In December, the Zcash founder resigned from his struggling privacy-focused blockchain. Now he’s collaborating with a Swiss-based entity to work on improving it from an external perspective.
By Steven Ehrlich, Forbes Staff
In the world of cryptocurrency, pioneers are highly respected. The mysterious Satoshi Nakamoto, creator of bitcoin, is seen as the industry’s founding figure. Ethereum’s founder, Vitalik Buterin, is admired for his leadership in the $283 billion blockchain market and his influence on the industry. Charles Hoskinson, founder of Cardano, has a strong following among fans of his ethereum-like blockchain, valued at $11.5 billion.
Zooko Wilcox, a 50-year-old computer scientist based in Boulder, Colorado, is often considered one of crypto’s founding figures. Wilcox, who collaborated with Satoshi Nakamoto on Bitcoin, launched the Zcash blockchain in 2016. Unlike Bitcoin, which is completely transparent, Zcash allows users to conceal their cryptocurrency transactions from governments, banks, and other entities.
Surprisingly, the executive director of the foundation supporting Wilcox’s creation disrupted a Zcash event in Barcelona during his keynote speech. This incident revealed a significant division in Zcash’s leadership, as the project aims for decentralization while facing regulatory challenges due to its US-based backers.
Despite being in existence for eight years, Zcash has low usage, generating minimal revenue and processing a small number of transactions. Its market value has significantly declined, mirroring the struggles of other billion-dollar cryptocurrencies like Monero.
In December 2023, Wilcox stepped down as CEO of the Electric Coin Company, expressing concerns about the association between himself and Zcash. Now, he has announced his involvement with Shielded Labs, a Swiss non-profit, to re-engage with the Zcash community and revamp its operations with the backing of Vitalik Buterin.
Buterin acknowledges Zcash’s centralized ecosystem compared to Ethereum, attributing many of the coin’s challenges to the control exerted by the Zcash Foundation and Electric Coin Company. The funding mechanism of Zcash, where a portion of block rewards goes back to these entities, has led to criticisms of centralization and inefficiency.
Shielded Labs, led by Jason McGee and Josh Swihart, aims to address these issues and steer Zcash towards a more sustainable and decentralized future. McGee, a dedicated supporter of Zcash, highlights the importance of community involvement and innovation in propelling the project forward.
One of the key early actions taken by McGee was to advocate for increased transparency within the Zcash Foundation regarding its fund utilization. McGee identified a lack of compliance with transparency obligations outlined in the Zcash Improvement Protocol 1014, which he likened to a Zcash constitution. He spearheaded efforts to reinstate quarterly reports and led various governance initiatives aimed at enhancing the grants program.
Discontent with the progress of Zcash, McGee established Shielded Labs in 2023, based in Switzerland for its privacy-centric reputation. The non-profit received an initial funding of around $200,000 from an undisclosed supporter with the objective of supporting future Zcash development.
As Wilcox observed Shielded Labs’ independent efforts to enhance Zcash, he reached out to McGee to collaborate on a plan for him to join the non-profit organization. This move relieved Wilcox of the mandate he had been operating under at ECC for eight years, as Shielded Labs did not receive any funds from the dev fund.
Presently, Shielded Labs is seeking to raise $1.1 million, with support already secured from prominent crypto investors such as the Winklevoss twins. Their endorsement underscores the significance of Zcash in reclaiming control over financial assets and privacy.
With Wilcox at the helm, Shielded Labs’ involvement comes at a critical juncture for Zcash, following a decisive community vote to reallocate block rewards away from Zcash Foundation and Electric Coin Company. This shift signifies a pivotal moment akin to a boardroom coup in the crypto realm.
ECC’s Swihart advocates for a shift towards a user-friendly approach in Zcash’s development, aiming to streamline the user experience and accessibility of the blockchain. Moreover, there is a growing movement towards transitioning Zcash from proof-of-work to proof-of-stake consensus mechanism, potentially enhancing security and user engagement.
Despite the evolving landscape, questions persist regarding the demand for privacy coins like Zcash, with user convenience often taking precedence over privacy concerns. While Zcash offers both shielded and transparent transaction options, its usage remains concentrated on trading rather than private transactions.
In conclusion, while Zcash may not reach the same level of adoption as Bitcoin or Ethereum, it remains a vital tool for individuals seeking to safeguard their wealth and privacy. Wilcox’s anecdote of a Syrian refugee utilizing Zcash to protect his assets underscores the profound impact of the blockchain in providing financial autonomy and security to individuals worldwide.