Key Takeaways
- Grayscale counts 10 qualifying tokens alongside bitcoin in its sector.
- XRP’s market value approaches 6% of bitcoin’s, versus Zcash’s 1.5%.
- The firm argues that ZEC has not reached a valuation ceiling.
XRP, Zcash, and Litecoin Share Bitcoin’s Currency Category
Digital currency competition extends beyond bitcoin (BTC) to 10 other qualifying tokens, including XRP, Zcash (ZEC), and Litecoin (LTC), according to Grayscale. Zach Pandl, head of research at the crypto asset manager, outlined their shared classification in a Sept. 29 analysis. The firm’s Currencies Crypto Sector groups blockchains focused on the digital currency use case.
The category encompasses monetary functions such as transferring value, storing value, and expressing prices in a common unit. These digital currency functions span standard monetary protocols and cryptocurrencies with privacy features. FTSE Russell, an index provider, and Grayscale review the sectors and their constituents quarterly, allowing classifications to change as the market develops. Pandl wrote: “Bitcoin is the king of the category.”
Litecoin illustrates how a decentralized payment network enables direct transfers between users rather than relying on a central processor. Its peer-to-peer digital currency supports payments worldwide. The network launched in 2011 and operates through open-source software. That payment function complements the confidential transactions emphasized in the analyst’s discussion of ZEC.
Grayscale included a chart in its Sept. 29 analysis comparing 10 cryptocurrencies’ market capitalizations with bitcoin’s, using 30-day averages through Sept. 28. Market capitalization measures a cryptocurrency’s circulating supply multiplied by its price. The chart shows XRP above the other nine tokens by relative valuation, while Zcash’s recent rise lifts it above monero (XMR), bitcoin cash, and litecoin. These comparisons measure each token’s market capitalization against bitcoin’s, rather than its share of the entire cryptocurrency market.
XRP’s Near-6% Valuation Frames Zcash’s Growth Potential
XRP currently has a market capitalization approaching 6% of bitcoin’s, providing a larger relative valuation than ZEC in Pandl’s comparison. ZEC’s value increased from less than 0.1% of BTC’s a year earlier to approximately 1.5%, using Artemis analytics data through Sept. 28.
Historical valuations underpin the argument that competing digital currencies can command a larger share of the category than ZEC currently holds. During the 2017-18 market cycle, XRP, bitcoin cash (BCH), litecoin, and dash (DASH) each reached at least 3% of bitcoin’s market capitalization. Pandl describes the recent increase as substantial but consistent with the sector’s history. He argues that the token has not reached a valuation ceiling.
The price appreciation also carries implications for network security through the rewards available to miners who verify transactions. Grayscale’s Sept. 11 estimates put Zcash mining rewards at approximately twice bitcoin’s per machine under specified assumptions. Those figures concern mining revenue; electricity, equipment, and operating expenses determine actual profit.
Privacy Gives Zcash a Distinct Competitive Role
Demand for confidential transactions forms the central basis of the firm’s outlook for further gains in the digital currency category. The token combines bitcoin-like monetary characteristics with privacy features. Cryptographic techniques used by privacy coins conceal transaction details while enabling networks to verify transfers, distinguishing them from cryptocurrencies whose transaction records are publicly traceable.
Interest in financial confidentiality accompanied stronger prices for these assets earlier this year, well before the latest assessment of relative valuations. Zcash reached $600 in early May, marking an earlier stage of the rally. By Sept. 29, its price stood at roughly $1,500, compared with about $60 a year earlier. The researcher attributed the magnitude of that rise to a low starting valuation and a large addressable market.
The broader privacy category expanded, with ZEC accounting for approximately 62% of its market value in blockchain data provider Glassnode’s Sept. 7 snapshot. Pandl’s outlook remains conditional on the cryptocurrency’s competitive capabilities: “If Zcash continues to offer the most effective privacy features among competing cryptocurrencies, we think it can capture additional market share.”
