Prediction: Zcash Will Prove to Be the Best Privacy Coin to Buy With $2,500 by 2027

There's often money to be made by betting on the winner of an emerging segment, and in crypto, that dynamic is no different. With that in mind, I predict that Zcash (CRYPTO: ZEC) will win the privacy coin segment during the next couple of years.

So if you're thinking about whether to buy Zcash with $2,500, or whether to buy a close competitor like Monero (CRYPTO: XMR) or a smaller competitor, read on and I'll explain why I think about these assets in the way that I do.

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The precise privacy features matter a lot

A privacy coin is, at minimum, a cryptocurrency that lets users move value without broadcasting their full financial diary to the world. The catch is that most regulated crypto exchanges -- which is to say, most of the main on-ramps through which fiat currency flows into the crypto sector -- do not want to touch privacy assets that aren't also fully auditable, because they cannot account for the transactions to internal compliance teams, government regulators, or law enforcement officials. And, frequently enough, those regulators and law enforcement officials view privacy coins as little more than tools for hiding illegal activity like money laundering.

Zcash somewhat solves that issue by supporting both transparent (non-private) and shielded (private) wallet addresses, meaning some transactions can be made privately while others are public. This flexibility gives exchanges, crypto custodians, and financial institutions a bit of wiggle room to design their policies, rather than forcing them into an all-or-nothing stance about whether to offer or hold the asset.

On the private transactions side, Zcash uses zk-SNARKs, which are cryptographic proofs that let the network validate a transaction without revealing the sender, receiver, or amount. There's also a built-in feature to the coin that lets someone reveal narrow slices of information to specific third parties, like regulators or exchange operators. So even regulators that are skeptical of privacy coins would probably view Zcash as a more acceptable implementation of privacy than cryptos like Monero, which are private by default and which do not offer any access for auditing or compliance.

That's a key point, because by 2027, more of the privacy coin segment's value will accrue to the coin that can live most comfortably inside of institutional risk frameworks. If prior adoption trends hold, eventually, major financial institutions will want to get some exposure to the privacy coin niche, and they will prefer the asset with the best compliance features because it will be the most convenient (and the safest) option for them. Zcash is not guaranteed to become that coin, but its design means that it's the best positioned by far today.

The alternatives face serious headwinds

In contrast to Zcash, Monero offers the purest privacy experience among large-cap coins. It hides the sender, receiver, and transaction amount by default. The downside is that there's no mode for institutions to use when they need an audit trail, because that would compromise the coin's privacy features. For many users, that in itself is a feature, but for potential investors, it's just another red flag.

Monero was delisted from a major exchange in late 2024, in part due to shifting regulations. When exchange listings of a token shrink over time, it dramatically increases friction for investors who want to buy it, and it makes custody harder. Neither of those is good for an asset's growth. Of course, ZCash has historically faced the same problem of exchanges delisting it, but more recently, it has had some luck in getting relisted, which Monero generally has not. Similarly, smaller privacy players like Dash, despite offering far weaker (and also optional) privacy features than either Monero or Zcash, have been largely run out of most of the major exchanges.

So if you want exposure to growth from privacy as a feature in crypto, Zcash offers the most regulator-compatible expression of that theme, and it's the best privacy coin to buy with $2,500 and hold until at least 2027. Its peers are largely struggling at the moment, and for some, the struggle has been going on for years already, with no sign of resolution.

Until the many regulatory questions surrounding the segment get resolved, investors should treat Zcash as a risky bet even if it's king of its pile. With that being said, I own it because I think investors are going to care more about privacy in the near future, and Zcash has both the compliance and privacy features it will need to survive.

Alex Carchidi has positions in Zcash. The Motley Fool recommends Monero. The Motley Fool has a disclosure policy.