Key Takeaways
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Bitcoin and Zcash follow identical supply strategies.
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These strategies have significantly benefited Bitcoin over the years.
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Zcash has one notable difference that could either dampen its success or enhance it.
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Many individuals have accumulated significant wealth by purchasing Bitcoin (CRYPTO: BTC) before it gained widespread recognition as a legitimate asset. Currently, Zcash (CRYPTO: ZEC) is being considered as the next cryptocurrency capable of creating millionaires, which is logical given its similarities to Bitcoin and its early stage on the adoption curve.
The question remains: will Zcash once again fall short like other contenders after Bitcoin, or does it hold real promise for future wealth generation? First, let’s examine Bitcoin more closely.
Bitcoin’s Future Challenges
Bitcoin’s market capitalization currently hovers around $1.7 trillion. This figure presents substantial challenges for its potential to generate millionaire-level returns, even over extended holding periods with substantial initial investments.
While a trillion-dollar asset can still appreciate significantly, its growth potential is inherently limited compared to smaller assets. Predictions suggesting Bitcoin could experience dramatic increases in value often assume it will surpass gold, an asset that has stood the test of time. Although it’s not impossible, one shouldn’t expect such growth in the immediate future.
Bitcoin’s primary advantage lies in its capped supply of 21 million coins, gradually released due to periodic halvings. With over 95% of the total supply already mined, even if demand remains constant, the price is likely to rise due to increasing competition for a dwindling supply.
Zcash’s Potential Advantages
Zcash employs similar tokenomics as Bitcoin, maintaining a fixed supply of 21 million coins and halving block rewards approximately every four years.
What sets Zcash apart is its optional privacy features, allowing users to conduct transactions without revealing their wallet addresses or amounts through advanced cryptographic techniques known as zk-SNARKs.
With a market cap of $6.7 billion, Zcash may represent a superior opportunity for generating wealth compared to Bitcoin due to its smaller size. A surge in demand for Zcash could yield vastly higher returns for investors.
Considerations for Investors
However, Zcash faces substantial regulatory risks. Increased scrutiny on privacy coins from regulators could ultimately hinder its growth. Stricter regulations, particularly in the European Union, could discourage its adoption, especially by financial institutions.
Overall, while Zcash may provide higher potential returns owing to its size and scarcity, Bitcoin remains a safer investment due to its established market presence and broader acceptance. For risk-conscious investors, Zcash may seem too volatile.
Final Thoughts on Investment Choices
Before investing in Bitcoin, consider this:
The Motley Fool Stock Advisor recently identified the 10 best stocks to consider now… and Bitcoin is not among them.
Notably, investments in stocks like Netflix or Nvidia would have yielded remarkable returns if bought at the right time.
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