Investor demand for financial privacy is driving a surge in privacy-preserving cryptocurrencies and signaling renewed interest in self-sovereign blockchain transactions.
According to data aggregator CoinGecko, the market capitalization of privacy-preserving cryptocurrencies rose around 80% last week, briefly surpassing $24 billion on Monday before declining 2.9% to $23.7 billion on the time of writing.
Dash (DASH) and Zcash (ZEC) were among the many best-performing privacy coins last week, with gains of 65% and 9.55%, respectively.
The privacy coin rally comes despite a broader crypto market downturn that saw the whole crypto market capitalization fall 3.7% from $3.96 trillion to $3.81 trillion last week, indicating growing investor demand for financial privacy.
Top privacy coins by performance, 1-week chart. Source: Coingecko.com
Privacy coins like Zcash and Monero (XMR) obscure sender, recipient and transaction details and offer greater anonymity than pseudonymous cryptocurrencies like Bitcoin (BTC).
Investors Seek Financial Privacy, “Encrypted” Bitcoin: Nansen Analyst
“Privacy is increasingly seen as a necessity relatively than a feature,” Jake Kennis, senior research analyst at Nansen, told Cointelegraph. “This renews the ideological call for personal, self-sovereign transactions.”
Kennis said the expansion of Zcash's protected pool and enhancements to its technology, including the Zashi wallet for protected transfers and Solana integration, make confidential transactions more accessible.
Zcash's fixed supply of 21 million coins, its Proof-of-Work (PoW) consensus model and its privacy setting based on zk-SNARK technology position it as an “encrypted Bitcoin” for investors looking for private transactions, Kennis added.
Zk-SNARKs are cryptographic primitives that may separate all traceable data between two parties over a public blockchain network to strengthen digital privacy. They are an interplay of knowledge-free technology.
Arthur Hayes suggestions $10,000 value of ZEC tokens before Zcash hits eight-year high
Zcash rose to an over eight-year high of $388 on Friday, briefly replacing Monero because the most useful privacy coin.
The rise to the eight-year high got here a number of days after BitMEX co-founder Arthur Hayes predicted the ZEC token would rise to $10,000, further increasing enthusiasm for the token.
As Cointelegraph reported, Zcash rallied from $272 to a high of $355 within the hours following Hayes' optimistic forecast on Sunday.
