jakiro
Author: The Rollup
“Bitcoin is the insurance for fiat currency, Zcash is the insurance for Bitcoin.”——This classic conclusion of Naval Ravikant, coupled with the support of a number of KOLs, triggered a rush of capital towards Zcash.
With an astonishing increase of more than 10 times in 2 months,Zcash, the “return of the king” privacy project, is emerging from the “dark age” of performance and regulation.
Why are even the staunchest Bitcoin supporters starting to flock to Zcash? In this interview, Zcash CEO Josh Swihart will provide an in-depth analysis of how Zcash solves the interoperability problem.And what he sees as the final battle between “fintech coins” and “liberty coins”.
01The birth of Zcash and the core of privacy
Moderator: Can you tell us the origin story of Zcash’s “founding fathers” and “from 0 to 1”?How did these scientists come together to invent this new technology?
Josh:Good question.Zero-knowledge cryptography has been around for more than 30 years, but it is mainly mathematical and lacks practical applications in academic settings.When Satoshi Nakamoto launched Bitcoin, he studied zero-knowledge and particularly wanted to add anonymity or higher privacy to Bitcoin, but he failed to figure out how to use zero-knowledge cryptography to achieve it.Hal Finney is also very fascinated by zero-knowledge cryptography and has been trying to apply it to Bitcoin.
But the math was too complicated, so scientists around the world began working on it independently.There are scientists from Johns Hopkins University, Israel Institute of Technology, MIT and many other universities.They finally figured it out, wrote some papers,They presented the results to the Bitcoin Core team, but the Core team said, “It’s too new, it won’t work, but you can try it on another chain.”So they forked the core of the Bitcoin code and added zero-knowledge encryption, and this was the birth of Zcash.
02Strong recovery: capital inflows and interoperability breakthroughs
Moderator:Zcash recently implemented better interoperability through Near Intents.Do you think this is the most critical factor in Zcash’s recent success?Or are there other factors driving it together?
Josh:I think it is a combination of factors. In the past few years, Zcash has poor performance, cannot be expanded, and has a poor user experience. This is mainly because cryptography is too new and we have a lot to explore.We got all this done a few years ago, and Orchard was activated through “Network Upgrade 5”, allowing us to really start building the upper-layer ecosystem.
I decided to be the CEO of ECC in January 2024. We will focus on improving the connection experience.Of course, we will continue core development.The core development of ECC is the team formed by Zuko.We developed a wallet called Zashi.If you look closely, after Zashi was released almost at the end of the first quarter of 2024, the total number of shielded transactions or tokens in the shielded pool began to grow exponentially.We work with Keystone to provide detailed hardware support, shielding the pool’s growth slope a step further.In December 2024, we added the redemption function to Zashi (about eight weeks ago).
If you look at the graph of shielded pools, it’s literally straight up.This shows that it is not serious speculation——Instead of someone buying a token on a centralized exchange, chasing the candlestick, and placing an order, they took the token out of the exchange, fell into fear, implemented self-custody, and used it as designed.So it’s gone up a lot, but the really important chart is the amount of ZEC in the shielded pool, which has gone almost vertical.
Moderator:Can you explain it to new usersWhat is a “Shielded Pool”?How does it work within Zcash’s mechanism, and how does it help achieve privacy?
Josh:Like I said, Zcash is a fork of the Bitcoin codebase, so has the same token economics:Fixed supply of 21 million.There are some adjustments to the block time, etc., which are slightly larger because they need to be accommodated.There are other innovations, but the foundation is Bitcoin.
You take Bitcoin, add privacy – we knew before that Bitcoin was traceable.People don’t want their wealth exposed on the Internet.For example, if you have Bitcoins at a certain address, that address will be tagged.If you buy it on an exchange and mention yours, that address is associated with you.If you have ever traded with someone who has done something bad (through no fault of yours), then the Bitcoin has become “tainted” and is no longer fully fungible.Transparency brings these problems.
What people want is a safe place to store their wealth:Untraceable, uncensorable, completely interchangeable, that’s what encryption offers.Zcash provides two types of addresses:Transparent address (T-address) and shielded address (Z-address).This way you gain privacy.In Zcash, you can get privacy protection when you transfer your tokens to a shielded address.The shielded pool is the population of all Zcash stored in shielded addresses.
Moderator: Where does the word “Shielded” come from?
Josh:I think Paige came up with it.She’s no longer at the ECC, and from what I understand, she brought up the word “shield” to Zuko before I was at the ECC.I don’t have all the details, but this is my understanding.
Moderator:Some have compared Zcash’s addressable market to the $2 trillion in private money in Swiss banks.Is this comparison reasonable?What do you think Zcash’s TAM (Total Addressable Market Size) should be?
Josh:There’s a bit of a problem with using UBS for TAM, I think it’s too small.The goals of Zcash are:To store wealth, you can self-custody, no need for a third party, but you can still spend it.
We see this in wallets as well.We do something very clever with Near Intents, they allow us to send exactly the specified amount.
Usually the conversion looks like this: say I exchange 1 BTC for Zcash, I get a numerical amount, liquidity and current price.
But they allow us to set: for example, I want to receive 10 (such as 10 USDC), and then the system automatically calculates how many BTC are needed to achieve it.This allows me to sell you a t-shirt for $10 and charge only USDC, and I can send you $10 USDC directly from my shielded storage.It’s super easy to do in just a few clicks in your wallet.
I keep it in a “Swiss bank in my pocket”, but I can easily spend it, the fees are minimal, it’s super fast, and you receive the exact amount you want.Therefore, TAM is for billions of users, not just for a few people who can transfer money to offshore accounts, but for anyone who wants to solve, store wealth safely, and then communicate with people all over the world.
Moderator:Many veteran Bitcoin supporters and crypto influencers such as Mert are now getting excited about Zcash.Have you talked to them?How does it feel to see the Zcash community soar in popularity?
Josh:I know Mert, he’s amazing.He was very important in spreading the message.You mentioned that people first see the price go up before they get interested, which is very reflexive, and then they start going down the rabbit hole and start researching: What is this token?How compatible?Mert is a huge driving force in this area.He’s a machine, talking about why privacy is important.
So I’m very grateful to him, and to the people in the ecosystem, some of whom I haven’t met yet, but there are indeed these key and influencers, both publicly and privately, many people I know who don’t like to be exposed publicly, but take very seriously what we are doing, what we are building, and participate in their own way.
Moderator:You mentioned earlier about funding flows on Zashi.Is it really Bitcoin that accounts for most of the inflows into Zcash?
Josh:I have data from maybe a few days ago.Zashi has been online for about 8 weeks, but the function of exchanging ZEC has been online for a short time, about a few weeks.We first launched the function of swapping out of ZEC, then cross-chain payment, and then swapping in ZEC.
So in 8 weeks we drove approx.$100 millionThe capital flow is an average of 2.2 million per day.In terms of currencies, the amount of USDC transferred to ZEC is far ahead, with about 11.5 million, and then BTC is 6.6 million (data from a few days ago).BTC is in second place.Then there are Solana, USDT and ETH, which are basically in line with market capitalization expectations.USDC is first, BTC is second, and the amount of USDC is twice that of BTC.
So that statement – many die-hard Bitcoin supporters have now transferred – does have a certain correlation in the data, but the amount of USDC transferred to Zcash is twice that of BTC, and 100 million funds have flowed in in 8 weeks.
Moderator:Are these small numbers?Or has it exceeded your wildest expectations?
Josh: I don’t think it’s a small number, because we are targeting billions of people.I’m excited to see this amount of funding, especially with something we just launched, where there’s clear product-market fit.Obviously people want to exchange it in and shield their wealth.It’s great to see this kind of usage and adoption.I expect this to continue to grow.
03Ecological development, regulatory response and future vision
Moderator: How is the developer ecosystem on Zcash now?What applications are already online or will be online soon?
Josh:There are now multiple core development organizations in the Zcash ecosystem.It wasn’t like this before, but now there’s the Zcash Foundation (an independent 501c3), there’s Shielded Labs (a Swiss charity), there’s Zuko’s team, Nate, Jason McGee, et al.They are doing the core protocol.There are also hardened cryptography companies like QEDIT, developed for Zcash.
There is also a bridge in progress.Someone is working on the Avalanche Bridge, which I expect will be online soon.There is a wrapper token on Solana that does not provide privacy, but provides access to some DeFi services.Some people lose more than they gain. For example, Aztec is working on interoperability, and someone at StarkWare published a paper on potential interoperability.
What I think is cool is that we have a really good rapport with the Near team and we are very tight-knit.Everyone is starting to realize that this is not a zero-sum game.If we want to build a Web3 ecosystem, there won’t be just one chain that eats up everything we have.It had its own ending and we did a great job.We stay focused and don’t try what others are already doing well.Then we interoperate.Once interoperable, all sorts of paralyzing stuff is unlocked.This is what is happening in the Zcash ecosystem.I feel like it’s going to grow exponentially from here.
Moderator:In the early days, privacy programs were a key target of regulation.How did you navigate that high-pressure environment?Want to stay innovative while ensuring compliance?Has the situation changed recently?
Josh:It’s really hard.I think that’s a great question, and I think it’s probably underestimated how hard it is.We write code and publish code, which is protected free speech in the United States.This has always been an important decision, and that’s what we did.But we have to make a decision: We do not operate the infrastructure.If you run infrastructure, some politicians or some people think that makes you a money services business (MSB).I don’t think so.If you are not hosting funds in accordance with FinCEN guidelines, you are not an MSB.But some in the Justice Department take that stance.So sometimes you’re not even sure what the rules are.I know I can write code, it’s sanctioned freedom, but that’s about it.
Now the situation is becoming clearer.In some countries like… I’m just talking about the United States, I spent a lot of time traveling to and from Washington, Tokyo, Singapore, meeting with regulators, and in some jurisdictions Zcash was either banned or killed.Regulators have recognized that transparent blockchain is actually a national security issue, but they have not had good tools to solve it.You can’t solve it by building backdoors into the code, and you can’t solve it by forcing KYC on central deglobalization public goods.
So I think we still have challenges ahead.But I feel safer now.I no longer worry about the FBI showing up at my door like I did in those dark days.
Moderator:Tucker Carlson recently said he dislikes Bitcoin and considers it a surveillance tool created by the CIA.Do you think he would be interested in Zcash?
Josh:I think he should be interested.I heard him say that he couldn’t use Bitcoin because it was essentially creating a Panopticon.I agree 100%.It is the go-to tool for law enforcement and government tracking.The problem is, when I communicated with the US government, I found:If you can fully see people’s transactions and histories, so can your opponents.
Moderator:You mentioned that you have had conversations with regulatory agencies such as the U.S. government.How do these conversations usually go?Are they really open to the value Zcash can provide?Or are you determined to turn it off?
Josh:As with anything, it depends on their motivations.But I think we did something very important. There was a guy on my team named Paul.He’s in Washington, D.C., with a computer science background and a law degree from Georgetown University.He taught me this.Basically you can’t just fly to these places, like Washington, and that goes for anywhere.You can’t just walk in and talk to regulators and expectBelieve what you say or care about the relationship.Relationships need to be built year after year.
Paul has been building relationships in Washington and has just created a project called Pretty Good Policy to bring regulators, policymakers, and industry people together for dialogue.We organize these conversations and events to get to know each other and slowly build trust, even though our perspectives are very different.For example, I participated in a roundtable meeting with people from the CIA, FBI, and then people like me who want a completely free privacy currency to discuss the issues, and this is what we do.This gives us the opportunity to speak the truth when we need to.
Moderator:You’re about to host a hackathon called Ziper Punk.What projects or applications would you like to see come out of this?
Josh:Mert is promoting this hackathon, which was not initiated by us. In the past, everything had to be initiated from the ECC, and no announcement could be made despite our promotion.Now…I see all kinds of things everywhere, and I have no idea what’s going on. The ecology is too active.So great, I slept a little less.But there’s no hackathon… I just saw the full announcement yesterday, so I don’t really have anything against it, so I’m probably not the right person.
Moderator: For those new to Zcash,What’s the best entry point to get started?What do you most want them to know first?
Josh:Download the wallet first and start using it. You will learn the most by using it.There is a lot of FUD and misinformation out there about Zcash, some of it very intentional.There are some good FUD responses where people say, “Here’s the thing, here’s the truth.” But some people continue to spread the same FUD even when they see the facts.
Follow the right people on Twitter and you can get some information, but download the Zashi wallet.Post on Twitter: “Hey, I’m new to Zcash.” Post your unified address, your deshined address, and see what happens.Because you will start receiving some Zcash to your wallet, along with crypto messages.One feature that Zcash supports is sending messages with money.You can send a 0 ZEC transaction with a message to someone else.
Then you see people start sending messages that others have sent them.As a wallet holder, you don’t necessarily see the source unless they tell you in the message.But I feel like this is the way to start understanding Zcash compatibility.its privacy properties.You put the transaction ID of that message you just received and it’s mining block explorer and you’ll see nothing, untraceable back to you.You can also see the impact on the enhancement pool, how your participation in it improves the owner’s privacy.So this is the best way I think to get started.
Host: What is your vision for the “end of privacy”?What do you predict this ecosystem will look like in three to five years?
Josh:I think we have a window of attractive global attention.I’m not good at predictions, but I can tell you what we’re doing.I want to push this technology and this ability to the limit – safe currency and protect people’s power.
To do this,It must be scalable.First, at the base layer, there is a cryptographer and engineer Shawn Bo, who launched a project called Project Tachyon.Shawn is a master of autonomy. Tachyon will fundamentally change the way the underlying technology works. There is something called a deactivator. I won’t go into details, but it will allow us to serve hundreds of millions of users.He has very aggressive goals to get online within the next 12 months.Then we can have super fast transactions and so on.So not only is it privacy better than Bitcoin, it also scales.
The side is building a powerful set of tools to make it easy for people to use ZEC.meOur goal is to make it easy for ordinary people to get started, start using, and gain experience.It’s not going to feed into yet another multi-currency crypto wallet with all this iffy nonsense.It is very simple and easy to use, but we also need richer functions.Like, what if I deposited a lot of Zcash and then I died?Can my family members access my key if they don’t know where it is?And so on.How do you make it super simple – understand that this is easy to get, but it’s easy to get to the process?These examples we will unlock in the coming times.
In my opinion, it is better than Bitcoin.And Bitcoin has been captured by fintech.That will be the battlefield:You either choose fintech coins or free coins.The goal is to be that option for everyone around the world.
Moderator:One of the “founding fathers” of Zcash, Eli Ben-Sasson, is now at Starknet and they are trying to do Bitcoin Fi, which may rely on Bitcoin activation OP_CAT.Do you think Bitcoin activation OP_CAT poses a risk to Zcash?
Josh:If you want crypto Bitcoin, you’ll get it on Zcash, get it with Zcash.There will be other mechanisms for moving things between different chains, for different examples, but like what Starknet is doing, Zcash is fundamentally different from Bitcoin, Bitcoin will never have these properties, you can try to wrap it in other things, but essentially, it is what it is, and it will stay true to its nature.
04How to Get Involved with Zcash: The Path from Zero to 10 Billion
Host: Zcash has attracted $100 million in inflows.How do you turn it into 1 billion, or even 10 billion?
Josh:We continue to work hard.Keep doing our thing at ECC.And there are good friends like Kon.There are others bridging.Maya is another DEX that now supports ZEC, and we need more options like this outside of the traditional financial system.So we might as well keep building bridges.
