IOSG Weekly Report | Why Naval Says: ZCash Is Insurance for Bitcoin Privacy

Chainfeeds Guide:

In the past few months, Zcash ($ZEC) has become a focal point. Within 30 days in September 2025, Zcash surged from $47 to $292, an increase of up to 620%. It has now reached an 8-year high of $429, pushing its FDV above $8 billions.

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Author:

IOSG Ventures

Opinion:

IOSG Ventures: Zcash is a privacy-focused decentralized digital currency, officially launched in October 2016. It is a fork from the Bitcoin codebase, inheriting the latter’s core monetary principles: a fixed cap of 21 million coins, predictable halving cycles, fair issuance, and a permissionless network architecture. Zcash’s standout feature is its privacy mechanism—using zero-knowledge proof technology zk-SNARKs (Zero-Knowledge Succinct Non-Interactive Argument of Knowledge). This allows transactions to be verified without revealing the sender, receiver, or amount, thus achieving the fully encrypted transaction vision that Bitcoin could not. When users conduct shielded transactions, all key details—including sender address, receiver address, and amount—are fully encrypted on-chain. The sender generates a zk proof with their private key to verify that they indeed own the funds, the funds are legitimate, inputs and outputs are balanced, and there is no double-spending. Other nodes can instantly verify this proof using the public key. The core advantage of zk-SNARKs lies in their efficient verification and small size, requiring only a few hundred bytes and millisecond-level processing. Zcash also offers optional privacy, allowing users to choose between transparent or shielded modes to balance compliance auditing and privacy freedom. ZEC has a dual address system: transparent addresses (t-addr) and shielded addresses (z-addr). Transparent transactions are similar to traditional public blockchains, while shielded transactions are fully encrypted and visible only to the transacting parties or those with the viewing key, truly achieving coin fungibility and on-chain privacy. To address the performance and trust challenges of privacy implementation, Zcash has undergone three major technical evolutions over eight years. The first stage was Sprout (2016), which first demonstrated the feasibility of zk-SNARK-based privacy transactions on a public blockchain, but required massive computational resources (several GB of memory) and relied on a one-time trusted setup. The famous whistleblower Edward Snowden participated in this setup ceremony under the pseudonym John Dobbertin, ensuring that no single party could compromise the system. This was followed by the Sapling (2018) upgrade, which improved performance by a hundredfold, enabling privacy transactions on mobile devices, and introduced diversified addresses and viewing key mechanisms, enhancing user control and compliance. The final Orchard (2022) phase saw Zcash implement trustless privacy through the Halo 2 zero-knowledge proof system, completely eliminating the need for a trusted setup, supporting batch verification and faster synchronization, and introducing Unified Address (UA), which can integrate the receiving ends of Orchard, Sapling, and transparent pools. Modern wallets automatically direct new transactions to Orchard, making shielding the default option. Overall, Sprout proved privacy was possible, Sapling made it practical, and Orchard made it trustless and scalable. The upcoming Crosslink upgrade plans to introduce a hybrid consensus model, combining proof-of-work and proof-of-stake, allowing ZEC holders to stake tokens for rewards and participate in block finality. In addition, the Tachyon project is addressing privacy scaling bottlenecks through innovations such as proof-carrying data, aiming to achieve planetary-scale private payment performance. Zcash’s recent surge is closely related to its ecosystem shift. Since September 2025, ZEC’s price has soared from $40 to over $400, a more than tenfold increase. One driving force is the official wallet Zashi launched by ECC, marking the project’s shift from cryptographic R&D to user experience orientation. Zashi’s interface rivals mainstream EVM wallets, with built-in viewing keys, hardware integration, and unified multi-pool support, and defaults to shielded transactions, greatly lowering the threshold for privacy use. After its launch, the amount of ZEC held in shielded addresses surged to 4.5 million, accounting for 28% of total supply, with the privacy pool reaching a record high. The expansion of the anonymity set has enhanced privacy and tightened liquidity, forming price support. More importantly, Zashi integrates NEAR Intents - Crosspay, enabling cross-chain privacy payments: users can swap assets from other chains in or out without exposing their ZEC address, completely eliminating reliance on centralized exchanges. Crosspay, as a bridging layer, leverages NEAR’s chain abstraction protocol, allowing users to complete cross-chain settlements with a single intent signature. Since this mechanism was launched, ZEC-related NEAR intents have accounted for more than 30% of the total, significantly expanding ecosystem traffic. Against the backdrop of tightening regulation and mixer bans, Zcash has regained popularity with its narrative of financial freedom. Coupled with the second halving event in November 2024, which sharply reduced the inflation rate, ZEC is experiencing a classic supply-demand tightening market. The interplay of privacy narrative, wallet experience, and scarcity has once again made Zcash a focal asset in the privacy finance sector.