Zero cashJersey) Has soared by nearly 20% in the past 24 hours, thanks to the excitement surrounding the decisive transition of its core protocol from Proof of Work (PoW) to Proof of Stake (PoS).

After rising by more than 27% for two consecutive days, the ZEC price hit an intraday high of $188.80 on Binance. Following the downward retracement of the entire cryptocurrency market, the rise of cryptocurrencies also eliminated most of the losses faced earlier this week.

In the Electric Coin Company (ECC), the main developer of cryptocurrencies, Announce It will transfer the Zcash protocol from PoW to PoS in the next three years. The non-profit organization pointed out that the upgrade will limit the downward pressure on the ZEC price by removing miners who “settled immediately” bitcoin or fiat tokens.

Josh Swihart, senior vice president of ECC growth, added: “This transformation will also increase the utility of ZEC by including functions that generate revenue through pledges and possible ways to provide ZEC hodlers with on-chain governance mechanisms,” he added:

“There are other benefits of moving to proof of stake, including reducing ZEC’s energy footprint, providing possible ways for on-chain governance mechanisms, and supporting interoperability by solving the problem of proof-of-work transaction finality, and so on.”

ZEC bulls profit from PoS FOMO

Unlike PoW, the PoS mechanism allows a person to mine or verify block transactions based on the number of base tokens they hold/mortgage. In return, the so-called “validators” are rewarded in the form of revenue.

Ethereum, the leading smart contract platform by market value, has also begun the transition from PoW to PoS after introducing dedicated smart contracts. In response, the user locked approximately 8.33 million Ether (Ethereum) The token becomes the so-called Ethereum 2.0 address, Effectively driving them out of active supply.

The ECC announcement promises that users will be able to pledge part of their ZEC assets to a dedicated Zcash smart contract to become a validator on their blockchain. Therefore, the result is that more ZEC may eventually exit the active loop due to the lock-up period. Bitcoin-like fixed supply 21 million tokens.

Barry Silbert, founder and CEO of venture capital firm Digital Currency Group Tweet On Saturday, he will “buy more” Zcash tokens, citing their supply ceiling. His tweet coincided with the sudden increase in the price of ZEC against the U.S. dollar and Bitcoin (Bitcoin).

Bitcoin Maximum supply: 21 million$ZEC Maximum supply: 21 million$zen Maximum supply: 21 million

— Barry Silbert (@BarrySilbert) November 20, 2021

Nevertheless, some analysts believe that Zcash will not have a supply cap after PoS is implemented.

For example, on-chain analyst Willy Woo famous In his response to Silbert’s tweet, if Zcash can “decide to extend the development tax” and “if it can switch to PoS and cut off miners”, then he believes that there is no maximum supply of cryptocurrency.

“And,” Woo added, “this ignores the inflation problem in 2018 and assumes that we can actually audit supply,” referring to Zcash’s Notorious loopholes This could create unlimited ZEC tokens.

related: Zcash vulnerability allows unlimited ZEC forgery fixation and disclosure

A few minutes after Woo commented on the suspicious supply of ZEC, Silbert tweeted:

Wow you all hate $ZEC. I want to buy more

— Barry Silbert (@BarrySilbert) November 20, 2021

Turning point

The latest rise of ZEC has brought it into an inflection point zone and is known for its record of limiting the rise of cryptocurrencies.

Specifically, the trading range defined by $170-205 (the red area in the figure below) provided traders with a selling opportunity earlier. Even recently, ZEC price After entering the above range, it fell back down, while paying attention to the upward sloping purple trend line to continue to fall.

After ZEC closes above the inflection point, there may be a clear breakthrough trend, accompanied by an increase in trading volume, thereby positioning the Fibonacci retracement at $247 and $316. Conversely, if the closing price is less than $170, it may push ZEC to $136.

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