A lot of people got extremely rich by buying Bitcoin (BTC 2.42%) before it was widely known and accepted as an asset. Now, Zcash (ZEC 3.90%) is being proposed as the next millionaire-maker cryptocurrency, which makes sense because it shares a lot of features with Bitcoin, and it’s also much earlier in its adoption curve.

But is this going to be yet another case where the next Bitcoin ends up underperforming the king of crypto when it comes to its wealth-building potential, or is Zcash really capable of making people millionaires down the line? Let’s start by looking at the incumbent first.

Image source: Getty Images.

Bitcoin’s path forward gets harder from here

Bitcoin’s market cap sits near $1.7 trillion today. Right off the bat, that has some pretty tough implications about its potential as a millionaire maker, even in the conditions of a very long holding period and a large initial investment.

A trillion-dollar asset can still rise a lot, and Bitcoin probably will, but it usually can’t move like a small one. When Bitcoin evangelists say the crypto can gain 50-fold, they’re implicitly describing a world where Bitcoin becomes one of the most valuable financial assets in human history — more valuable than gold, which has been in use for millennia. There isn’t any law of nature that says such an outcome can’t happen, but you probably shouldn’t hold your breath for it during the next few years.

Bitcoin’s main structural tailwind is the scarcity of its supply, which is capped at 21 million coins, and which trickles out at an ever-decreasing rate thanks to its periodic halvings. Most of that supply is already out in the world, with more than 95% issued. A decade from now, even if there is still roughly the same absolute amount of demand for the coin, the price probably will be higher, because mechanically, new buyers will be competing with each other for a smaller-than-ever quantity of coins.

Bitcoin

Today’s Change

(-2.42%) $-2161.62

Current Price

$87325.00

But Bitcoin has already graduated from being an unknown into being a mainstream financial asset. That’s great for its odds of long-term survival, but it’s less great for millionaire-maker dreams.

So if you want the crypto asset that gives you the best chance of ending up wealthier in 10 years than you are today, Bitcoin is usually going to be the better pick. On the other hand, if your goal is the kind of upside that can turn a modest allocation into seven figures, you need to look where the market is smaller, but also riskier.

Zcash can deliver bigger multiples, with a big caveat

Zcash uses the same tokenomics as Bitcoin, with a fixed supply cap of 21 million coins, and with the block reward halving about every four years.

The way that it’s better than Bitcoin is that it offers privacy features that you can opt into such that, in theory, with perfect use, an outside actor can’t snoop to figure out which wallet addresses are transacting with each other or for how much. The cryptography behind these private transfers relies on a type of proof called zk-SNARKs, which let the network validate a transaction without revealing any sensitive details.

Zcash’s market cap is $6.7 billion today. Privacy and its small size are why Zcash is likely a better millionaire-maker candidate than Bitcoin. A smaller base means a given wave of new demand for the coin can translate into a much larger gain for holders, at least in theory.

Today’s Change

(-3.90%) $-15.96

Current Price

$393.61

Zcash’s biggest threat is regulation. If regulators increasingly treat privacy coins as unacceptable for crypto exchanges to list, or for financial institutions to hold, then Zcash will struggle, perhaps greatly so. The European Union has been building a tougher anti-money-laundering (AML) regime that begins in 2027, and it might effectively ban the privacy coin sector. And major crypto exchanges have already shown a willingness to delist privacy-focused assets in some jurisdictions, though it’s also true that they’ve been willing to re-list them when they perceive that the risk of a regulatory backlash is ebbing.

So, Zcash likely has more upside from here because it is smaller and because scarcity still has room to drive up prices as it has for years with Bitcoin. At the same time, Bitcoin has a much higher chance of continuing to be broadly owned and institutionally tolerated, and so it’s much safer. In other words, Zcash is the better candidate to make millions because it’s a higher-volatility bet on a world where financial privacy remains a legitimate product feature rather than a regulatory compliance red flag.

Just be aware that Zcash’s significantly higher risk burden means that it’s probably a bit too risky for most investors’ tastes.