What is Zcash? [A Comprehensive Guide to Understanding Zcash]

[Efs 164]

The thing about currency is that people care about privacy when it comes to the transfer of value. Many people don’t want the average joes to find out where they are using or transferring their money. When Bitcoin came into existence, some of the crypto enthusiasts questioned Bitcoin blockchain’s lack of privacy feature. Everybody could easily track Bitcoin transactions from any wallet addresses. This is where Zcash comes in. Hailed as one of the most famous privacy-focused cryptocurrencies, along with Monero and Dash, Zcash has a mission to put privacy in the frontline of their project development. In this article, we will talk about Zcash history, how Zcash technology differs from other cryptocurrencies, and how the crypto market sees Zcash. Let’s begin.

History of Zcash

In 2013 a cryptocurrency privacy protocol called Zerocoin was developed. In 2014, there was an improved version of this protocol called Zerocash developed by Matthew Green, Ian Miers, Eran Tromer, Madars Virza, Alessandro Chiesa, Christina Garman, and Eli Ben-Sasson. Zcash implemented this Zerocash protocol along with certain improvements and all the people who were mainly involved with the Zerocash protocol, eventually became part of the Zcash team, united by the CEO Zooko Wilcox.

Zcash core team believed Bitcoin users compromised their own privacy when they interacted with the network. They believed decentralization and scalability should not be the only focus of cryptocurrency development. 'Privacy' should matter a lot too because money is always a sensitive issue. People don’t want the outside world to track each of their transactions, and this issue becomes the focus of Zcash project. 

While Zcash used Zerocash protocol to improve privacy, but they originally began as a code fork of Bitcoin itself. Zcash’s genesis block historically began on October 28th, 2016, and since then it has become one of the top cryptocurrencies and one of the people’s favorites among privacy-focused coins. 

When it became available to trade on crypto exchange for the first time, Zcash price went to its peak at $4,293.37. The price then crashed instantly within a short period of time before it stabilized around $45-60 a few months later. Despite the historical crash in 2016, many people still have a lot of faith in Zcash developments. One of the main selling points of Zcash is its implementation of zero-knowledge proof called zk-SNARKs. We will get into this in the middle of the article.

Purpose of Zcash

Just like how it is mentioned on the official site, the purpose of ZCash is to build a privacy-protecting digital currency. When it comes to cryptocurrencies, mostly top projects ignore the privacy part. They always try to solve what they call as the ‘blockchain trilemma’. Scalability, decentralization, and security. Of course, nobody argues that these three things are very important to crypto project development. However, Zcash team and supporters believe you cannot simply ignore the privacy part.

Just like Monero and Dash, Zcash is one of the frontrunners when it comes to the privacy-focused cryptocurrency project. Zcash is often hailed as the biggest competitor to Monero, reflected by the market capitalization of both coins. At the time of this post writing (September 19th, 2019), Zcash is one of the top 30 crypto rankings. It has $374,905,011 USD market cap.

Zcash’s biggest use case is to hide ‘tracks’ of transactions of those who want to remain anonymous. Zcash blockchain gives options to its users to choose different types of transactions. There are four transaction types in Zcash blockchain. They are private, deshielding, shielding, and public. Each transaction type is defined by its transparency. A totally public transaction utilizes t-addresses (transparent addresses). Meanwhile, a private transaction utilizes two z-addresses (private addresses).

The Importance of Zero-Knowledge Proof

Image source: https://www.forbes.com/sites/samantharadocchia/2018/04/24/why-zk-snarks-are-crucial-for-blockchain-data-privacy/#38b85c9b50f0

To understand how Zcash works, first, you need to understand the term ‘zero knowledge proof’. Basically, zero-knowledge proof is a situation where one party can prove to another party that one statement is undeniably correct without having to reveal any sensitive information. For easier explanation, I will give you one simple example. 

Let’s say there are two people called Alice and Bob. Alice has a safe box inside her room. Bob tells Alice he has the key to Alice’s safe box. Alice tells Bob to get into the room and open the safe box. Bob gets into the room, but Alice does not follow him. Bob then unlocks the safe box and goes outside to tell Alice that the safe box is now unlocked. Alice checks the safe box, and now she confirms that Bob has successfully unlocked the safe box.

This is a simple example of a ‘zero-knowledge proof’ in the real world. Alice does not have to follow Bob into the room, and Alice does not need to see Bob’s key, but Bob unlocks the safe box anyway. So, Alice (as the verifier) has ‘verified’ that Bob (as the prover) has proved himself that he has the key to her safe box.

Zero-knowledge proof in the cryptography world works in the same way. A prover can prove the validity of a statement to a verifier without revealing any sensitive information.  

zk-SNARKS

Zcash utilizes this ‘zero-knowledge proof’ in its core technology called zk-SNARKS. zk-SNARKS is short for “Zero-Knowledge Succinct Non-Interactive Argument of Knowledge.” It means a short and easy to verify zero-knowledge proof implementation. With zk-SNARKS, a transaction can happen without revealing any sensitive information. 

So, in a typical public blockchain network (i.e. Bitcoin), validation of a transaction always involves a link between the receiver and sender wallet addresses. Input and output values in the network will also need to be ‘proven.’ 

With zk-SNARKS, transaction values and wallet addresses are defined as sensitive information, and they can be kept hidden. But of course, the sender with his shielded transaction has to prove the output and input values for his transaction. The same sender also needs to show the private spending keys of the input notes to prove it to the network that they are the ones who really authorize the outgoing transaction. 

Due to its implementation of zk-SNARKS, among other technology, there are two different types of Zcash addresses. T-address and Z-address. T-address means the address is transparent or public. Z-address means the address is private or hidden. The t-address works the same way with a wallet address in the bitcoin blockchain. All transactions are visible on the blockchain explorer. But, when you start utilizing the z-address, the public won’t be able to observe any information except during shielding and deshielding (where partial information can be revealed due to the involvement of a t-address).

T-address and Z-address of a wallet address are interoperable. So, ZEC coins can be sent from z-address to t-address and vice versa. There’s no limitation made by the network about this. As we have mentioned before, there are basically four types of Zcash transactions involving t-address and z-address. They are Private, Deshielding, Shielding, and Public.

Image source: https://z.cash/technology/

The powerful thing about Zcash’s technology is that users can choose whether they want their transactions to be public or private. Zcash’s flexibility with privacy is often seen as an advantage over several other privacy-focused cryptocurrencies where you won’t be able to opt-out of certain privacy features.

Scalability

When it comes to scalability, however, Zcash is not really known as a speedy coin. According to several unofficial sources, Zcash can only achieve 27 transactions per second (TPS). This number is far lower than many of the newer blockchain platforms where they can quickly achieve thousands of TPS. Despite the fact that Zcash’s main selling point is about anonymity, but the ‘slowness’ of each transaction might become a potential obstacle in its future adoption.

Controversies

Image source: https://www.theblockcrypto.com/genesis/35027/an-analysis-of-zcashs-founders-reward

There are several controversies surrounding Zcash but not as much as the other top altcoins. Perhaps the biggest controversy was the announcement of the Zcash Founders’ Reward. So, with the Zcash founder’s reward, 20% of the mining block reward of the first four years since the genesis block will be automatically distributed to the investors, employees, advisors, and the founders. This was designed from the very beginning to incentivize development and bug fixing of the project itself. 

In the beginning, the idea sounded cool because at least the network has to stay healthy for developers to receive their incentives. However, the Founders’ Reward has been heavily criticized by many Zcash skeptics because they believe this reward program is contradictive to the spirit of decentralization. The defense that came from Zcash supporters (such as Edward Snowden) is that the incentives will be able to help developers kill serious bugs within a short period of time. However, this theory is not yet proven. On the contrary, developers for Bitcoin or Monero could quickly fix bugs and issues without this type of founders’ reward.

Another controversy about the Zcash project is the recent ‘politics’ between the Zcash Foundation and the ECC (Electric Coin Company). So, basically, Zcash has been developed by the for-profit company ECC. Meanwhile, in March 2017, the Zcash Foundation was created to help the Zcash community to get bigger and also to educate the public about the technology and importance of the Zcash project itself.

The Zcash Foundation and the ECC had an agreement in place to share the trademark of Zcash. That being said, the negotiation did not go through eventually. The Zcash Foundation accused the ECC’s decision has harmed the Zcash project to the level of ‘decentralization theater’, whatever it means.

Adoptions And The Crypto Market

Image source: https://www.cryptoninjas.net/2017/10/17/zcash-zero-knowledge-cryptography-technology-integrated-j-p-morgans-quorum-blockchain/

When it comes to tech adoption, Zcash has been doing quite well. Zcash’s ZSL technology (zero-knowledge security layer) that’s derived from zk-SNARKS has been adopted by JPMorgan’s private blockhain called Quorum. Not only that, the famous co-founder of Ethereum, Vitalik Buterin, has been teasing that Ethereum can easily scale up to 500 TPS if they use zk-SNARKS technology.

And in the crypto market itself, Zcash coin (ZEC) position is still somewhat promising. Despite the fact that it has fallen from the top 20 crypto rankings, but ZEC traders still have a lot of faith in this coin. At the time of this post writing (September 19th, 2019), ZEC is trading at $50.33 with a $374,905,011 USD market cap. You can find Zcash on many top crypto exchanges, including Coinbase, Binance, Bithumb, OKEx, or Huobi. And while ZEC price is still very far away from its all-time high (ATH), but there’s a lot of potentials for this coin to go much higher than the current trading price.

Competitors

Image source: https://hacked.com/monero-vs-zcash-privacy-coins-compared/

Zcash has two main competitors in the crypto market. They are Dash and Monero. Zcash and Monero supporters often poke fun between each other because they are basically competing to become the ‘face’ of privacy-focused cryptocurrency. Monero has the upper hand at the moment due to its larger market cap and bigger popularity, but Zcash is not that far behind. 

On the other hand, Dash has ‘shifted’ away from its focus from a simple privacy coin to become speedy digital cash. Of course, that doesn’t mean Dash has abandoned its privacy feature development. They are still a privacy coin, by definition. It’s just that the broader focus and branding of Dash is to be spent as a daily peer-to-peer cryptocurrency.

Conclusion

Zcash has a big future in its hand despite several controversies and scalability issue we have mentioned above. There’s also one potential obstacle that might challenge Zcash’s future which is the government regulations against privacy-based coins. Just like Monero, Zcash’s future will have to consider big governments’ perspective against privacy coins. But outside of this specific external factor, Zcash actually has a very promising future because there will always be a need for privacy cryptocurrency.

[Jeet Narayan 1940]

You are posted full history about zcash coin. Zcash is one kind of digital coin and this coin projects work in Crypto transactions. One of the best things about this coin is there supply is not very high. So sometimes this coin give high profit and sometimes less profit.

[KURTAULI 1297]

Thanks for sharing some interesting information about zcash. In my opinion this is the strongest currency after bitcoin and ethereum. Soon it will become in demand and the price will increase. Most in this cryptocurrency I like the anonymity which is strongly protected

[AkaCrafterCZ 1140]

That is really useful, I didn't know that much about Zcash until now. I have more interest in this coin after reading your article. Thanks for your sharing.

[BTC Future 3946]

This is an amazing case study of one of my favorite altcoins Zcash. I still think that this coin will keep being relevant since it has potent developers that keep working even after becoming rich from it. Zcash has a use-case and along Monero are probably a few that will survive.

[Adrian Adkins 11]

Zcash became operational on October 28, 2016. behind; It is known that businessmen such as David Dacus, Roger Ver and Alan Fairless have investments, as well as Pantera Capital, Digital Currency Group and Fenbushi Capital. It can be defined as a cryptocurrency initiative focused on privacy and aiming to serve in all areas of the global economy.

[jacker 1095]

Thanks for sharing, I don't know much about zcash. It is a new currency to me but has a lot of potential and high growth opportunities in the market, it has the ability to add value and delight users. It has advantages and potential, reviews of zcash are quite good

[Rezort 846]

Zcash is the best cryptocurrency when it comes to anonymous cryptocurrencies, and I also see only improvements with this crypto, so I recommend everyone to invest some little money in it.

[Upright 2688]

One of the features which I really like of the zcash, is that of the privacy feature, as to which each personal wallet and address on the blockchain, as to those other public blockchain coins which, the wallet is public for anyone to see their assets

[iloveyobit 6599]

Despite all the history and information about the currency, I am only interested in trading it in the crypto market and it is really a good currency especially for the long term as it can give you great returns.

[Guada 43]

yeap and the united states govt is going after monero private tx, i guess you are next or zcash just doesn't count because no one is using privacy addresses.

[Joseunda 35]

wow i very interesting in this coin, nice info, is very anonimous

[Rigamer 91]

I really liked your Story. It is a very good coin I like very much

[keton_double_k 10]

On 20.03.2020 at 16:54, AkaCrafterCZ said:

That is really useful, I didn't know that much about Zcash until now. I have more interest in this coin after reading your article. Thanks for your sharing.

Investors will be able to use the new coins to work with automated loans and financial products with increased level of privacy. Also, the developers claim that in the future, the new version of the company will be able to provide confidentiality in smart contracts to hide information about its members in my opinion

[VovaCoolLol 23]

This coin looks like anonymous and private. Half a year Zcash costed 38$ USD per coin and now more than 80. Looks like it was a good time to invest in it.

[candyguyyy 43]

well it look like zcash has many difference about other crypto currency so i like been it different is to build a privacy-protecting digital currency and transactions issue that would be great privilege to investors who would make high value transactions

 

[Therry29 28]

It is a great coin with a very great potential that in the future it can play in its favor, by this I mean that it may have a much higher value and it will be one that will survive

[nestor14 208]

Thank you for your review, very good, coincidentally I have been earning Zcash fractions with a faucet for days, this coin looks pretty great and has not a bad price, your contribution helped.

[tienda 8776]

Zcash is one of the best future coin and right now we can find it in almost of website exchange platform, and in some it is listed on the top 10 list. This is important and as a proof of this coin has its potential investors who invested on it or trusted it.

[huesca123 946]

Zcash & monero are really the only privacy coins. They other security, privacy, cheap & fast sending fees, among some other things. Zcash & monero have been delisted from certain exchanges because of their privacy features. Also, both of them are easier & more profitable to mine than btc.

[Froshk 1828]

On 2/24/2020 at 12:02 PM, Efs said:

Zcash has a big future in its hand despite several controversies and scalability issue we have mentioned above. There’s also one potential obstacle that might challenge Zcash’s future which is the government regulations against privacy-based coins. Just like Monero, Zcash’s future will have to consider big governments’ perspective against privacy coins. But outside of this specific external factor, Zcash actually has a very promising future because there will always be a need for privacy cryptocurrency.

No one will list the list of top privacy cryptocurrencies with having to mention Zcash, the coin that started ar 2013,has made wonderful progress for itself in the world of cryptocurrencies 

[chambers 58]

1 hour ago, Uni12 said:

Thanks for sharing, I don't know much about ZCash. It is a new currency to me but there is a lot of potential in the market and high development opportunities, it has the ability to add value and pleasure to the users. It has the advantages and the possibilities, the reviews of ZCkash are quite good

Zcash is not actually a new currency, it have been in operation for a while now, the popularity is something that it just dosent have.

On 2/24/2020 at 12:02 PM, Efs said:

Zcash has two main competitors in the crypto market. They are Dash and Monero. Zcash and Monero supporters often poke fun between each other because they are basically competing to become the ‘face’ of privacy-focused cryptocurrency. Monero has the upper hand at the moment due to its larger market cap

I think the popularity of Zcash is somehow questionable, unlike monero and Dash that even a beginner in the crypto world can easily say something about 

[Goopang 202]

Z cash is also a currency on which we can trade like as all other curriencies some days ago I discussed with me friend and that guy is senior by me in this field the topic of our discussion is about trading and he told me that zcash is also best currency for investment we can earn by this currency in future he advised me that if you want to buy any currency then this one is also best.