Public blockchains were sold as transparent. In 2026, transparency has a new enemy: cheap, tireless AI that can connect the dots. Grayscale Research's Michael Zhao used CoinDesk's Crypto Long and Short column this week to argue that this changes the case for Zcash, and the numbers he cites are worth a close look.
📌 The argument
Zhao's point is simple. Every transaction on a public chain is permanent, and AI now makes it cheap to link wallets to exchange accounts, data leaks, social media posts and timing patterns. A payment that looked anonymous in 2019 can be unmasked in 2026 without anyone breaking the cryptography. Grayscale calls this a third wave of financial privacy concern, after the 1970s and the 1990s, and says privacy has to be built into a network from the start because a public ledger cannot be made private later.
📊 The numbers
• About 4.9 million $ZEC sit in the shielded pool, close to 29% of all ZEC ever mined, per Grayscale.
• Shielded transactions grew sharply over the past two years while transparent ones stayed flat.
• ZEC rose roughly 2,300% between September 2025 and September 2026, per the column.
• Grayscale's spot Zcash fund, listed on the NYSE in August, gathered nearly $1 billion in just over a month. It is not registered under the Investment Company Act of 1940, and its prospectus says an investment in the fund is not a direct investment in ZEC.
• Today the price is near $1,236, down about 6.6% on the day and 13.9% on the week, per CoinGecko, about 61% below its record.
🔍 How shielding works
Zcash launched in 2016 from Bitcoin's code and keeps the 21 million coin limit. A shielded transaction lets the network verify a payment without revealing sender, receiver or amount. Viewing keys let a user share selected details with a regulator or a business partner without giving up control of funds. Businesses have a plain reason to want this: payroll and supplier lists are not things you publish for competitors. Zhao also notes that privacy strengthens with use, since each shielded transaction makes every individual harder to single out.
⚖️ Bull vs bear case
• Bull: AI surveillance makes privacy a feature people will pay for, the shielded share keeps rising, and the ETF gives traditional investors a wrapper.
• Bear: AML rules and MiCA are moving toward automatic reporting, which may collide with selective disclosure, and a 14% weekly drop after a 2,300% year shows how much of the move was speculative.
• Neutral: the Ironwood upgrade shipped in July 2026, so the technical roadmap is progressing whatever the price does.
👀 What to watch next
• The shielded pool share; a move well above 29% would confirm the usage story.
• Flows into the Grayscale fund now that the price has cooled.
• Any regulatory statement in Europe or the US that specifically addresses selective-disclosure coins.
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💡 My take: Zhao's strongest point is not about Zcash at all, it is that "public by default" ages badly in a world of AI. Whether ZEC captures that demand depends on regulators as much as on code, and this week's price action says the market has not decided.
💬 Is on-chain privacy a right, a feature, or a regulatory problem waiting to happen?