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If you are even tangentially familiar with anonymous cryptocurrencies, the titular dilemma is not new to you. “Which coin is better for X?” is a natural question, given the variety of established projects in the crypto market today. It gets especially sensitive when we are talking about things like privacy: after all, this goes beyond simple convenience in a territory like that. In this guide, the ChangeHero team will compare the two most popular privacy coins so you know the difference between Monero vs. Zcash and pick your own winner of the standoff.
Key Takeaways
- The Monero blockchain is built on the premise that privacy is not an option. Every transaction with XMR by default conceals sender, receiver, and amount using multiple layers of obfuscation.
- Zcash, on the other hand, leaves the level of privacy up to the user. Shielded transactions are optional, meaning that the ZEC blockchain is more transparent unless the users actively conceal their activity.
- As a result of the difference between core philosophies, Monero is widely believed to be the superior privacy protector. However, its technology and design hinders adoption, while Zcash wins on that front and enjoys wider market support.
Why Anonymity Matters in Crypto
Why would one even need to pick between these privacy coins? When it comes to Monero vs. Bitcoin, isn’t it quite obvious which is more widespread and valuable? Well, the thing is, Monero is trying to do a very different thing, one that not a lot of bitcoiners have a demand for or are even aware of.
Bitcoin, as the vast majority of cryptocurrencies that followed in its footsteps, is a database of hashes and encrypted data, which makes it look like it obfuscates it. However, it is quite the opposite: blockchains in general are entirely transparent. In fact, Bitcoin was built to be fully transparent, so that anyone has access to the information recorded in the blockchain for audit or review purposes.
Instead of true anonymity, most crypto uses pseudonyms, which are unlinked to the real-world identity only initially. As your pseudonym is associated with more data such as exchange records, transaction patterns, and even IP addresses, it gets increasingly easy to de-anonymize you.
The Case for Financial Privacy
The Bitcoin blockchain, as well as other chains, transfer millions of dollars in value daily. Imagine someone with not the best of intentions getting access to this kind of information? By now, it should be more clear how not only criminals would want their records protected from unwanted attention.
There are far more examples of fairly legal reasons to protect your financial activity than just personal safety. Businesses would want to keep their strategies, suppliers, customer data and finances unknown to the competitors.
Another argument in favor of anonymizing assets has to do with its use as a currency. One of the properties of money is fungibility: you can exchange one dollar bill for another, often not even aware of its history. This is not the case with transparent cryptocurrencies — for compliance purposes, service providers and exchanges want to avoid holding or dealing with crypto that has been used in crime. A bitcoin’s output and history stays with it forever, potentially “tainting” it and undermining its value to the very same bitcoins without this kind of baggage.
How Privacy Coins Offer a Solution
Therefore, the problems are obvious: make transaction history not observable to outsiders. However, the blockchain validators still need to know some crucial information about transactions — how do you go about that?
You employ cryptography, the very same thing these digital currencies are built with! Granted, the techniques that enable this kind of arrangement are a little more sophisticated than the bare basics of Bitcoin and the like. Some of these are ring signatures and zero-knowledge proofs, and in the following sections, we will explain which privacy coin uses which and how.
The Uncompromising Monero (XMR)
What is Monero?
If you are not familiar, Monero or XMR is probably the most exemplary of the bunch. It was created as a modified version of the Bytecoin protocol which included obfuscation techniques from the very start. As a result, Monero embodies uncompromising commitment to financial privacy and, arguably, a vision of real digital cash.
You can find even more insights into this cryptocurrency in our Beginner’s Guide to Monero!
How Monero Achieves Privacy
Monero’s privacy architecture relies on several cryptographic technologies, with stealth addresses and RingCT being the most prominent. Stealth addresses generate unique, one-time destination addresses for each transaction, secured by a view key owned only by the recipient. RingCT (Ring Confidential Transactions) conceals transaction amounts through cryptographic commitments that prove validity without revealing specific values. The main features of the Monero blockchain reveal some flexibility in the degree of obfuscation and user experience.
Other Key Features of Monero
The extra privacy-oriented features make the Monero blockchain more computationally intensive than even Bitcoin, so to prevent traffic jams, it uses dynamic block size. Another trait that separates Monero from Bitcoin on a protocol design level is tail emission, which redistributes XMR transaction fees to miners.
Although Monero’s hashing algorithm RandomX used to be hailed as ASIC-resistant, compatible ASICs (application-specific integrated circuits, costly and professional equipment) have been out for a while. They remain niche, though, so the main source of Monero’s hash power is still processors (CPUs and GPUs), which makes mining XMR more accessible and, therefore, decentralized. Back when ETH used to be a PoW cryptocurrency, Monero vs. Ethereum was a frequent dilemma for miners to ponder.
The Selective Zcash (ZEC)
What is Zcash?
If Monero was built on the Bytecoin code, Zcash is a product of improvements made to Zerocoin. It is not as uncompromising as Monero, disabling its privacy features by default but still giving users the ability to enable them.
This leads to its architecture being essentially double-layered, with opaque and transparent levels. On the transparent level, it is not too different from Bitcoin but the opaque level secures the users’ data related to their financial activity. As a result, Zcash meets much less friction from businesses and institutions, without leaving privacy-conscious users behind.
Zcash’s Approach to Privacy
How do you preserve the integrity of records without disclosing them even to validators? To solve this conundrum, Zcash relies on zk-SNARKs (Zero-Knowledge Succinct Non-Interactive Arguments of Knowledge).
These so-called proofs do their job: confirm the sender A) owns the sufficient funds to make the transaction and B) is not double-spending. The rest — sender’s identity, recipient address, amount — remains a secret to those without viewing privileges. This technique is enabled only for z-addresses, or shielded addresses. Transparent addresses, appropriately labeled as t-addresses, are fully transparent and therefore, auditable but also offer little to no privacy protection.
More Technical Details to Zcash
Like Monero and Bitcoin, Zcash is a proof-of-work cryptocurrency. Its algorithm Equihash is memory-intensive, although ASICs have also taken over the ZEC mining niche by now. The currency release schedule is very similar to Bitcoin’s, with block rewards halving and a total cap of 21 million coins on the total supply. Selective transparency means that the circulating supply is publicly verifiable.
Zcash vs. Monero — A Head-to-Head Comparison
Privacy Implementation vs. Auditability
From the introductions, you could already get the idea of how Zcash vs. Monero compares on this front but let’s recap it once again for comprehensiveness and describe some extra features that amplify this contrast.
These two privacy coin networks exhibit radically different approaches to transaction confidentiality. Monero’s mandatory privacy creates perfect fungibility where every coin carries identical value regardless of transaction history, as no external observer can distinguish between different units. This universal obfuscation eliminates the privacy tax that optional systems create, where choosing privacy signals suspicious intent.
In contrast, Zcash’s selective disclosure appeals to users who need audit capabilities: viewing keys allow authorized parties to verify specific transactions without compromising overall network privacy. In other words, the users have a say in who does the reviewing, significantly limiting the risks to personal or business privacy.
Transaction Speed and Costs
Privacy is usually where the comparison between XMR and ZEC stops. However, how do they measure up against each other when it comes to using them as networks to transact value?
Is Monero better than Bitcoin or Zcash for transacting? For one, Monero transactions typically confirm within 2–4 minutes with fees averaging $0.12. Its privacy mechanisms create larger transaction sizes that consume more bandwidth and storage. The ring signature mixing process adds another computational overhead but end users might not even notice it thanks to protocol optimizations developed over years of network operation.
Zcash transparent layer vs. Bitcoin more or less match in their performance profile. Shielded transactions require significantly more computational resources for proof generation, though, often taking 40–90 seconds just to construct on standard hardware. Luckily, verification remains fast regardless of transaction type, and fees average $0.8-0.9, making Zcash ever so slightly more cost-effective for frequent users.
Scalability and Network Growth
The value of the network is directly proportional to the amount of users it serves. Even the most sophisticated payment rail is not of much worth if it is used by no one. So how equipped for this challenge are our contestants?
In addition to dynamic mining difficulty which smooths out sharp hash rate changes, Monero also employs a dynamic block size. It solves spam, it prevents congestion — what’s not to love? A long-term effect of this feature is the lack of scaling debates that plagued Bitcoin and then its forks’ communities.
The Zcash blockchain currently operates with fixed 2MB blocks producing roughly 20 transactions per second, and seems to not have yet reached a point where this becomes a hurdle to scaling. This is not to say the developers are not future-proofing the chain: zk-SNARKs open up the avenues to explore unique scaling solutions, already seen in zk-proof-based L2s on Ethereum.
Adoption, Use Cases, Ecosystem
These blockchains are making adjustments to accommodate more users but what would they do with them? By now, the adoption trends and uses are more or less clear.
Despite a value proposition that encompasses as wide a range of users as possible (the digital cash one), XMR remains niche. Monero dominates privacy-centric applications where fungibility is paramount, including usage on darknet markets, remittances in authoritarian regions, and general-purpose transactions where users value default anonymity. This niche facilitated the cultivation of a unique ecosystem of products and applications which honor the design philosophy of Monero.
Zcash aims for different user segments, particularly institutions and businesses requiring selective privacy with audit capabilities. That being said, the actual user demographic leans more towards retail adopters who choose Zcash to do things like gambling in online casinos with a little more peace of mind. However, Zcash faces true adoption challenges as many users simply default to transparent addresses, reducing overall network privacy effects and shrinking anonymity sets for shielded transactions.
Team, Governance & Development
Surprisingly, even the teams behind the projects serve as microcosms of the user bases. Monero’s creators and contributors are mostly anonymous, while ZEC is backed by a foundation that is more corporate in comparison.
Monero operates through pure community governance where contributors coordinate via public forums, IRC channels, and in-person community meetings. Development funding comes entirely from voluntary donations through the Community Crowdfunding System, establishing complete independence from corporate interests but admittedly, sometimes limiting resources for more ambitious initiatives.
Zcash on the other hand benefits from well-funded development through the Electric Coin Company and Zcash Foundation, which receive a share of the mining rewards through the founder’s reward mechanism. Their professional development model empowers more rapid innovation and formal security audits but raises centralization concerns and more dependence on key individuals.
Regulatory and Future Outlook
Last but not least, regulatory pressures increasingly differentiate these privacy coins’ market prospects. Monero keeps facing mounting challenges as exchanges delist it due to regulatory compliance concerns. Finding any XMR trading pairs on major platforms in Japan, South Korea, and Europe is an increasingly arduous task. Moreover, law enforcement agencies specifically target Monero’s untraceability, viewing it as facilitating illicit activities with no concern for legitimate privacy needs.
Zcash’s selective transparency alleviates the regulatory pressure, as its viewing key capabilities satisfy many compliance requirements while preserving user privacy options. This positioning can potentially make Zcash the more sustainable long-term privacy solution despite Monero’s superior technical privacy guarantees.
Zcash vs. Monero: Comparison Chart
Choosing the Winner: XMR or ZEC?
If you went into the guide with a clear set of criteria, you would know the answer by now. If not, though, let’s recap the strong suits of each privacy coin while highlighting who they might be best for.
XMR for Maximum, Uncompromising Privacy
Monero is a simple choice for when privacy cannot be compromised. Its mandatory anonymity creates near-perfect fungibility, making it ideal for users who need verifiable transaction untraceability. Monero excels for users in authoritarian regimes; those requiring protection from targeted attacks based on wealth visibility; and just anyone who believes financial privacy should be a fundamental right rather than an optional feature.
Zcash for Optional Privacy with Auditability
Zcash serves another set of users who need flexibility between privacy and transparency. The dual-address system is a good fit for businesses requiring selective disclosure for compliance, institutions needing audit capabilities, and users operating within regulatory environments. Zcash seems to cater for a less hardcore audience who still appreciate the option of securing their financial privacy to a degree, although the overhead of these privacy-protecting features is a major UX challenge.
Investment Considerations
Until now, the guide has focused mostly on the use cases and fundamental differences between Monero and Zcash. If you wanted to invest in the anonymity-preserving networks, though, there is still some market insight left to cover.
As expected, neither XMR nor ZEC can be considered large-cap cryptocurrencies due to their niches and market-related challenges. Monero is the bigger asset of the two, accounting for an estimated $5.76B market capitalization (per CoinMarketCap) at the moment of publishing.
Zcash these days, as of the time of writing, has fallen in the rankings down to 91st place (on CoinMarketCap) with a $63M estimated market cap. It is represented on more markets (145 vs. 113) than Monero for the reasons amply described above. Traders might also need to know that ZEC is more liquid than XMR, despite more modest market rankings. The effect these factors have on price performance is seen well enough on the chart above.
The Bottom Line: Who Wins the Standoff?
As far as we are concerned, there is no definitive winner between the two. Monero is rightfully appreciated by anonymity fans for valid reasons, but Zcash deserves attention as well, despite its compromising possibly hurting its perceived value.
We hope that you found our guide insightful and if your curiosity is aroused, there is a lot more content in our blog! To subscribe for updates and even more bite-sized content, follow ChangeHero’s social media: X, Facebook, and Telegram.
Frequently Asked Questions (FAQs)
Is Zcash or Monero more private?
Monero provides superior privacy by default since every transaction automatically employs privacy features, creating universal anonymity and fungibility on par with cash. Zcash offers arguably stronger cryptographic privacy through zk-SNARKs when users choose shielded transactions, but many default to transparent addresses, reducing overall network privacy effects.
Are XMR and ZEC on the same blockchain?
No, Monero (XMR) and Zcash (ZEC) operate on completely separate, independent blockchains. Each maintains its own network of nodes and miners, consensus mechanisms, and transaction history. They cannot directly interact without using cross-chain bridges or exchanges.
Can Zcash transactions be traced?
Zcash’s traceability depends entirely on user choice. Transparent transactions using t-addresses are fully traceable like in Bitcoin, but shielded transactions using z-addresses cannot be traced due to zero-knowledge proofs.
What is the main difference between Zcash vs. Monero?
The fundamental difference is privacy philosophy: Monero enforces mandatory privacy for transactions by default, ensuring universal anonymity; Zcash provides optional privacy, letting users choose between transparent and shielded transactions based on their specific needs.
Disclaimer
This article is not a piece of financial or investment advice. When dealing with cryptocurrencies, remember that they are extremely volatile and thus, a high-risk investment. Always make sure to stay informed and be aware of those risks. Consider investing in cryptocurrencies only after careful consideration and analysis and at your own risk.
