Barry Silbert’s recent championing of Zcash brought the long-dormant proof-of-work protocol some renewed attention. Check out our guide, “What Is Zcash?” to learn about one of the longest-running projects in crypto.
- What Is Zcash?
- Who Created Zcash?
- How It Works
- WHAT IS ZEC?
WHAT IS ZCASH?
Zcash is a digital currency created by scientists and cryptographers. Its purpose is to protect the privacy of its users and allow them to make private transactions. Zcash was built using the original codebase of Bitcoin. As such, it has the same consensus mechanism as Bitcoin, i.e., Proof of Work (PoW).
The transactions that take place with Bitcoin were designed to be Pseudonymous, which means that all the transactions that take place on the blockchain are recorded and visible for all to see. On the other hand, the transactions on Zcash are private and are known as “shielded.” It allows all the users involved to completely cipher their transactions and facilitates anonymous transactions that can’t be tracked.
The great thing about Zcash is that it enables its users to choose their desired level of anonymity. It offers both transparent as well as shielded transactions. Transparent transactions are trackable, while shielded transactions offer complete anonymity. In shielded transactions, the sender, the recipient, and the amount to be transferred are all encrypted, meaning they are virtually untraceable.
Bitcoin heavily influences Zcash, and it can be said that it is a privacy-centric Bitcoin alternative. Like Bitcoin, it is also intended to be a peer-to-peer (p2p) currency which makes it suitable for making day-to-day purchases, but with its privacy features, it makes it a more viable option for those who wish to make transactions anonymously.
WHO CREATED ZCASH?
The origin of Zcash goes back to 2013 when Zerocoin White Paper was published by a group of scientists at John Hopkins University. They advocated for the Zerocoin protocol, which was to be a privacy protocol designed as an extension for the Bitcoin network. Two years later, in 2015, cryptographer Zooko Wilcox managed to utilize the Zerocoin idea to create a new cryptocurrency known as Zcash. The project, along with the Zcash company, was launched in January of 2016. The first blocks were put out in October of the same year.
In the March of 2017, the Zcash foundation was launched in order to guide and facilitate the future development of the project. In 2018, the ‘Sapling’ upgrade was launched, designed to improve the network’s features significantly. In 2019, the Zcash company was formally renamed as Electric Coin Company. The team behind Zcash claims that they are committed to the principles of decentralization. They don’t own the network, and neither do they run it. Their role is to help build and develop the protocol, but any update to the network has to be agreed upon by the Zcash community.
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HOW IT WORKS
Zcash achieves its privacy-centric aims by using “Zero-Knowledge Proofs,” known fully as “Zero-Knowledge Succinct Non-Interactive Argument of Knowledge.” It is generally known as zk-SNARKS, and it helps to safeguard the privacy of transactions. A range of transaction types can be done through Zcash. It authorizes private and public transactions with both partial as well as complete privacy options for its users. All of these transactions are further validated by nodes and are recorded on the blockchain. The zk-SNARKS conceal the user’s identity and ensure that the proper conditions for a transaction are satisfied. Just like ‘wax seals’ were used to authenticate letters without opening them in the old days, zk-SNARKS enable the users to validate their transactions without having to show their details.
Zcash allows anonymous transactions and gives the user the ability to make traceable transactions. This is done through the use of two unique addresses within the network. These include private addresses (z-addresses) and transparent addresses (t-addresses). Private addresses facilitate anonymous transactions, while transparent addresses are responsible for normal transactions that can be traced. The great thing about this system is that both these addresses are interoperable and can work in tandem with each other.
Zcash supports 4 types of transactions with respect to the two types of addresses (t-addresses, z-addresses). These include;
- Public (t-to-t)
- Shielded (t-to-z)
- Deshielding (z-to-t)
- Private (z-to-z)
The public transaction is quite self-explanatory as it is the transaction between two transparent or “t-addressers.” The amount, as well as the sender and recipient of the transaction, is public. Shielding transaction occurs between a transparent “t-addresser” and a shielded “z-addresser.” The information on part of the “t-addresser” is public, whereas the information on part of the “z-addresser” is kept private.
Similarly, a private transaction happens between two “z-addressers,” and the information of both of them is concealed. Along with confidentiality, there’s also an optional “Memo” that can be filled with every payment. This memo can be retrieved by the recipient only. All these features provide Zcash users with privacy and anonymity, along with the freedom to disclose their details if they so wish.
WHAT IS ZEC?
ZEC coin is the native token of the Zcash Network. Zcash is an interconvertible cryptocurrency. It means that the ZEC tokens are fungible, and tokens are alike, and their transaction history can’t be tracked because a single token is indistinguishable from the other. The transactions made with ZEC can’t be traced, but the Zcash blockchain keeps a record of all the ZEC transactions and balances.
“Zatoshi” is the minimum subunit of ZEC, and it has a value of 0.00000001 ZEC, which makes it one hundred-millionth of 1 ZEC. The total supply of ZEC is 21 million coins. While its circulating supply at the moment is 13.3M ZEC. Just like BTC, the number of ZEC coins increases as new blocks are mined. Similarly, the number of new coins released is halved after every four years. This will go on until the total supply of 21 million has been released. At the time of writing, the market cap of ZEC is more than $1.9 billion.
The primary concern for Zcash is that its major strength is also its most deadly weakness. As mentioned previously, Zcash is a privacy-centric token that allows anonymous transactions. These transactions are likely to get into hot waters with regulators. Similarly, despite the apparent usefulness of its features, it can also be used for nefarious purposes, as its shielded’ transactions would allow potentially illegal transactions to go through untraced. Similarly, criminals can easily misuse Zcash technology to conceal their illegitimate assets.
Apart from its privacy features, it faces certain other hindrances as well. Most notably, its mining is entirely CPU-centric. This means that other forms of hardware like GPUs can’t be used for mining ZEC. Similarly, other alternatives in privacy cryptocurrencies are also being introduced that supposedly offer privacy-conscious users more advanced and better options. It faces stiff competition from the likes of Monero, Omise, and Lisk.
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Where to Z Cash?
You can purchase ZEC through KuCoin exchange similarly to how you would buy another cryptocurrency. You can either place a market buy or a limit buy. With a limit buy, you determine the price you are willing to pay, and your order gets filled once the token price reaches your limit price. If you want to get your hands on the token quickly, you can place a market order, where you agree to pay the current price and have your order filled almost immediately. If you are interested in purchasing Z Cash you can do so by visiting KuCoin, Gate.io, or Binance.US