Arthur Hayes Advises Zcash Holders to Withdraw from Centralized Exchanges and ‘Shield’ Their Assets

In a recent statement, BitMEX co-founder Arthur Hayes has brought attention back to the privacy coin sector by urging Zcash holders to take their assets out of centralized exchanges (CEXs).

Key Takeaways

Arthur Hayes advises Zcash holders to withdraw from centralized exchanges and use self-custodial wallets to enhance privacy.
Zcash's price has experienced significant fluctuations recently, dropping from a high of $723 to around $450.
Hayes encourages users to understand the importance of shielding their assets to maintain privacy and avoid risks associated with CEXs.

Arthur Hayes tells Zcash holders to withdraw from CEXs and ‘shield’ assets

The Urgent Call for Zcash Holders

On Wednesday, Hayes recommended that Zcash holders “shield” their assets, a feature within the Zcash network that facilitates private transactions. He mentioned on X, “If you hold $ZEC on a CEX, withdraw it to a self-custodial wallet and shield it.”

This advice comes during a turbulent period for Zcash, as its price has fluctuated sharply. After reaching a peak of $723 on Saturday, it dropped to $504 on Sunday, then rebounded to $677 on Monday before falling again. Currently, ZEC is trading around $450, reflecting a 37% decrease from its earlier high. Analysts had previously cautioned that ZEC might face a steep correction due to its relative strength index (RSI) hitting an all-time high, indicating that it is overbought.

Zcash's seven-day price chart. Source: CoinGecko

Understanding the Need to ‘Shield’ Zcash Tokens

Zcash employs a unique privacy structure that supports two address types: transparent addresses, known as “t-addresses,” and shielded addresses, or “z-addresses.”

Transparent addresses operate like standard public wallets, while shielded addresses use zk-SNARKs (zero-knowledge proofs) to maintain the privacy of the sender, receiver, and transaction amounts. Centralized exchanges typically only support transparent ZEC, making all transactions traceable on the blockchain. To utilize the full privacy capabilities of Zcash, users need self-custodial wallets that support zk-SNARK functionality.

Hayes’s call to action highlights a pervasive concern in the privacy coin community regarding how exchange custody can compromise the anonymity that Zcash aims to provide. When a ZEC token is held on a centralized exchange, its privacy is essentially forfeited. Additionally, tokens in exchanges are vulnerable to withdrawal freezes, Know Your Customer (KYC) policies, and potential delisting, risks that have impacted Monero in recent years.

In essence, Hayes underscores a significant trade-off: the choice between convenience and personal sovereignty. While self-custody can safeguard users from insolvency and regulatory restrictions like freezing or delisting of assets, it also requires individuals to take on more responsibility, such as safeguarding private keys, creating backups, and utilizing verified wallets.

Related:__Privacy tools are gaining traction amid institutional adoption, according to ZKsync developers

Mixed Results for Privacy Tokens

Despite its recent downturn, Zcash maintains its position as a key player in the privacy coin market, boasting a market capitalization of $7.4 billion. According to CoinMarketCap, the token remains up by 5% over the past week, even considering the decline from its recent high.

In addition to Zcash, Monero continues to be one of the leading privacy coins, valued at $7 billion and increasing by 7% over the week. Meanwhile, other privacy coins such as Canton (CC), Dash, Decred, and ZKsync have seen losses ranging from 13% to 42% during the same period.

Privacy coins have exhibited mixed performance over the last week. Source: CoinMarketCap

Magazine:__Philippines blockchain bill aims to combat corruption, while crypto KOLs face charges: Asia Express