Zcash community approves new mining tax

Robert Hoogendoorn
Jan 30 · 2 min read

Starting from November 2020 privacy-focused cryptocurrency Zcash will introduce a new mining tax distribution scheme that should help to move the cryptocurrency forward. A new proposal states that 80 percent of the mining rewards goes to the miners, 5% to the Zcash Foundation, 7% to the Electric Coin Company and the remaining eight percent will be used for grants. This way Zcash secures its own development and secures its decentralization.

This proposal comes from the Zcash community. To make changes to the Zcash blockchain, both the ECC and the Zcash Foundation need to agree. This hasn’t happened at the moment.

When Zcash was created four years ago, the community agreed to the Zcash Founder’s Reward program. During this program 80 percent went to the miners, and 15 percent to the founders and early investors. Only five percent with to the Electric Coin Company (ECC). Under the new proposal nothing will change for the miners. The only thing that changes, is the way the system distributes the governing fund (20%).

The Zcash Founder’s Reward program will expire in November 2020. On top of that the privacy-oriented cryptocurrency will undergo a halving. This means that the mining rewards will be halved.

Mining tax

Where the mining tax is community driven with Zcash, other cryptocurrencies have a more totalitarian way of dealing with development fund. Five of the biggest Bitcoin Cash mining pools are trying to force a new community fund upon miners. Miners who don’t comply, will be forced out of the system by orphaning their mined blocks.

The group of mining pools is talking about a donation. But it’s not. It’s a tax forced upon the 49 percent by those in control of the 51 percent. Because the group has the majority hash rate, they can decide on the future of Bitcoin Cash. As a result they can decide that miners who don’t subsidize the foundation will have their blocks orphaned. Technically this would be called a 51% Attack, as the foundation is using its computer power to create a majority vote and influence the blockchain.

Bitcoin Cash is an hard fork from Bitcoin. The cryptocurrency has always been surrounded by drama. In 2018 this resulted in another hard fork, which became Bitcoin SV. Bitcoin SV and its founder Craig S. Wright have been at the center of the biggest soap drama of 2019, and the court case is still going on in 2020.


Originally published at NEDEROB.

Robert Hoogendoorn

Written by

Content Creator & Optimization Expert. Building Play to Earn. Learning about blockchain every day, sharing my knowledge and passion.

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