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Zcash (ZEC) is a decentralized open-source cryptocurrency that guarantees privacy and selective transparency of transactions. Zcash currency payments are published in the public chain of blocks, but the sender, the recipient and the transfer amount are confidential.

The level of anonymity of Zcash is observed by many companies and well-known people. For example, WikiLeaks began accepting donations in ZEC. Edward Snowden said that the cryptocurrency was the most interesting alternative to Bitcoin. Europol on the other hand officially expressed its concern about the growing popularity of the cryptocurrency.

The Zcash cryptocurrency is based on the Bitcoin protocol but has its own chain of blocks and currency token. Zcash can be sent around the world and exchanged through exchanges, personal transfers, etc.

The main technical peculiarity of Zcash is the use of the zero-knowledge test (ZKP). This allows you to confirm transactions without revealing additional information and makes the use of the cryptographic currency completely anonymous.

A little history behind Zcash

Thanks to the new zerocash protocol, unlike Zerocoin, users can make direct payments to each other using a much more efficient cryptographic protocol that hides not only the origin but also the amount of the payment.

How does Zcash work?

A transaction from Z to Z appears in the public blockchain, so it is known that it happened and that the fees were paid. But the addresses, the amount of the transaction and the memo field are encrypted and are not publicly visible. The use of encryption in a chain of blocks is only possible through the use of zero-knowledge tests. This is made possible thanks to the Zcash zk-SNARK protocol implementation.

For example, the owner of an address can choose to reveal the z address and the details of the transaction with trusted third parties, by using display keys and the disclosure of payments. In this way, the option of viewing trusted third parties can be enabled for audit purposes. On the other hand, transactions between two transparent addresses work the same as Bitcoin: the sender, the receiver and the value of the transaction are publicly visible. While many portfolios and exchanges use t-addresses exclusively at present, many are moving to protected addresses to better protect the user’s privacy.

Despite having different addresses, both types of Zcash addresses are interoperable. Funds can be transferred between z addresses and t addresses. However, it is important that users understand the privacy implications of protecting or checking out information through these transactions.

Characteristics and functionalities

The owner has the option to reveal all incoming transactions and the memo field but does not have access to the sender’s address unless identification information is included in the memo field. Zcash will soon support full visualization keys that reveal all transaction values inside and outside the address. Disclosure of payment: The sender or the recipient of a transaction may reveal specific details of the transaction to third parties. This as necessary for an audit. The receiver can reveal a transaction value and a note but does not have access to the sender’s address. This is currently an experimental feature of Zcash. Expiration of the transaction: Zcash supports the expiration of the transaction to minimize the impact of an untapped transaction.

By default, a transaction will expire and funds will not be taxed if the transaction is not removed after 50 minutes (20 blocks). Multi-unit transactions: Zcash supports transactions that require multiple signatures. This means that a transaction may require two or more parties to accept the transaction before the funds are sent. However, multiple signature transactions are transparent and can not be made private.

What are the zk-SNARKS?

The “zero-knowledge test” allows one party (the promoter) to prove to another (the verifier) that a statement is true. This without revealing any information beyond the validity of the statement itself. For example, given the hash of a random number, the researcher could convince the verifier that there is indeed a number with this hash value, without revealing what it is.

“Succinct” tests of zero knowledge can be verified in a few milliseconds, with a test length of only a few hundred bytes, even for statements about programs that are very large. In the first zero-knowledge protocols, the tester and the verifier had to communicate back and forth over several rounds, but in the “non-interactive” constructs, the test consists of a single message sent from one verifier to another.

Currently, the most efficient way to produce zero knowledge tests that are not interactive and short enough to publish in a block chain is to have an initial configuration phase that generates a common reference string shared between the verifier and the verifier. We refer to this common reference chain as the public parameters of the system.

The value of zk-SNARKS in modern blockchain technology is clear. It integrates seamlessly with smart contract technology. A smart contract is basically a deposit of funds that is activated once a particular function is performed. When the tasks to be performed are multilayered and confidential, problems arise.

The acronym of zk-SNARK can be deconstructed in the following way:

Arguments: the verifier is only protected against limited testers computationally. Providers with sufficient computing power can create evidence/arguments about incorrect claims. (Note that with sufficient computing power, any public key encryption may be broken). This is also known as “computational strength”, rather than “perfect solidity”. of knowledge: the prover can not build a test/argument without knowing a supposed witness (for example, the direction in which he wants to spend, the preimage of a hash function or the route to a certain Merkle tree) node.

The zero-knowledge prefix is added, it also needs that, during the interaction, the verifier knows nothing, apart from the validity of the declaration.

Originally published at TheStartupFounder.com.

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TheStartupFounder.com — Startups, fintech, e-commerce, crypto and online advertising.

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