ZEC price jumps 20% in one day as Zcash developers unveil transition to proof of stake

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Zcash (ZEC) has jumped nearly 20% in the past 24 hours, helped by the euphoria surrounding the decisive transition of its basic protocol from Proof-of-Work (PoW) to Proof-of-Stake (PoS) .

The ZEC price hit an intraday high of $ 188.80 on Binance after rising two consecutive days by more than 27%. The cryptocurrency’s bullish move also erased much of the losses it suffered earlier this week, following a downward retracement in the crypto market.

ZEC’s price surged after leading cryptocurrency developer Electric Coin Company (ECC) announced it would move Zcash’s protocol from PoW to PoS over the next three years. The association noted that the upgrade would limit downward pressure on the ZEC price by removing miners who “immediately liquidate” the token for Bitcoin or fiat.

“This change will also increase the utility of the ZEC with capabilities that include staking yield generation and a possible path to on-chain governance mechanisms for ZEC hodlers,” added Josh Swihart, senior vice president of growth at ECC, adding:

“There are other advantages to moving to proof of stake, including reducing the energy footprint of the ZEC, opening a possible path to chain governance mechanisms and taking charge of interoperability by solving the finality issues of the proof-of-work transaction, among other reasons. “

ZEC / USDT Daily Price Table. Source: TradingView

ZEC bulls cashing on PoS FOMO

Unlike PoW, the mechanisms of PoS allow a person to mine or validate block transactions based on the number of underlying tokens they own / stake. In turn, the so-called “validator” receives rewards in the form of returns.

Ethereum, the leading smart contract platform by market capitalization, also began its transition from PoW to PoS after introducing a dedicated smart contract. In response, users locked around 8.33 million Ether tokens (ETH) in the so-called Ethereum 2.0 address, effectively pushing them out of the active offer.

ETH / USD weekly price table. Source: TradingView

ECC’s announcement promised that users would be able to stake a portion of their ZEC holdings in a dedicated Zcash smart contract to become validators on its blockchain. Therefore, as a result, more ZEC could end up exiting active circulation due to blocking periods, compared to its Bitcoin-like fixed supply of 21 million tokens.

Barry Silbert, Founder and CEO of Digital Currency Group, a venture capital firm tweeted On Saturday he would “buy more” Zcash tokens, citing their supply cap. His tweet coincided with a sudden rise in ZEC prices against the US dollar and Bitcoin (BTC).

Nonetheless, some analysts have argued that Zcash will not have a supply cap after the implementation of PoS.

For example, chain analyst Willy Woo Noted in his response to Silbert’s tweet that if Zcash could “decide to extend the development tax” and “if he can switch to PoS and eliminate miners,” then he’s convinced the cryptocurrency hasn’t maximum supply.

“And,” Woo added, “that’s ignoring the 2018 inflation bug and assuming we could actually audit the offer,” referring to the infamous Zcash vulnerability that could have created ZEC tokens. infinite.

Related: Zcash Vulnerability Allowing Infinite ZEC Counterfeiting Corrected And Disclosed

Minutes after Woo’s remarks about the questionable ZEC supply, Silbert tweeted:

Inflection zone

ZEC’s latest upswing has brought it into an inflection zone, important for its record capping cryptocurrency rallies.

Specifically, the trading range set between $ 170 and $ 205 (the reddened area in the chart below) has already provided sell opportunities for traders. Even recently, the ZEC price has retreated after entering the said range while considering prolonged declines towards the purple upward sloping trendline.

ZEC / USDT three-day price table. Source: TradingView

A clear breakout trend may appear after the ZEC closes above the inflection zone, accompanied by an increase in trading volumes, thus targeting the Fibonacci retracement levels at $ 247 and $ 316. Conversely, a decisive close below $ 170 can risk sending ZEC towards $ 136.

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