What is your view on the future of privacy coins? Recently, the founder of Cardano shared an interesting analysis of the fundamental challenges facing Zcash.

First, he emphasized respect for Zcash. Recognizing it as a pioneer and legendary figure in the history of cryptocurrencies. Its track record of leading the industry in developing privacy technology is undeniable, and he also appreciates the strength of its philosophy and the dedication of its development team. However, in the current market environment, he sees many challenges ahead.

The first issue is the lack of programmability. Zcash is essentially a fixed-function ledger, and compared to modern blockchain platforms, it lacks scalability. They are trying to address this with frameworks like ZEXE, but newer projects are already ahead in this area.

However, a more serious problem lies in liquidity. Due to stricter regulatory environments, protocols with default privacy protections are increasingly difficult to list on exchanges. Fully private assets like Zcash are caught in a vicious cycle where regulatory pressure grows with each cycle, limiting market access.

He points out that this is not a technical quality issue but purely a regulation and market access problem. Instead of growth, liquidity is drying up, making long-term adoption difficult.

A proposed solution is the dual-token model. The mechanism is simple. One public token is made to behave like Bitcoin or Cardano, facilitating exchange listings and circulation. Meanwhile, a separate private token handles confidential transactions and computations. This approach allows Zcash to maintain privacy features while also meeting regulatory requirements.

In short, the future of privacy coins has reached a stage where technical innovation alone cannot solve the problems. How to design coexistence with regulation will likely be the survival strategy for privacy assets, including Zcash.