Artificial intelligence could trigger a new wave of concern over financial privacy, according to a Grayscale research report. Zach Pandl, the firm’s head of research, expects AI to create new privacy threats while increasing demand for solutions that protect users’ financial data.
Pandl identified Zcash as one potential option for users seeking greater privacy on public blockchains.
Why AI Could Increase Demand for Blockchain Privacy
Public concern over financial privacy has historically grown alongside major technological shifts. The first wave emerged in the 1970s, when computers enabled the digitization and automation of financial records. A second followed in the 1990s as the Internet expanded and raised new concerns about online privacy.
Grayscale believes a third wave is now beginning as artificial intelligence becomes more widely adopted. Pandl said AI tools are likely to create new privacy challenges across the economy, with the issue especially pressing for public blockchains that are transparent by default.
On the Bitcoin network, for example, every transaction is recorded on a public ledger that anyone can view. When blockchain activity is combined with off-chain information, user addresses could potentially be de-anonymized—an issue also noted in the Bitcoin white paper.
Although that risk existed before the rise of AI, Grayscale said advances in the technology could make blockchain address labeling more effective and widely available. That could increase demand for stronger privacy protections.
Unlike Bitcoin, Zcash offers additional privacy features through shielded transactions. These transactions use zero-knowledge cryptography to conceal both the addresses involved and the amount transferred. Grayscale said this feature could become a “must-have” for users who prioritize financial privacy.
Grayscale made a similar argument previously, noting that $ZEC had surged about 20 times over the past year while still representing less than 1% of Bitcoin’s market capitalization. The firm said Zcash’s privacy features and other advantages may not be fully reflected in its current valuation, potentially leaving room for further gains.
$ZEC Targets Further Gains After Strong Rally
The comments came days after Grayscale converted its Zcash Trust, which launched in 2017, into a spot $ZEC ETF. The fund began trading on NYSE Arca on August 25.
$ZEC has delivered a strong performance, gaining nearly 80% over the past month alone. Following the sharp rally, the privacy-focused crypto asset is trading at around $850, but crypto analyst Ali Martinez is betting on further upside.
He said that “Zcash is about to melt faces,” while identifying $1,800 as the “first stop.”
