One serves as a store of value emphasizing privacy, while the other functions as a platform for assets and finance.
It’s evident that both Ethereum (ETH +5.46%) and Zcash (ZEC +25.05%) hold value. Currently, Zcash’s price is rapidly increasing, boasting over a 500% gain in the past three months. In contrast, Ethereum remains the primary network for significant financial activities, aligning more with institutional interests.
So, which cryptocurrency is a better investment?
Ethereum Dominates Decentralized Finance (DeFi)
Investors benefit when an asset provides genuine economic value. In this regard, Ethereum clearly leads the DeFi landscape, evidenced by a total value locked (TVL) of $86.8 billion—a strong indicator of the activity on its blockchain. Ethereum hosts the largest DeFi community, even delving into the significant growth area of real-world assets.
Currently, the most credible institutional application in crypto is the tokenization of real-world assets (RWAs), such as U.S. Treasuries and ETFs. With $11.9 billion in RWAs on its chain, Ethereum is the go-to platform. Continuous capital inflows related to RWAs will likely increase demand and value for the coin.
Zcash Offers Privacy, but Faces Challenges
Unlike Ethereum, Zcash lacks a viable DeFi ecosystem and is not expected to manage RWAs soon. As a privacy coin, its use case closely resembles that of Bitcoin, featuring unique attributes that can obscure the identities of users and transaction amounts.
However, investors must consider regulatory headwinds for privacy coins, as authorities tend to disfavor assets that facilitate private transactions, as this could enable illegal activities. Consequently, Zcash has encountered difficulties remaining on major crypto exchanges, with some facing delistings.
Moreover, Zcash’s privacy features are optional and can be somewhat inconvenient. Many holders prefer transparent transactions over using shielded wallet addresses, diminishing the network’s distinctiveness. While the adoption of shielded transactions is growing, it still doesn’t dominate the network’s transaction volume.
Ultimately, Zcash has a less robust value mechanism compared to Ethereum; it relies heavily on its Bitcoin-like scarcity strategies and ongoing demand for privacy features to maintain long-term value. Though Zcash may present an investment opportunity, it faces numerous challenges and has less potential for growth compared to Ethereum.
For investors determining where to allocate their funds, Ethereum stands out as the superior choice currently. While Zcash might be a worthwhile investment for some, it carries a higher degree of risk. Beyond its recent price surge, it may not deliver comparable upside for new buyers.
