Bitcoin's (BTC +0.37%) halving mechanism was the first of its kind, but since the coin's launch, a few others have adopted a similar approach. For example, Zcash (ZEC +3.23%) copied its own halving mechanism more or less verbatim from Bitcoin, and it's up 197% so far this year. Its next halving is predicted to occur on Nov. 23, 2028.
Zcash also took Bitcoin's 21 million coin cap, among other features. But rather than aiming to be a neutral and fully transparent store of value like its older sibling, Zcash offers privacy. And given that demand for financial privacy solutions could just be getting started, it's worth knowing the basics about Zcash, as it might have what it takes to be bigger than Bitcoin someday.
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Zcash's supply tweaks seek to improve on Bitcoin's bones
A halving is an event in which a blockchain's block subsidy (the new coins paid to miners for mining a block) decreases by 50% and remains at that level forever.
Bitcoin's protocol implements a halving every 210,000 blocks, which makes the halving date mostly predictable. Its mining difficulty, the amount of computational power that miners must apply on average to mine a new block, automatically adjusts itself every 2,016 blocks, thereby keeping the Bitcoin mining schedule at close to the target of 10-minute blocks. Bitcoin's network currently mines approximately 164,250 new coins annually, or 0.8% of the total possible supply.
CRYPTO: BTC
Key Data Points
Zcash uses the same blueprint but operates at significantly higher speeds while also bolting on additional privacy features, with 75-second blocks. The chain's community recently voted to reduce the block time to 25 seconds in the next network update, which developers are targeting for November 2026. About 3.9% of its circulating supply is currently mined per year.
How privacy factors in
Scarcity as a store of value, while a major factor in Bitcoin's price appreciation over the years, is not necessarily as significant a driver of Zcash's value at present. Demand for privacy and the stickiness of its features when applied to assets are the main drivers.
CRYPTO: ZEC
Key Data Points
About 4.9 million ZEC, or 29% of the coin's circulating supply, is stored in Zcash's shielded pools, the encrypted side of the network that has the requisite technology to hide users' balances, transactions, and identities. Value in a shielded pool remains private only while it stays there, which gives capital an incentive to stay on Zcash's network even as it changes hands. Using the coin for privacy thus delivers value to holders while leaving new buyers to compete over the unshielded supply.
Privacy is a risk, too. Zcash has been removed from crypto exchanges because regulators don't like their reduced ability to police who owns what and from where.
Still, Zcash has many of the same store-of-value properties as Bitcoin. For that reason, it's worth adding to your watch list or even buying a small amount today.
