and certain transaction data can remain encrypted for outside observers. Zcash describes this approach as a way of verifying the validity of a transaction without disclosing the underlying information [3].

The Orchard protocol and Halo 2

Zcash's most important technical evolution is the Orchard protocol, introduced with the NU5 upgrade in May 2022. Orchard uses the Halo 2 proof system, designed to avoid a new trusted setup specific to this protocol [3][4].

This architecture aims in particular to reduce certain trust assumptions and improve the design of shielded transactions. It does not mean, however, that Zcash's entire cryptographic history is free of any trusted setup: the protocol's older components relied on other mechanisms.

The Orchard protocol is documented in Zcash's technical specifications and is an important component of its shielded transactions [4].

Key point: technical vocabulary

• Blockchain: a digital ledger shared and synchronised between many computers.
• Zero-knowledge proof: a proof that demonstrates a statement is true without revealing all the information that justifies it.
• zk-SNARK: a family of compact cryptographic proofs that can be verified quickly.
• Shielded address: a Zcash address or payment space designed to hide certain transaction information.
• Network effect: the advantage gained when a network becomes more useful as the number of users grows.
• Trusted setup: an initial process whose compromise could, in some systems, create a cryptographic risk.

What is Zcash used for?

Making more confidential payments

Zcash's main use is transferring value with a higher level of privacy than a classic Bitcoin transaction.

On Bitcoin, confirmed transactions are recorded in a public ledger. Addresses, amounts and movements of funds can be viewed by anyone, even though the owner's real identity is not written directly on the blockchain [5].

Bitcoin is therefore generally described as pseudonymous rather than anonymous. If an address is linked to a real identity — for example after a withdrawal from a regulated exchange — it may be possible to analyse part of the associated history [5].

Zcash seeks to address this weakness by allowing transaction details to be protected. Potential use cases include:

• payments between individuals;
• international transfers;
• confidential donations;
• protecting one's financial assets;
• business payments requiring some discretion;
• reducing systematic surveillance of spending habits.

Preserving financial privacy

In the traditional banking system, the amount of a payment is not necessarily visible to the whole population. Conversely, a fully transparent blockchain can reveal a great deal of information about a user's financial activities.

Privacy can be relevant for several legitimate reasons:

• preventing a merchant from knowing a customer's total balance;
• stopping an employer or a neighbour from watching personal spending;
• protecting businesses against analysis of their cash flows;
• limiting the risks of crypto holders being targeted;
• allowing people living in unstable environments to protect their savings.

Privacy therefore does not necessarily mean criminal concealment. It can also be seen as a normal property of money, comparable to the discretion generally associated with cash payments.

Developing confidential assets

Work within the Zcash ecosystem is also exploring the possibility of creating or transferring different assets in a shielded environment.

ZIPs 226 and 227 describe an architecture called Zcash Shielded Assets, intended to allow custom assets to be issued, transferred and burned within the Orchard ecosystem.

These documents are, however, technical proposals: their existence does not prove that all the features are activated, widely deployed or adopted by users. [6]

Zcash's main advantages

1. Greater privacy than Bitcoin

This is Zcash's most obvious advantage. When users make proper use of the shielded features, the publicly visible information can be far more limited than on Bitcoin [2][3].

This privacy relies on cryptographic mechanisms built into the protocol, and not merely on a commercial promise or on mixing coins afterwards.

2. Validation without full disclosure

zk-SNARKs let the network verify that a transaction follows the rules without publishing all the data needed for that verification. This is a major innovation for digital financial systems.

It could be useful in applications where verifiability and privacy must coexist. This sentence describes potential use, however, not proven commercial adoption.

3. A known monetary policy

Zcash shares with Bitcoin a feature appreciated by many users: its maximum money supply is fixed at 21 million ZEC [7]. This programmed scarcity can give the currency a potential store-of-value function, even though its volatility remains very high.

Monetary policy alone is not enough to guarantee ZEC's future value, however. A limited supply does not prevent demand from falling.

4. Open-source technology

The protocol, the specifications and several software components are publicly documented. This transparency allows researchers and developers to examine the mechanisms used.

It is an advantage compared with a closed financial system, but it does not remove the risk of bugs, design errors or future vulnerabilities.

5. A function that may complement Bitcoin

Zcash need not be seen solely as a competitor to Bitcoin. It can also be seen as a network specialising in confidential payments.

In this scenario, Bitcoin could serve as a widely recognised store of value and settlement layer, while Zcash would play a role more oriented towards private transactions. This is an analytical scenario, not a guaranteed development.

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Zcash's drawbacks and limits

1. Lower adoption than Bitcoin

Bitcoin benefits from a strong network effect:

• more users;
• more wallets;
• more merchants;
• more liquidity;
• a strong developer community;
• a global media and financial presence.

Zcash remains much smaller than Bitcoin in terms of capitalisation, liquidity and awareness.

For a payment currency, the key question is often: who accepts it and who actually uses it?

Superior technology is not enough if users cannot easily buy, store, send and spend the asset.

2. Imperfect privacy in practice

The protocol can offer strong privacy, but users can compromise it through their behaviour.

The main sources of leaks can include:

• using a transparent address;
• buying ZEC on an exchange that knows the customer's identity;
• withdrawing to an address easily linked to that identity;
• reusing addresses;
• wallet metadata;
• the IP address;
• information provided to an exchange;
• frequently moving between transparent and shielded funds.

Blockchain privacy therefore does not automatically protect the user's entire digital environment [2].

3. A more complex user experience

Shielded transactions can be harder for beginners to understand. Users need to know the difference between transparent and shielded addresses, check wallet compatibility and take exchanges' policies into account.

This complexity is a handicap compared with Bitcoin, whose ecosystem benefits from greater maturity and wider familiarity among the general public.

4. Regulatory risks

Privacy-focused cryptocurrencies may attract particular attention from the authorities. Some exchanges may limit or drop support for ZEC to reduce their compliance risks.

Regulatory concerns relate in particular to:

• the fight against money laundering;
• terrorist financing;
• the traceability of funds;
• identification obligations;
• requests for information from the authorities.

Privacy is not prohibited everywhere, but it can make access to certain services more difficult. The legal framework varies from country to country and can change quickly.

5. Perceived centralisation of governance

Some observers have historically criticised the concentration of development and funding around identifiable organisations in the Zcash ecosystem.

This criticism should be distinguished from technical centralisation of the network: it mainly concerns governance, funding and the influence exerted by certain organisations.

6. Intense competition

Zcash is not the only project offering confidential transactions. It has to compete with:

• Monero, strongly oriented towards privacy by default;
• second-layer solutions;
• protocols using zero-knowledge proofs;
• wallets that improve Bitcoin's privacy;
• private financial systems based on stablecoins or regulated infrastructure.

Zcash must therefore convince people that its trade-off between privacy, optional transparency, security and compliance is better than that of its competitors.

Is Zcash better than Bitcoin?

There is no universal answer, because the two networks do not pursue exactly the same priorities.

Bitcoin has a considerable advantage in liquidity, awareness and acceptance, but claims about its "security" or "decentralisation" should be presented as comparative assessments, not as absolute measures.

Zcash has a more targeted technological advantage in the field of privacy.

It would therefore be more accurate to say that Zcash is potentially better for certain confidential payments, while Bitcoin is currently far more powerful as a global monetary network and reserve asset, depending on how these categories are defined.

What is Zcash's future?

Zcash's future will depend less on the elegance of its cryptography than on its ability to turn this technology into concrete use.

Favourable scenario

In an optimistic scenario:

1. wallets become simpler;
2. privacy is enabled by default;
3. shielded transactions become fast and cheap;
4. more exchanges support shielded operations;
5. developers create useful applications;
6. regulation recognises a difference between legitimate privacy and illegal activity;
7. private payments become more important.

In this case, Zcash could become major specialised infrastructure for confidential transactions. This is a forward-looking scenario, not a verifiable forecast.

Intermediate scenario

Zcash could also remain a niche but technically respected project. It would be used by:

• users who are particularly sensitive to privacy;
• non-governmental organisations;
• businesses that need discretion;
• developers working on zero-knowledge proofs;
• users in environments where financial privacy matters.

This scenario would not make Zcash a direct rival to Bitcoin, but could allow it to remain useful over the long term.

Unfavourable scenario

In the most negative scenario:

• exchanges keep restricting access to it;
• users prefer simpler solutions;
• shielded transactions remain a minority;
• development lacks funding;
• regulation severely restricts privacy coins;
• new technologies offer comparable privacy with better adoption.

Zcash could then remain an interesting technology, but gradually lose its economic relevance.

Could Zcash dethrone Bitcoin?

A low probability in the medium term

As of 17 September 2026, it seems highly unlikely that Zcash will dethrone Bitcoin in the broad sense, that is, by becoming the main store-of-value network, the most liquid cryptocurrency and the market's dominant benchmark.

Bitcoin has a considerable lead in capitalisation, liquidity, historical security, number of users, integration into financial services, awareness, mining infrastructure, market depth and international recognition.

As an indication, market data consulted on 17 September 2026 gave a price of around $76,409 for Bitcoin and $1,382 for Zcash, with large swings during the session [8].

The unit price does not allow a direct comparison of the size of two networks: you need to look in particular at capitalisation, circulating supply, liquidity and traded volume [8].

A possibility of dominance in a specific sector

The question becomes more nuanced when it comes to private payments.

Zcash could become a benchmark for financial privacy if:

• its technology stays ahead;
• it becomes genuinely easy to use;
• shielded transactions become the norm;
• its ecosystem attracts developers;
• regulators accept how it works;
• it keeps enough liquidity.

In this case, Zcash might not dethrone Bitcoin, but it could dominate a specific category of the market. This hypothesis remains speculative.

Bitcoin can also improve its privacy

Another factor reduces the chances of Bitcoin being replaced: its ecosystem can evolve.

Wallets, secondary networks and complementary protocols can improve the privacy of Bitcoin payments. Bitcoin.org states that additional layers, such as the Lightning Network, can improve certain characteristics of the network, notably speed and costs [9].

Bitcoin can therefore keep its core advantage while gradually adopting new privacy solutions, directly or through complementary layers.

Should you buy Zcash?

The decision depends on the user's goal.

Zcash may interest someone who:

• understands how shielded transactions work;
• places great importance on privacy;
• accepts high volatility;
• tolerates higher regulatory and adoption risk;
• wants to diversify a highly speculative portfolio.

On the other hand, you should be particularly careful if you are buying only because:

• the price seems lower than Bitcoin's;
• a strong recent rise gives the impression that the move will continue;
• a prediction announces a spectacular price;
• the project is presented as "the next Bitcoin";
• privacy is confused with a guarantee of absolute anonymity.

A cryptocurrency's unit price does not tell you whether it is cheap. You need to look at its capitalisation, supply, liquidity, use, technical risks, governance and real demand.

Conclusion

Zcash is one of the most ambitious experiments in the cryptocurrency world. Its main contribution is building privacy directly into a verifiable monetary system, thanks to zk-SNARKs and modern protocols such as Orchard and Halo 2 [3][4].

Its advantages are real:

• advanced cryptographic privacy;
• the possibility of shielded transactions;
• a limited money supply;
• an open-source architecture;
• potential for confidential payments and certain digital assets.

But its limits are just as significant:

• lower adoption than Bitcoin;
• a complex user experience;
• privacy that depends on user practices;
• regulatory risks;
• strong competition;
• lower liquidity and recognition.

Zcash could become a major privacy cryptocurrency, but it is unlikely to dethrone Bitcoin in its overall role as the market benchmark. The most credible scenario is not necessarily Bitcoin's replacement, but the coexistence of two specialised networks: Bitcoin as a widely adopted monetary infrastructure and store of value, and Zcash as a confidential payments network. This conclusion remains a forward-looking assessment, not a demonstrated result.

Sources

• [1] Electric Coin Co., "Who created Zcash?", accessed 17 September 2026. The page states that Zcash was launched in October 2016; the date of 28 October 2016 is confirmed by the project's launch archives. (z.cash)
• [2] Zcash, "How to use Zcash" and "What are Zcash unified addresses?", accessed 17 September 2026. These documents distinguish transparent and shielded transactions and explain that the features available depend in particular on the wallet. (z.cash)
• [3] Zcash, "What are zk-SNARKs?", accessed 17 September 2026. The page explains the role of zero-knowledge proofs and states that Orchard was introduced with NU5 in May 2022. (z.cash)
• [4] Zcash Improvement Proposal, "ZIP 224: Orchard Shielded Protocol", and the Zcash NU6.1 protocol specification, accessed 17 September 2026. (zips.z.cash)
• [5] Bitcoin Core, "Privacy", and Bitcoin.org, "FAQ", accessed 17 September 2026. These documents describe the public nature of Bitcoin transactions and distinguish pseudonymity from anonymity. (bitcoin.org)
• [6] Zcash Improvement Proposals, "ZIP 226: Transfer and Burn of Zcash Shielded Assets" and "ZIP 227: Issuance of Zcash Shielded Assets", accessed 17 September 2026. ZIP 226 is listed as a proposal with Draft status; it should therefore not be presented as proof of general deployment. (zips.z.cash)
• [7] U.S. Securities and Exchange Commission, reference document on Zcash, accessed 17 September 2026. The document states that the network is designed to allow the creation of a maximum of 21 million ZEC. (sec.gov)
• [8] Market data accessed on 17 September 2026. Prices vary by platform, currency, time and scope of calculation. Available histories showed in particular a ZEC price in a range of roughly $1,300 to $1,400 that day; a single source is not enough to establish a universal price. (coingecko.com)
• [9] Bitcoin.org, "FAQ — Can Bitcoin scale to become a major payment network?", accessed 17 September 2026. The page presents Lightning as a payment layer built on top of Bitcoin, enabling fast and generally low-cost payments. (bitcoin.org)