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This report uses the skyrocketing price of Zcash (ZEC) as an entry point to systematically sort out the technological evolution, valuation re-pricing and medium- and long-term investment logic of the privacy currency track.Privacy is not a temporary topic, but a rigid need to gradually move towards “financial infrastructure” in the context of regulatory technology, CBDC, on-chain monitoring and data abuse: companies need to protect business secrets, individuals need to prevent assets and behaviors from being fully profiled, and countries compete around data sovereignty.ZEC’s skyrocketing market comes from supply contraction after halving, long-term undervaluation, upgrades such as Halo 2 / NU5, and the resonance of the “compliance and privacy” narrative. However, price amplification is also accompanied by high volatility and policy sensitivity.The future landscape is likely to move from “privacy coins” to “privacy infrastructure”, and privacy capabilities will sink to L2, DeFi and TradFi.Privacy assets are more suitable as functional sub-positions in a portfolio, used to hedge the risks of transparent public chains and CBDC, and share the long-term beta of the popularization of zero-knowledge infrastructure, rather than a single heavy position in a desperate move.
1. Overview of the Privacy Coin TrackView
In the structural rotation of the crypto market in 2024-2025, one of the most dramatic main lines is the “resurrection of privacy coins.”After being suppressed for a long time by regulatory pressure, exchange delistings, and narrative cooling, the privacy track suddenly returned to the spotlight in the second half of 2025: the overall market value of privacy coins exceeded the $24-28 billion range, with Zcash (ZEC) and Monero (XMR) leading the way, significantly outperforming the market.ZEC, in particular, fell below the low price of US$20 in July 2024, and reached around US$600-700 in November 2025, with a stage increase of more than 30 times, becoming one of the “flagbearers” of this round of privacy sector market.In this context, privacy coins are no longer just synonymous with “dark web assets” or “compliance gray areas”, but have been re-incorporated into the medium- and long-term asset pool of “digital financial privacy infrastructure”.
Since the birth of Bitcoin, the discussion around “privacy” in the digital asset world has never stopped.From the pseudonym system at the beginning to today’s complex and diverse privacy protocols, privacy is not an ancillary issue of crypto assets, but a fundamental variable that runs through “financial freedom-regulatory game-data sovereignty”.Bitcoin is not a truly anonymous system. All transactions on the chain are open and transparent. As long as KYC data and on-chain cluster analysis are combined, the participants’ transaction paths, asset distribution and even identities can be highly restored.As regulatory technology and on-chain forensics capabilities mature rapidly from 2020 to 2025, the privacy gaps in public ledgers such as Bitcoin and Ethereum are fully exposed, thus promoting the evolution of privacy coins represented by Dash, Monero, Zcash, Grin/Beam, etc. generation after generation, forming an “arms race” in privacy technology.Early privacy solutions focused on currency mixing and on-chain mixing technologies. For example, Dash’s PrivateSend disrupted the transaction path by mixing input and output, making it difficult to directly track “who paid whom”; Monero relied on ring signatures, stealth addresses and RingCT to achieve triple privacy of the sender, receiver and amount, and continued to expand the “ring size” and use Bulletproofs to reduce transaction volume in multiple upgrades.Zcash brings zero-knowledge proof into the mainstream public chain world, achieving for the first time “completely hiding transaction content and only disclosing validity proof”. Its dual-track design of shielded addresses and transparent addresses allows users to choose between “privacy and auditing”.MimbleWimble further enhances privacy to the block level, by aggregating transactions and deleting intermediate data, forming a light chain structure that is both private and highly scalable.These technical solutions have never really been oriented to “black market tools”, but are more like systematic responses to three common needs: business confidentiality and pricing privacy, personal asset security, and institutional reflection on the “panoramic data surveillance” of countries and platforms.The bull market in 2017 pushed the privacy narrative to its peak, with most privacy coins entering the top 20 in terms of market capitalization, and the market regarded “privacy” as the core of competition for the next generation of cryptocurrencies.However, since 2018, the track has gradually declined due to regulatory pressure, early model defects, user barriers and other factors.Exchanges are gradually delisting strong privacy coins, leading to a decline in liquidity; the high inflation and founder rewards designed in the early stages of some projects have brought continuous selling pressure; the threshold for using privacy technology itself is high, making actual demand far less than speculative demand.By 2023–2024, the privacy track has been considered a fringe field, with market capitalization falling to less than 1%.However, research and development continues in the dark: Zcash’s NU5/NU6 upgrade removes trusted settings, unifies the address format and introduces Halo 2; Monero continues to optimize ring signatures and privacy certificates; the MimbleWimble community is still exploring lighter and more anonymous implementations.The accumulation of technology has not stopped due to price and sentiment, paving the way for the resurgence of the privacy track in 2025.Entering 2024-2025, the crypto market macro-environment, regulatory orientation and sector rotation have combined to cause significant changes in the privacy track. The market value has rebounded from the bottom to US$24-28 billion. The sector has regained institutional attention, and many research institutions have even provided special coverage of privacy assets.
At the same time, regulatory pressure and privacy demands are rising simultaneously.The EU AMLR has put forward clear restrictions on “high-anonymity crypto-assets”, which means that assets such as Monero and Grin that default to complete privacy may face comprehensive bans or prohibitions on exchange listings starting in 2027 in some jurisdictions.The U.S. Department of the Treasury, the Department of Justice, and on-chain analysis companies used machine learning, large-scale address clustering, and associated behavior modeling to track and seize large amounts of Bitcoin many times, making the “privacy gap in transparent chains” a social event.The reverse demonstration effect of the transparent public chain has instead pushed the market to re-examine the value of privacy coins: in a world where surveillance capabilities are rapidly increasing, the need for privacy is no longer a niche characteristic of geeks, but a common concern of ordinary users, institutions and cross-border enterprises.In this context, privacy assets are clearly differentiated: Monero represents the path of “strong privacy, non-auditable”, where privacy is turned on by default but also leads to regulatory resistance and liquidity contraction; Zcash, Secret, etc. represent the path of “compliance privacy”, which not only supports shielded transactions, but also can selectively disclose transaction records by viewing keys to achieve the minimum transparency required for supervision, liquidation, and auditing.This kind of design is more likely to be accepted by institutions and regulators in policy-friendly areas.The market’s revaluation of ZEC largely stems from the fact that its technical architecture and compliance attributes are more sustainable in the future privacy policy environment.
Looking beyond 2025, the privacy track is completing a historic shift from “privacy coins” to “privacy infrastructure”.Privacy is no longer the narrative of a single token, but the underlying module of Web3, DeFi, RWA, identity protocols and financial infrastructure.The future privacy structure will show at least three evolutionary routes.First, compliance privacy will become a mainstream design concept.Selective disclosure mechanisms and view-key modes are being considered as viable solutions, allowing institutions to find a new balance between privacy and regulation.Second, privacy will be deeply embedded in DeFi and Web3 in a modular way.In fields such as decentralized lending, derivatives, NFT, and on-chain identities, users have extremely strong demands for “position privacy, transaction privacy, and asset privacy.” Technologies such as ZK, MPC, and ring signatures have begun to enter the L2, cross-chain bridge, and application layers.Privacy will shift from L1 competition to a “privacy layer for all applications” and may also become a differentiating weapon for L2.Third, privacy will compete deeply with CBDC, digital identity systems and data sovereignty policies on a global scale.Central bank digital currencies of various countries all face the same problem: how to maintain users’ basic financial privacy under anti-money laundering and counter-terrorism financing requirements.Zero-knowledge proofs and selective disclosure mechanisms may be absorbed by central banks and become part of their infrastructure.In other words, privacy technologies may either be suppressed or absorbed, and may even become a standard component of the traditional financial system.The revaluation of the privacy track in 2025 is not the product of short-term speculation, but a structural regression jointly shaped by “technological maturity × regulatory pressure × market reflection × on-chain monitoring expansion”.The long-term value of privacy assets does not lie in price fluctuations, but in its response to the core question of the digital society: When everything can be calculated, audited, and archived, do humans still have their own “financial space”?The future of privacy is neither dark nor transparent, but a new paradigm that is controllable, authorizable, auditable but not abused.ZEC’s emergence in this wave of innovation and compliance trends may be an early signal of this paradigm shift.
2. Investment value of privacy coinsanalyze
From an investor’s perspective, the most critical question in judging whether a track is worthy of long-term allocation is never “how much it has increased,” but whether the demand behind it is rigid and long-term.The reason why privacy coins deserve serious study as an independent track is that in the world of ever-expanding on-chain finance, “privacy” itself is changing from optional to mandatory.As long as you have a stable usage scenario on the public chain, once the main address is bound to the real identity (such as depositing coins to a KYC exchange or OTCCross traces left during transactions), all your historical transactions, position size, and capital flow may be profiled by algorithms, which means higher risks of attack and strategy exposure for high-net-worth individuals, institutional funds, and professional traders: hackers or ransom attacks can target “large account addresses”, and counterparties can reversely deduce your position structure and liquidation threshold through on-chain intelligence.Privacy coins provide investors with a technical path to “regain financial privacy” in the open financial system through address anonymity, amount hiding, and path confusion.In enterprise scenarios such as B2B and supply chain finance, transaction terms are often extremely sensitive. If all settlement information is naked on the chain, it will not only easily lead to perceptions of “unfair prices” among customers, but will also be used by competitors to reversely dismantle your cost structure and bargaining power. Therefore, building a settlement network that is “auditable to supervision and opaque to the entire network” is a rigid demand of enterprises.At the same time, from a broader social background, there are endless cases of privacy data leaks and platform abuse of user data. The public has gradually realized that “data is an asset”. Once leaked, it will be permanently copied, bought and sold, and reorganized, and users often do not even know how their data is used.In this context, the sentiment “I hope my assets and transaction records will not be infinitely exploited by the platform and third parties” provides deep value and cultural soil for the privacy track.As on-chain monitoring continues to mature, “blacklisted coins” and “polluted addresses” have become a reality – once an address is associated with a hacker or sanctions list, its corresponding assets may be rejected or even frozen even if they change hands several times, causing substantial harm to the substitutability of assets. Privacy coins fight “address discrimination” by weakening path traceability.Going back to the bottom layer of values, privacy is regarded as a basic human right in many societies with strong liberal traditions. “What I am willing to disclose and to whom I disclose it should be my own choice.” Privacy coins and zero-knowledge infrastructure can be understood as the technical mapping of this concept in the financial field.Therefore, as long as the digitization and on-chainization of assets and identities continues to advance, the need for privacy will not disappear, but will emerge in a more systematic way. This determines the legitimacy of the privacy coin track to have long-term research and strategic allocation, rather than one-time hype.
From the technical pedigree, the privacy track can be roughly broken down into several schools and representative assets: CoinJoin/coin mixing solutions represented by Dash are more like superimposing one-time currency mixing tools on the original transparent ledger, with limited privacy strength; ring signature + ring confidential transactions represented by Monero achieve deep privacy that is forced and enabled by default through ring signatures, stealth addresses and amount hiding, and are the technical destination of “pure anonymists”; zk-SNARKs represented by ZcashThe route, with the support of zero-knowledge proof, completely hides the transaction content and only discloses the validity proof, and can be extended to smart contracts and the wider ZK ecosystem on this basis; the MimbleWimble system (such as Grin, Beam) prefers minimalist protocols and lightweight ledgers, emphasizing block-level aggregation and data clipping, and pursuing a dynamic balance between privacy and scalability.In this territory, Monero is the leader with the most consensus on the strong privacy side, with the largest anonymity set and the richest practical experience, so it has naturally become the focus of supervision; DASH is closer to the positioning of “digital cash + light privacy function” and has gained certain adoption in some emerging markets based on payment experience; the new generation ZK project is trying to bind privacy capabilities with L2 expansion and ecological narrative.From a structural position point of view, ZEC is at a very subtle but extremely flexible middle point: on the one hand, it is technically ahead of simple currency mixing solutions and is more mature and stable than some MimbleWimble projects; on the other hand, although its privacy strength is not as strong as Monero, which enforces ring signatures, it provides a more natural design space for “privacy + audit + compliance” through the dual-track model of transparent addresses and shielded addresses, and mechanisms such as viewing keys.Coupled with a series of upgrades such as Halo 2, Orchard, and NU5/NU6, it is at the forefront of “removing trusted settings, unifying the address structure, and lowering the threshold for private transactions.” ZEC is not only a privacy coin itself, but also begins to play the role of a “zero-knowledge technology supplier.” The research and development results of zero-knowledge proofs have a spillover effect on the broader Web3 and ZK Rollup ecology.From an investor’s perspective, ZEC can be understood as a typical “high-beta leader”: it enjoys the beta of the entire privacy track, but also obtains additional alpha by virtue of its technical moat and compliance imagination space.
ZEC’s surge in 2024–2025 is not driven by a single catalyst, but the result of a series of medium- and long-term variables concentrating on cashing out within the same time window.The first is the supply and valuation level. Zcash continues the Bitcoin-style total supply and halving curve. After years of price decline and emotional cooling, the second halving in 2024 will further compress the block reward to 1.5625 ZEC. The inflation rate has dropped significantly, miners can sell fewer chips, and the actual number of ZEC received by the developer fund has also been reduced simultaneously.In the past few years, “Founders Rewards/Developer Funds” were widely regarded as a source of continuous selling pressure. After multiple rounds of halvings, the marginal impact of this negative factor began to weaken. When combined with the historical bottom price of 15-20 US dollars, it is equivalent to pressing the spring to the limit on the supply and valuation sides.When sentiment and funds return to this sector, the upward elasticity of prices is greatly amplified.Secondly, there is a sense of “qualitative change” brought about by technology and product upgrades: a series of upgrades such as removing trusted settings, improving privacy certification efficiency, unifying the address mode, improving light wallet and mobile experience, etc., have transformed the outside world’s understanding of ZEC from an “old privacy coin” to a “privacy infrastructure candidate that can be adopted by financial institutions and compliance products.” The technical narrative no longer stays in the white paper, but has actually landed on the network layer and user experience layer.The third is the linkage between narrative and capital structure. As the overall market value of privacy coins rebounded to more than 20 billion US dollars, many studies and media labeled ZEC as the “privacy recovery leader”, coupled with the disclosure of some institutional product positions, making “institutional recognition” a new label; in the derivatives market, ZEC perpetual and options trading volume suddenly enlarged when it broke through the key price, triggering short squeezes multiple times, pushing the price upward in an almost waterfall-like form, and then funds moved to XMR and DASH within the sector.Wait for asset rotation to form a complete “privacy currency sector market”.Finally, macro and regulatory events have provided powerful narrative fuel for this round of market conditions: several large-scale BTC tracking and confiscation cases on transparent public chains have made the market intuitively aware that public ledgers have little “room for forgetfulness” in the face of strong supervision and strong analytical capabilities. This has not only strengthened regulatory confidence, but also intensified some users’ concerns about their privacy being completely stripped away.In this contrast, assets that can provide both strong privacy and selective disclosure capabilities are naturally regarded as a tool to hedge the risks of transparent chains and hedge against excessive visibility of future CBDCs.
However, understanding ZEC’s surge logic does not mean ignoring its risk attributes.The privacy track as a whole is characterized by high volatility, high policy sensitivity, and high narrative dependence. The greater the increase, the higher the sensitivity to regulatory and liquidity impacts.Therefore, compared with “stud one” single-coin speculation, a more reasonable perspective is to incorporate the privacy track into the portfolio level for structured allocation.It can be regarded as a functional sub-position in the digital asset portfolio: on the one hand, it hedges against the tail risk of “further compression of privacy” in the macro and regulatory environment; on the other hand, it shares the long-term beta generated by zero-knowledge proofs and privacy infrastructure as they are gradually absorbed by traditional finance and Web3.In terms of specific configuration, investors can use the three-layer structure of “core + satellite + options” to understand: use XMR and ZEC as the leaders of the core layer, one is biased toward extreme privacy, and the other is biased towards compliance; use payment-oriented or privacy assets actually adopted in specific areas as the satellite layer, and pay more attention to actual usage scenarios and network effects; use the emerging ZK/L2/privacy DeFi module as the option layer, and use small positions to gain high-fold returns from technical inflection points and narrative amplification.No matter what structure is adopted, the premise is to have a clear understanding of the high volatility of the track and policy uncertainty, and to incorporate both “long-term optimism about privacy” and “short-term respect for risks” into the investment framework through position control, stop-loss mechanisms and regular rebalancing.For investors who are willing to invest time in in-depth research and understand the game between technology and regulation, the privacy currency track, especially the compliant privacy architecture represented by ZEC, may be one of the main threads that will run through the bulls and bears of digital assets in the future, but it is more suitable to be included in the portfolio rationally and systematically rather than impulsive bets driven by emotions and short-term gains.
3. Investment Prospects and Risks of the Privacy Coin Trackrisk
The mid- to long-term prospects and risk structure of the privacy currency track are being rapidly reshaped with the deepening of digitalization, changes in the regulatory environment, and the maturity of cryptographic infrastructure.Regardless of macro trends, technical routes or institutional adoption paths, the value logic of privacy assets is breaking away from the category of “speculative niche coins” and evolving into a long-term proposition spanning business, finance, sovereignty and Internet architecture.In a world where assets, identities, and data are gradually being moved on-chain, privacy is no longer optional, but has gradually become an underlying requirement.Therefore, the cryptographic privacy infrastructure represented by privacy coins is likely to form a structural growth pillar in the next decade.
Judging from the changes in the real world, the privacy awareness and data sovereignty awareness of enterprises, individuals and countries are increasing simultaneously.For enterprises, business secrets, cost structures, supply chain pricing and credit terms are all highly sensitive data. If the settlement and liquidation process are completely transparent, it means that competitors can easily reversely deduce cost structures and strategic arrangements through on-chain data, forming a new asymmetric competition.For individuals, from social media, ticket booking platforms to large Internet companies, information leakage and data abuse have long become the norm. The public has gradually realized that financial trajectory, asset size and transaction habits themselves are extremely valuable “hidden assets”, and exposure means higher attack risks.With the promotion of infrastructure such as CBDC, digital identity, and unified credit reporting systems, discussions around data sovereignty between countries and citizens have become increasingly intense.All these trends together push privacy from “optional” to “infrastructure layer requirement”, and privacy coins and privacy protocols are naturally at the intersection of this trend.At the same time, the maturity of cryptographic technologies such as zero-knowledge proofs, ring signatures, and multi-party calculations has further accelerated the trend of privacy transforming from “characteristics of a certain chain” to “Web3 full-stack infrastructure components”.For example, the zero-knowledge proof research promoted by ZEC, Aztec, ZK Rollup and other projects has penetrated into many directions such as private payment, on-chain settlement, RWA data protection, ZK KYC, ZK reputation, etc.Even if the price of a single privacy coin no longer rises in the future, its underlying technology will still be adopted by a wider range of B2B and B2G scenarios through enterprise solutions, side chains, licensing networks, etc.In other words, even if investors do not directly hold the privacy coin itself, the value of the privacy track may still be realized through technology spillover.
In addition, driven by global institutionalized DeFi, the need for privacy is evolving from “anonymous transactions” to “optional transparency.”Institutions want to monitor systemic risks and overall leverage on the chain, but do not want their positions, strategies, and liquidity to be exposed to competitors; high-net-worth customers also want to take advantage of on-chain settlement and 24/7 liquidity, but do not want their asset size to be fully disclosed by on-chain scanning tools.With the emergence of on-chain treasury bonds, money market funds, institutional lending pools and other products, an “auditable but not completely transparent” financial network is gradually taking shape.Privacy Chain, Privacy L2 and Privacy Modules therefore have the potential to be adopted as infrastructure by financial institutions.In the future, privacy will no longer be limited to niche narratives, but will become an “optional layer of transparency” for institutions.In this sense, the privacy track has long-term growth pillars that span bull and bear cycles.However, the privacy coin track is not without risks, and the core systemic risk comes from changes in the regulatory environment.Over the past few years, privacy coins have been in a “twilight zone”: They are essentially technological tools that provide privacy rather than exclusive vehicles for illicit uses, but regulators often associate privacy-enhancing tools with illicit financial flows.The EU AMLR has clearly included highly anonymous encrypted assets as key regulatory targets, and some regions are discussing banning privacy coins from being listed on local exchanges; the United States and other countries have also not ruled out taking more direct sanctions against mixers, anonymous wallets or some privacy protocols.In this context, “compliance privacy” itself is a dynamic game: whether supervision will accept the ZEC-style view key mechanism, and whether financial institutions are willing to adopt the “selective disclosure” model, will take time to verify.Once major jurisdictions implement more aggressive restrictions, the privacy track as a whole is likely to experience a sharp valuation correction in the short term.
Technical risks cannot be ignored either.Privacy protocols are extremely dependent on the correct implementation of cryptography. Any underlying algorithm bugs, risks in the zero-knowledge proof parameter generation process, incorrect settings of wallet default parameters, or even client misuse of privacy switches may cause anonymity to be weakened or even destroyed.In addition, the attack surface of privacy protocols is more complex than that of general public chains, and many users do not understand that “privacy protection is not absolute”, which increases security uncertainty at the usage and implementation levels.Therefore, the security of privacy assets should not be taken as a granted technology gift, but requires continuous attention to the project’s auditing, upgrade cadence, and community transparency.
The privacy track also faces competitive pressures from both internal and external sources.As Ethereum and its L2 (such as zkSync, Stark series), Bitcoin side chains, and high-performance public chains have joined the research and development of zero-knowledge proofs, privacy capabilities are gradually “sinking” to mainstream public chains.This means that privacy may become a “universal function” in the future, rather than the exclusive selling point of “independent privacy coins”.The final pattern may evolve into two categories: one is full-time privacy coins such as XMR and ZEC, which are pure choices for privacyists; the other is the privacy modules of mainstream chains, which provide sufficient privacy protection for 90% of usage scenarios.From a valuation perspective, this means that whether privacy coins can maintain a high market value depends on factors such as ecology, usage scenarios, institutional adoption, etc., and cannot rely solely on “possessing privacy technology” as a moat.
Finally, liquidity and market structure remain the most realistic risks for privacy coins.Compared with BTC and ETH, the overall market value of privacy coins is smaller, more concentrated, and less deep, which makes it easier for large funds to enter and exit, causing violent price fluctuations.Insufficient depth in the derivatives market may also intensify the effect of long and short runs; some exchanges may take delisting measures or temporary risk control adjustments, which may have a severe impact on prices.In other words, even if the long-term logic of the privacy track holds true, it is still not an asset class suitable for high leverage and heavy bets.To sum up, the privacy track has clear mid- and long-term growth pillars: certainty of privacy demand, zero-knowledge technology spillover, and deep coupling potential with institutional finance; at the same time, it faces systemic risks in regulation, technology implementation, competitive environment, and market structure.There is no need to be overly optimistic about the future of privacy coins, nor to be intimidated by short-term price behavior. The key is to understand the strategic value it represents as the “privacy base layer of the future on-chain world” and to use combination thinking, risk budgeting and long-term tracking to configure this track.In an on-chain era with increasing transparency, privacy will become more scarce and more important. This makes the investment value of the privacy coin track ultimately dependent on whether investors can look at it from an infrastructure perspective rather than a short-term fluctuation perspective.
Four.knotOn
Privacy coins are not a short-term hot spot, but have gradually become a structural necessity of the financial system in the context of deepening digitalization, mature regulatory technology, advancement of CBDC and frequent data abuse.Privacy will inevitably move from fringe issues to public issues, and its implementation may continue to evolve between privacy coins such as XMR and ZEC and ZK Rollup, privacy L2, and compliance privacy modules. However, the long-term trend of “privacy infrastructure expansion” has become clear.ZEC’s current surge is not only due to supply contraction, long-term underestimation and technological upgrades such as Halo 2 / NU5, but also affected by the high leverage and emotional amplification of the encryption market. The price cannot extend linearly.The key is to observe whether ZEC continues to increase the proportion of blocked transactions and actual usage during the callback period, and stabilize the strategic position of “compliance privacy” in the regulatory game.For investors, the privacy track is more suitable as a functional sub-position in a portfolio to hedge the risks of transparent public chains and CBDC, while sharing the long-term beta of the popularity of privacy technology, rather than as a single heavy position.The top assets should be the core, supplemented by small-position innovative projects, and supervision, development progress and on-chain data should be continuously tracked.This report is intended to provide a cognitive framework rather than a buy or sell signal.In the next ten years, the privacy track will still go through multiple rounds of pursuit and suppression cycles. What is really important is to maintain the ability to judge amid fluctuations and narratives, and to examine the inevitable value of “privacy” as infrastructure from a long-term perspective.
