With AI technology making it easier to associate wallet addresses with their owners, Zcash’s shielded transactions provide a solution to privacy concerns. Michael Zhao from Grayscale Research discusses why nearly 29% of all mined ZEC is now in the shielded pool.
By Helene Braun|Edited by Kim Greenberg KlemballaOct 7, 2026, 11:03 a.m. EDT6 min readMake preferred on ShareShare this articleCopy linkX (Twitter)LinkedInFacebookEmailMake preferred on SummaryShowYou're reading Crypto Long & Short, our weekly newsletter featuring insights, news and analysis for the professional investor. Sign up here to get it in your inbox every Wednesday.
Note: The views expressed in this column are those of the author and do not necessarily reflect those of CoinDesk, Inc., CoinDesk Indices or its owners and affiliates.
Happy Wednesday,
This is your institutional newsletter, Crypto Long & Short. This week:
- Michael Zhao of Grayscale Research on how AI has created privacy issues for public blockchains, and how Zcash counters this.
- Key headlines that institutions should keep an eye on by Helene Braun
- “ORE Weekly Revenue Picks Up as Price Responds” in Chart of the Week
Thanks for joining us!
Zcash: Financial Privacy for the Modern Age
- by Michael Zhao, Grayscale Research
Bitcoin demonstrated that transferring money without a bank is possible, but it came with a significant caveat: all transactions are permanently public. Anyone can trace who paid whom, how much, and when. Although wallet addresses are not directly linked to real identities, the transaction history remains accessible. Zcash was developed to address this shortcoming by focusing on privacy rather than transparency, which is increasingly needed in digital currency.
For a long time, Bitcoin’s transparency did not pose much of a problem, as identifying a wallet owner required considerable effort, such as obtaining subpoenas, accessing exchange records, or using costly forensic services.
This situation is rapidly changing. AI technologies excel at the kind of complex pattern recognition needed to connect wallets to exchange accounts, social media, and data leaks. Furthermore, because blockchain records are immutable, past transactions can also be analyzed with new AI tools that emerge over time. AI does not need to crack codes; it simply processes public data more efficiently than humans.
According to Grayscale Research, AI is triggering a renewed public concern regarding financial privacy. The first wave occurred in the 1970s with the digitization of financial records, followed by the internet boom in the 1990s. As traditional finance increasingly transitions to public blockchains, the urgency regarding privacy will intensify. Companies do not want sensitive payroll or supplier information exposed to competitors. This concern is not about concealing illicit activities; it relates to the fundamental need for privacy in financial dealings, akin to how banks do not disclose personal account balances publicly.
Zcash: Filling the Privacy Gap
Launched in 2016 using Bitcoin's codebase, Zcash retains the core principles of Bitcoin, including the 21-million-coin cap and the mining security model, while incorporating a crucial feature: the ability to conduct private transactions. In a "shielded" transaction, the network can verify the payment's validity without disclosing the sender, recipient, or transaction amount.
For users needing to demonstrate something to a regulator or business associate, they can provide a "viewing key" that allows access to specific details without relinquishing control over their funds. A complete viewing key can show incoming transactions and details of standard outgoing payments to anyone with whom it is shared. This selective disclosure enables users to control their financial information rather than having it universally available by default.
Interestingly, the concept of selective disclosure predates Zcash by several years. Satoshi Nakamoto, Bitcoin's creator, referenced this type of cryptography in a 2010 post but admitted they could not implement it within Bitcoin at that time.
Data indicates that users are actively utilizing Zcash's privacy feature, not merely holding the currency. The number of shielded transactions has surged in the last two years, while standard transactions have remained steady. Approximately 4.9 million Zcash (ZEC), representing nearly 29% of all mined coins, are now in the shielded pool. Meanwhile, ZEC's price experienced a staggering increase of about 2,300% between September 2025 and September 2026. In August 2026, Grayscale introduced a spot Zcash investment product on the NYSE, which attracted nearly $1 billion in assets within a month.