101 Guide to Zcash (ZEC)
What is Zcash?
Zcash is a privacy coin that offers anonymity and privacy. The information transmitted using Zcash network is encrypted and completely hidden from other people.
Origins of Zcash
Zcash is launched in October 2016. On this date, the Bitcoin blockchain was forked into Zcash. Zcash is a fork of Bitcoin which means that Zcash uses the Bitcoin codebase. Initially, it was just called Zerocoin protocol. Then, its name is changed to Zeocash system and finally to Zcash.
The company behind Zcash is known as Zerocoin Electric Con Company. The founder and CEO of Zcash are Zooko Wilcox.
Why launch a new cryptocurrency with enhanced privacy?
Everyone can look up an individual wallet balance and transaction details such as amount by inspecting the Bitcoin blockchain.
By doing so, we can roughly know how rich someone is if we know a certain address belongs to whom. It is quite easy to know the ownership of a certain address. For example, a Bitcoin address of a shop owner. It can be a bad thing for certain users as this non-transparent feature would expose users to be robbed or hacked due to their wealthiness.
Zcash is unique in the sense that users have the choice of being anonymous or not.
How does Zcash work?
Zcash utilizes zero-knowledge cryptography/proofs called zk-Snakrs (a cryptographic technique)to keep all user transaction details anonymous and private.
Zk-SNARKs (Zero-Knowledge Succinct Non-Interactive Argument of Knowledge) is the mechanism that enables Zcash transactions to be fully encrypted on the blockchain, yet still, be verified as valid. In other words, you can prove something or verify that something is correct or accurate without having to give out the information.
In Zcash, the sender can choose two ways to make the transactions. They can choose between shielded private transaction or a normal transparent transaction.
The choice gives the user the ability to make the most out of the blockchain. It gives the best of both worlds. Sometimes, it is important to have a transparent transaction. This can be done to protect the interest of both the sender and a receiver. For example, if you try to buy an item from a seller, you need to keep it transparent so that it can be referred too if any conflict arises.
Zcash’s Z Addresses vs. T Addresses
Zcash allows users to use either “Z” or “T” addresses.
Addresses that start with a “z” are fully shielded and anonymous. Addresses beginning with a “t” are transparent and behave just like bitcoin, which is more suitable for international finance.
Pros
- Using Zcash zk-SNARK protocols, transactions can be settled instantly
- The Zcash mining algorithm is resistant to ASIC mining — meaning that the blockchain can never be partially centralized by individual groups of miners
- Zcash mining and zk-SNARK privacy protocols have been fully peer-reviewed
- Zcash supports a secondary ‘semi-transparent’ transaction settlement protocol suitable for use in mainstream finance
- Zcash technology is already being used by JP Morgan, which lends support to its quality
Cons
- One major criticism of Zcash is the fact that miners are required to pay a 20% tax on mined coins to the founders for the first four years.
- In addition, most Zcash transactions do not use the anonymous shield feature.
- Finally, privacy coins may face additional government regulation because of their potential to be used for crime.
Similarities between Bitcoin and Zcash
- Market Cap
Both Bitcoin and Zcash are peer-to-peer, decentralized cryptocurrencies with a hard cap of 21 million coins.
2. Type of Software
Both Bitcoin and Zcash are free and open source blockchain network.
The biggest difference between Bitcoin and Zcash is the fact that Zcash transactions have the option to be private.
Difference between Zcash and Monero
Zcash is often compared with Monero, one of the most notable privacy altcoins.
The main differences of both coins are listed below:
- Monero is one of the most commonly used cryptocurrencies on the Dark Web while Zcash was designed and built by academic and professional cryptographers.
- Zcash provides the option to use either shielded and unshielded addresses while Monero’s transactions are all private.
- Zcash was approved by New York regulators to be listed on the Gemini Exchange, suggesting that regulators may be more comfortable with Zcash, than Monero.
Zcash Mining
Zcash mining uses an Equihash proof-of-work algorithm which is fully resistant to commercial grade ASIC mining. This means that the Zcash coin supply is much more stable and that the network itself is much more genuinely decentralized compared to Bitcoin.
As it is forked from Bitcoin, it also has the same supply of 21 million coins. At the current mining rate, it is estimated that all the coins will be mined by 2032. The mining difficulty is increased with each block mined. This means that every four years, the block mining reward is cut to half.
Developments of Zcash
Zcash was never a part of a big project or intended to raise funds through ICOs. That’s why it is funded by closed investors. They invested $1 million to ensure its development path. All the investors received “Founder’s reward” which contained 10% of the total supply over a 4-year period. Some of the famous investors include Roger Ver, Barry Silbert, Naval Ravikant and others.
Privacy coins had been held back somewhat in their growth by the fear that regulators may not feel comfortable with them. However, the approval of Zcash to be listed on the heavily-regulated Gemini Exchange in May of 2018 shows that this fear was unwarranted.
October 2018 Zcash is expected to release Sapling, a network upgrade that improves the efficiency of shielded transactions.
The rate of return of Zcash
In early February 2017, privacy-focused coin Zcash was trading at just $30. A little over a year later in early 2018, Zcash was dazzling cryptocurrency investors at over $300 per token.
Types of Zcash Wallet
- Official Zcash Desktop Wallet
- Mobile and Desktop Wallet — Jaxx, Mobi, Coinomi
- Hardware wallet — Ledger, Trezor etc
Where and How to Buy Zcash?
One of the best places to buy Zcash is on Tokenize Xchange where you can buy in the fastest, easiest and most secure way. You can either trade, buy and sell on Tokenize Xchange by sending Zcash to the exchange wallet.
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