Why are privacy tokens outperforming bitcoin?
There’s never a dull moment onchain. Here’s what you need to know this week:
Are interest rates about to rise? Inflation data due Thursday and Friday could tip the decision — here's what it means for crypto.
Visa says stablecoin card payments grew 200% last year. 160 programs are now live globally, and the growth keeps accelerating.
Zcash just hit highs last seen in 2016. Why privacy-focused tokens are soaring in the age of AI.
MARKET BYTES
Will the Iran conflict and rising bond yields force the Fed to raise interest rates?
The Iran conflict continued to heat up this week, driving oil prices to highest levels since May, pushing stocks lower, sending 10-year bond yields to multiyear highs, and nudging crypto prices slightly lower compared to last week.
Last month, Treasury Secretary Scott Bessent announced a plan to try to tame surging bond yields, which influence borrowing costs for both businesses and consumers. But on Wednesday, when the agency said it would be buying back $6 billion in U.S. debt, bond markets shrugged off the move, with Wells Fargo analysts noting that “some market participants were likely expecting larger operations.”
All eyes are now on a pair of inflation reports out this week for clues about whether or not the Federal Reserve will raise interest rates at its meeting next week. On Thursday, the Producer Price Index, which measures wholesale prices, rose 0.4% — matching expectations. Even though the “core PPI” came in slightly softer than expected, crypto prices dipped and bond yields continued to climb. On Friday we’ll see if the Consumer Price Index, which measures the prices consumers pay for goods and services, comes in hotter or cooler than expected.
“With officials concerned by persistently high inflation, but divided over how monetary policy should respond in the near term, new evidence of price pressures could tilt the Federal Open Market Committee into a hike,” Bloomberg notes. “Cooler reports are likely to keep the Fed on hold, as it’s been through five previous meetings this year.”
Here’s more news you should know…
Why Visa says stablecoin-linked cards “are in hypergrowth mode”
According to the payments giant, cards that allow users to make payments using stablecoins have become one of the fastest-growing product categories on the Visa network.
“In Q2, there were more 160 stablecoin-linked card programs live around the world, payment volume on those programs grew nearly 200% year over year, and stablecoin settlement volume recently surpassed a $20 billion annualized run rate, up more than 15x year over year,” Visa reports.
Real genius… Following the passage of the stablecoin regulation package known as the GENIUS Act last year, a growing range of banks, fintech firms, and crypto companies have created stablecoin platforms. Visa’s own stablecoin platform launched in July.
PRIVATE INVESTIGATOR
Why have privacy tokens like Zcash been outperforming the market recently?
After months with little action, crypto markets have surged back to life in the last few weeks. But one category of tokens eclipsed all the rest. Privacy tokens like Zcash and Dash have seen major spikes in recent weeks, with one index tracking the category up 90% over the past month — and 213% since last October.
But what exactly are privacy tokens? Here’s what you need to know.
What are privacy tokens?
One of the core elements of blockchains is that they’re public ledgers. That means that wallet balances and transaction history can generally be accessed by anyone. Privacy tokens allow users to hide details of transactions, like the sender, recipient, or amount, allowing them to keep their financial activity confidential.
“Privacy is increasingly viewed as a necessity rather than a feature, renewing ideological demand for private, self-sovereign transactions,” said Jake Kennis, senior research analyst at Nansen.
If a regular crypto transaction is akin to a postcard (anyone can read it), privacy tokens are more like sealed envelopes.
How do they work?
Two of the biggest privacy tokens by market cap, Zcash and Dash, take slightly different approaches to blockchain privacy.
Zcash, which launched in 2016, makes privacy optional, giving users the choice to make “shielded” transactions, which are fully private, or "unshielded” ones, which are public. To shield its transactions, Zcash relies on an advanced form of cryptography known as zk-SNARKs, which allow the network to ensure that the necessary conditions for a valid transaction are met (like a wallet having enough funds) without exposing any personal data.
Dash, which was created in 2014, is also an optional privacy token. Users have the option to use “PrivateSend,” allowing them to “coin mix,” which mixes tokens in with those of others, making it hard to identify where tokens were sent to and from. And last month, Dash launched a “shielded” token feature similar to Zcash.
Why are privacy tokens surging?
Analysts point to a mix of a shifting crypto sentiment, a growing institutional appetite for altcoins, and a rising interest in privacy technology on blockchains.
Zcash is up nearly 150% in the past month alone. As of Wednesday it was trading around $1,260 — its highest level since 2016. A new Zcash ETF launched by Grayscale in August has already crossed $500 million in assets under management and seen more than $70 million in cumulative inflows.
Zcash has also garnered attention as a “quantum hedge.” Developers from the Zcash Open Development Lab say that Zcash could be fully quantum proof by the end of next year, putting it ahead of ETH’s target to be quantum proof by the end of 2029.
Zach Pandl, head of research at Grayscale, says the inflows reflect the mainstream financial industry view that blockchains need a privacy layer. “Anyone that comes from TradFi and looks at public blockchain technology would tell you that it needs a privacy layer,” he said. “We can't disclose all of our transactions, all of our assets in the public ledger at all times. We need privacy solutions, and Zcash can definitely be one part of that.”
Dash, meanwhile, is up more than 106% over the past month, after launching shielded transactions — a feature it’s calling “the most significant privacy overhaul in our 12+ years of providing confidential payments to users.”
What's next?
Privacy, according to some analysts, is becoming a key feature for blockchains. a16z crypto called privacy the “most important moat in crypto,” and Grayscale’s Pandl says it's a “must have feature in a world of AI powered surveillance.”
Currently, however, privacy blockchains have a scalability issue. Hiding transaction information means more data per transaction, which can slow how many transactions the blockchain can process. Zcash, for example, can only process around 20 transactions per second. But planned upgrades on its roadmap aim to bring that number to 50,000 – near the capabilities of Visa and Mastercard.
"Our dream is to support the world's payments,” said a group of Zcash developers in a recent blog post. “Mastercard and Visa handle more than 50k transactions per second; that's our floor.”
NUMBERS
$694 billion
The amount in stablecoin loans that onchain lending protocols have distributed since 2020, according to Visa. The payment processing giant recently announced that it would allow its own payment data to be used alongside blockchain transaction data to assess a business’ performance and help determine lending terms.
$827 million
The approximate value of Euro-pegged stablecoins onchain — still a small fraction of U.S. dollar-denominated tokens. Despite the Euro representing around 20% of global foreign exchange reserves onchain (compared to 57% for USD), USD-pegged stablecoins see around 300x the usage and demand of Euro-pegged ones.
10,000
The number of AI agents that OpenAI said it used to solve one of mathematics’ seven Millennium Prize Problems, which offer a $1 million prize. The problem was more than 90 years old, and the agents exchanged 2.7 million messages while solving the problem in a matter of days.
CRIPTOCURIOSIDADES
What do privacy tokens like Zcash and Dash let users do?
A
Earn interest on their crypto holdings automatically
B
Trade crypto without paying any network fees
C
Reverse a transaction after it's been sent
D
Hide transaction details like the sender, recipient, or amount
Veja a resposta abaixo.
Resposta da pergunta
D
Hide transaction details like the sender, recipient, or amount
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