Investor demand for financial privacy is fueling a rally in privacy-preserving cryptocurrencies, signaling renewed interest in self-sovereign blockchain transactions.
The market capitalization of privacy-preserving cryptocurrencies rose by about 80% over the past week to briefly surpass $24 billion earlier on Monday before retracing 2.9% to $23.7 billion at the time of writing, according to data aggregator CoinGecko.
Dash (DASH) and Zcash (ZEC) were among the best-performing privacy coins last week, with 65% and 9.55% gains, respectively.
The privacy coin rally occurred despite a wider crypto market downturn, which saw the total crypto market cap decline by 3.7% over the past week, from $3.96 trillion to $3.81 trillion, signaling increasing investor demand for financial privacy.
Privacy coins such as Zcash and Monero (XMR) obscure sender, receiver and transaction details, offering greater anonymity than pseudonymous cryptocurrencies like Bitcoin (BTC).
Related: Why Zcash and privacy tokens are back in the conversation
Investors seek financial privacy, “encrypted” Bitcoin: Nansen analyst
“Privacy is increasingly viewed as a necessity rather than a feature,” Jake Kennis, senior research analyst at Nansen, told Cointelegraph. “This renews ideological demand for private, self-sovereign transactions.”
Kennis said the expansion of Zcash’s shielded pool and improvements in its technology, including the Zashi wallet for shielded transfers and Solana integration, are making privacy 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 seeking private transactions, added Kennis.
Zk-SNARKs are cryptographic primitives that can sever any tractable piece of data between two parties over a public blockchain network, aiming to strengthen digital privacy. They are an interaction of zero-knowledge proof technology.
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Arthur Hayes tips $10,000 ZEC tokens before Zcash hits eight-year high
Zcash surged to an over eight-year high of $388 on Friday, briefly flipping Monero to become the most valuable privacy coin.
The rise to the eight-year high came days after BitMEX co-founder Arthur Hayes predicted a ZEC token rally to $10,000, further bolstering buzz around the token.
Zcash rallied from $272 to a peak of $355 in the hours after Hayes’s bullish prediction on Sunday, Cointelegraph reported.
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