coindesk.com
Happy Wednesday,
This is your institutional newsletter, Crypto Long & Short. This week:
- Michael Zhao of Grayscale Research on the privacy problem AI created for public blockchains, and how Zcash addresses it
- Top headlines institutions should pay attention to by Helene Braun
- “ORE Weekly Revenue Picks Up as Price Responds” in Chart of the Week
Thanks for joining us!
- Kim Klemballa
Zcash: money for an age of financial privacy
- by Michael Zhao, Grayscale Research
Bitcoin proved you don't need a bank to move money. But it made a trade-off: every transaction is public, forever. Anyone can see who paid whom, how much and when. Wallet addresses aren't tied to real names by default, but the payment history itself is never hidden. Zcash was built to close that gap — a cryptocurrency designed around the idea that privacy, not transparency, is what the next generation of digital money needs.
For years, Bitcoin's openness didn't matter much in practice, because turning a wallet address into a real person's name took real work — subpoenas, exchange records or expensive forensics firms.
That's changing fast. AI is incredibly good at exactly the kind of messy pattern-matching this work requires: linking wallets to exchange accounts, data leaks, social media and timing patterns. And because the blockchain never forgets, this cuts backward in time too: a transaction from 2019 can be unmasked by software that didn’t exist until 2026. AI doesn't need to crack any codes; it just needs to read public data faster and cheaper than a human ever could.
Grayscale Research argues that AI is driving a third wave of public concern about financial privacy. The first came in the 1970s as financial records went digital, and the second in the 1990s with the rise of the internet. As more real-world finance moves onto public blockchains, whether that’s stablecoins, company payments or trading activity, the concern will only get more acute. Few businesses want their payroll or supplier list visible to competitors. This isn't about hiding wrongdoing; it's the same reason why your bank doesn't publish your balance to the world. Privacy means choosing who gets to see your financial information, not eliminating oversight altogether.
This is the gap Zcash was built to fill
Launched in 2016 using Bitcoin's own code, Zcash keeps Bitcoin's core design — the 21-million-coin limit, the same mining-based security model — but adds something Bitcoin doesn't have: an option to make transactions private. In a "shielded" Zcash transaction, the network can still confirm that the payment is legitimate (no fraud, no double-spending) without revealing who sent it, who received it or how much was sent.
