Zcash to Transition from PoW to PoS, ZEC Price Could Hit $40 by February 2024

Key takeaways

• Zcash (ZEC) is planning to implement major changes to its consensus protocol during a migration to proof-of-stake
• The project has revealed that it plans to take “meaningful steps” towards the migration by Q1 2024, which would include security discussions and a new protocol simulator
• The ZEC price prediction algorithm expects a +36% move within three months as the cryptocurrency aims to reclaim key resistance levels that were lost during the bear market downtrend

Zcash plans network migration with early steps forecasted for January 2024

Zcash (ZEC) has been planning a major network overhaul that would see the Zcash protocol migrate from a proof-of-work (PoW) to a proof-of-stake (PoS) consensus mechanism. Electric Coin Co., the parent company of the Zcash blockchain, said that it hopes “to deliver a world-class user experience” as part of the upgrade.

In a recent update to the Zcash community, Electric Coin Co. outlined its roadmap heading into Q1 2024. The timeline includes what the company describes as “meaningful steps” towards the PoS transition, which will include positing security arguments to ZEC token holders and a program that will simulate Zcash’s performance post-transition.

Proof-of-stake consensus protocols are more energy efficient by design, which helps to reduce costs for node providers when compared with proof-of-work. This typically enables a more scalable blockchain network, as consensus can be reached much faster as there is a streamlined process for deciding transaction orders. Reduced costs also often trickle down to the end user, who then benefits from lower fees.

The scalability improvements that are synonymous with PoS are offset by a slight compromise on security — an issue that will be discussed in length as part of the Q1 2024 roadmap for Zcash. On balance, the project hopes to “improve ZEC’s position as a leading private, global, permissionless cryptocurrency.”

Proof-of-stake could improve Zcash performance, extending benefits to the end user

ZEC has been a leading blockchain solution for private financial transactions since it first went live in 2017. The cryptocurrency uses end-to-end encryption to fully obscure personal transaction information, which makes it stand apart from alternative proof-of-work cryptocurrencies such as Bitcoin (BTC), Litecoin (LTC), and Ethereum PoW (ETHW), which are, for the most part, public ledgers.

Despite a positive performance during the 2021 bull market in which ZEC hit a new all-time high at the $372 price level, the cryptocurrency has been in a consistent downtrend ever since. Over the past two years, ZEC has lost more than -90% of its value to reach lows that haven’t been seen since 2020.

The move to migrate ZEC to proof-of-stake mirrors a similar move made by Ethereum in October 2022 during The Merge. A key reason for Zcash’s decision is to keep the blockchain competitive with other leading networks in terms of the user experience, which is typically harmed by slower block finality on proof-of-work chains.

Algorithm predicts surge to $40 for ZEC during Q1 2024

The ZEC price prediction algorithm has forecasted a +36% move from the current price of $29.33 within the next 3 months. The move would take ZEC back above a multi-year support/resistance level at $34, which previously formed resistance in 2019 and 2020 before a major break-out took place heading into 2021.

ZEC had lost this level in Q3 2023 after spending almost exactly 3 years above. The forecasted reclaim could signal continued bullish action for ZEC, which would aim to target higher resistance levels that were formed during the bear market downtrend, such as $42 and $52.

The price prediction algorithm’s projected $40 target may indicate that ZEC lacks the momentum needed to push beyond $42 at this moment in time. However, the proof-of-stake migration could generate more buy pressure over time, and the algorithm does expect ZEC to reclaim both of the key levels mentioned before 2025.

Bottom line: PoS upgrade could provide a fresh bullish catalyst for ZEC

ZEC remains firmly within the crypto top 100 when measuring market cap. The Zcash solution offers a privacy-protecting decentralized finance system that has proven itself to be robust and secure through all stages of the market cycle since it first launched in 2017.

The recent decision to introduce a proof-of-stake consensus protocol could serve the network well. Currently, the ZEC market cap is a fraction of older PoW blockchains such as BTC and LTC, and the network offers clunkier block finality when compared with new-age PoS chains such as Cardano (ADA) and Avalanche (AVAX).

ZEC’s move to introduce proof-of-stake could help it to rival the performance capabilities of ADA, SOL, and other PoS chains over time. With a leading privacy solution already in place, the price prediction algorithm expects the migration to benefit ZEC price action directly, with a +36% move expected in the next 3 months.

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