Zcash (ZEC) is a bet that increased AI surveillance will make financial privacy more valuable, and the cryptocurrency market is underestimating that possibility, according to asset manager Grayscale.
“Zcash is almost 10 years old, but it may be entering a new chapter. Use of its protection technology is increasing and new capital is entering the ecosystem to support Zcash mining and wallet development,” analyst Michael Zhao wrote in a Friday report.
ZEC is a privacy-focused cryptocurrency that uses zero-knowledge proofs to hide transaction details, allowing users to protect the sender, recipient, and amount, while verifying transfers on a public blockchain.
Designed as a more confidential alternative to bitcoin the largest cryptocurrency, aims to function as a closer approximation to digital cash in an otherwise transparent crypto ecosystem.
The token has experienced multiple boom and bust cycles, most notably during cryptocurrency bull markets when its privacy narrative gained traction. By the end of 2025, ZEC rose to nearly $700, far outperforming much of the market as investors shifted to smaller-cap assets with differentiated use cases.
The measure was short-lived. Prices retreated quickly, falling more than 60% in the following months as momentum faded and larger assets like bitcoin regained favor. The volatility underscores a recurring pattern for Zcash: strong gains during narrative-driven rallies, followed by sharp declines when that narrative loses urgency.
ZEC represents about 0.3% of the $1.6 trillion crypto “coin” segment, according to Grayscale, a proportion it said reflects expectations that privacy remains marginal. If that view changes even slightly, the benefit could be significant.
Grayscale pointed to the growing use of Zcash protected transactions, now the majority of activity, as evidence that the demand for privacy already exists on-chain. But the firm said the market still treats privacy as an afterthought rather than a fundamental monetary feature.
This is part of a broader structural change. Just as digitalization and the Internet changed debates about financial privacy in previous decades, Zhao argued that the transparency of AI and blockchain could trigger a third wave, in which confidential transactions become more valuable.
In this scenario, Zcash’s design positions it as a direct analogue of cash, a property that, according to the analyst, is increasingly scarce in digital finance.
Still, there are risks, the report warned. Regulatory treatment remains uncertain despite Zcash’s selective disclosure tools. Execution risk remains given the network’s dependence on complex upgrades and long-term concerns such as quantum computing that applies to all cryptocurrencies, including ZEC, the report added.
ZEC was trading 5% higher in 24 hours, around $224.80, at the time of this publication.
Read more: AI Decline Hits Software Stocks, But Grayscale Says Blockchains Will Benefit
