What is Zcash? (ZEC)
How does Zcash work?
Zcash is a privacy-preserving digital currency based on strong scientific evidence. Using Zcash, people can transact efficiently and securely with low fees. Shielded Zcash provides transaction privacy by allowing people to selectively share address and transaction information for auditing or compliance purposes.
Zcash addresses are either private (z addresses) or transparent (t addresses). Private z addresses start with “z” and transparent t addresses start with “t”. Between these two types of addresses, there are four types of transactions.
The Z-to-Z transaction appears on the public blockchain, so it is known to have occurred and the fee has been paid. But the address, transaction amount, and memo fields are encrypted and invisible to the public. This type of encryption is only possible when using zero-knowledge proofs.
The owner of the address can decide to disclose the z-address and transaction details to trusted third parties by using the view and pay disclosure keys – considering the need for auditing and compliance. T-to-T transactions work just like Bitcoin: the sender, receiver, and cost of the transaction are all public. While many wallets and exchanges today exclusively use t-addresses, many are moving to shielded addresses to better protect user privacy.
Both types of Zcash addresses are compatible. Funds can be transferred between z addresses and t addresses. However, it is important for users to understand the privacy implications of blocking or unblocking information through these transactions.
zk-SNARK
Zcash is the primary inescapable utilization of zk-SNARKs, another type of zero-information cryptography. Zcash’s solid protection ensures depend on the way that safeguarded exchanges in Zcash can be completely scrambled on the blockchain, yet confirmed as legitimate as per the organization’s agreement rules utilizing zk-SNARK evidences.
The abbreviation zk-SNARK means “Concise Non-Interactive Zero-Knowledge Argument” and alludes to a proof design that can demonstrate ownership of some data, like a mystery key, without uncovering this data and without the requirement for a prover any collaboration with the validator.
Zero-information evidences permit one party (the prover) to demonstrate to another party (the verifier) that an assertion is valid without uncovering something besides the legitimacy of the actual assertion. For instance, given a hash of an irregular number, a prover can persuade a verifier that there truly is a number with that hash esteem without uncovering what it is.
Zcash Transactions
The diagram above shows the process of sending and receiving ZEC in a transaction. Using a shielded address—whether sending or receiving—requires the creation of a zero-knowledge proof that allows others to verify the encrypted transaction data without exposing it. (More on how this works in the next article on the inner workings of transactions between shielded addresses.) These addresses always start with a “z” and are sometimes called “z addresses”. Likewise, the use of transparent addresses requires interaction with so-called “transparent value pools” (or TVPs) and public disclosure of transaction data. These addresses always start with a “t” and are sometimes called “t-addrs”. Transaction fees also go through TVP and are therefore always visible on the blockchain.
Two Keys
Owners of z-addresses can share information about their transactions with trusted third parties using a viewing key, which grants read access but does not exercise authority over the address. This allows for “selective disclosure”, where the transaction is auditable but the disclosure is under the control of the participant. This enables you to comply with audit fees, tax regulations or anti-money laundering regulations.
ZEC (Zcash token)
The Zcash (ZEC) network was sent off in 2016 to give more prominent exchange security than Bitcoin. Utilizing zk-SNARKS encryption, Zcash empowers clients to conceal data about the source, collector, and equilibrium of an exchange.
Zcash was sent off by one of the most regarded tech groups on the planet. Zcash is the “https of the blockchain”, safeguarding your opportunity to save and spend anyway you need. Zcash is the main task to carry out zk-SNARKs, another type of zero-information cryptography that furnishes clients with the most grounded security of any advanced money. A few autonomous associations have been subsidized to improve in Zcash. Zcash is as of now accessible on driving trades, advanced wallets and a developing number of utilizations.
Zcash’s local token is called zcash in lowercase. The all out conceivable stockpile of Zcash is 21 million coins. Like Bitcoin, how much Zcash stamped in each square reductions over the long haul. Very much like the way that Bitcoin works, “excavators” are liable for the security of the organization. For each square of exchanges they effectively “mined”, the triumphant excavator is compensated with Zcash, while 20% of the award is customarily dispersed to the authors. To begin with, Zcash split this “author’s award” into 15% to the organizers and 5% to Electric Coin Co., which established Zcash and keeps on supporting the improvement of the crypto project.
Consensus
Electric Coin and the Zcash Foundation lead standard security reviews and security reports to guarantee the security of Zcash. The likelihood of a 51% assault on Zcash is near zero on the grounds that the results of such an assault could deliver the aggressor’s gadget pointless, so anybody with the assets to lead such an assault would get more cash-flow from lawful mining. This is the excellence of Proof of Work as characterized by Nakamoto agreement.
Zcash presently involves Equihash as evidence of-work for Zcash block mining. Equihash is a mental soundness checking calculation created by Alexey Biryukov and Dmitry Khovratovich. It depends on an idea in software engineering and cryptography called the summed up birthday issue. As of May 2018, Zcash Equihash boundaries have been carried out in devoted equipment (“ASIC”) miners. ECC is intently checking the presentation of elective agreement calculations, for example, PoS and will keep on being assessed as a component of our long haul guide to further develop adaptability and versatility.
At present, Electric Coin Company and the Zcash Foundation are adding to research, convention and reference clients, as well as open correspondences and numerous other significant undertakings. The Zcash Community Advisory Panel (ZCAP) votes on significant local area choices, for example, making a local area advancement reserve and choosing a huge awards audit board.
Benefits of Zcash (ZEC)
Privacy
Zcash, one of the leading digital currency blockchains, is trying to solve this snowballing problem and seek to return power and privacy to users. Zcash is a privacy-focused blockchain-based payment network that uses zero-knowledge proofs (ZKP) to secure transactions, keeping the contents of transactions private even on public blockchains. Zcash is based on the Zerocash protocol, which was forked on the Bitcoin blockchain in 2016. Its native token, zcash, uses the code ZEC.
ZKPs are a product of cryptography dating back to the 1980s. They allow two parties to mutually authenticate information without exchanging underlying data related to that information. For example, you can prove that you are over 21 without disclosing your actual date of birth (or any other irrelevant information that may appear on some identification documents, such as your driver’s license). The Electric Coin Company (ECC), which created Zcash, has added a concise, non-interactive zero-knowledge argument or “zk-SNARK” to the ZKP toolbox.
This cryptographic enhancement essentially allows secure Zcash transactions to be fully encrypted on the blockchain, while still allowing the transaction to be validated against network consensus.
If the t-address is sending funds to the z-address, the observer will have no way of knowing where they went. If one z-address sends a transaction to another z-address, the transaction is completely impervious to prying eyes, providing one of the most private and secure options on the market.
Fungible
Zcash provides anonymity and fungibility using an optimized form of ZKP called zk-SNARK and shielded transactions that hide transaction details on a public blockchain network. Created and maintained by the Electric Coin Company and the Zcash Foundation, ZEC is one of the most well-known privacy-centric cryptocurrencies today.
The primary use case for Zcash is privacy, and a secondary impact of this privacy is fungibility. Compared to other privacy-focused cryptocurrencies, Zcash is considered one of the strongest guarantees of anonymity due to the use of ZKP. The anonymous nature of ZKPs provides fungibility that fiat currencies or many other cryptocurrencies do not offer. Fungibility means that all tokens are the same and interchangeable.
Of course, private transactions and near-perfect fungibility could draw backlash from governments, law enforcement officials and regulators. To address this, Zcash also allows transparent transactions on its blockchain, which currently account for the vast majority (~86%) of transactions on the network. However, the Sapling update provided a much-needed respite from the inconvenience of using shielded transactions, reducing time and memory requirements by 90% and 97%, respectively. The number of shielded pools and transactions has increased since Sapling (discussed in more detail in the following sections).
Scarcity
Scarcity is another advantage for Zcash investors. The network shares Bitcoin’s scarcity in terms of total coin supply. During the life of the project, only 21 million ZEC coins will be issued in total.
Due to the limited supply of coins that can be mined, ZCash has been compared to Bitcoin in terms of being seen as a store of value. The total supply of coins is 21 million coins. According to information from CoinMarketCap, “As the total ZEC supply approaches the 21 million limit, the block subsidy is periodically halved to slow issuance.”
With 12.7 million ZEC, ZCash, like other cryptocurrencies with limited supply, will see all coins mined. Once completed, as many crypto analysts have pointed out, the true ZEC valuation will be reached.
Scalability
Zcash can process transactions faster than Bitcoin. It is also more scalable. Scalability issues continue to plague Bitcoin users. When the market gets busy, fees and delays negate its cash-like characteristics. Zcash changes some systems to greatly improve Bitcoin’s performance.
Security
Zcash has a reputation for its commitment to security. The project was developed using peer-reviewed scientific methods. This strategy has made Zcash one of the most secure privacy coins ever to enter the space.
The centralized nature of ZCash makes it more vulnerable to regulatory pressure than more decentralized cryptocurrencies like Bitcoin or Monero. Regulatory responses to ZCash, or as a class of privacy coins in particular, will make their use extremely difficult. Additionally, the SEC could make a stronger argument that the central authority, the ECC, has sole control over the project, further simplifying the classification of ZECs as securities. The SEC has yet to make a definitive statement on ZEC’s security status.
History of Zcash (ZEC)
The history of Zcash dates back to 2013. The project started out as a completely different network called Zerocoin. This privacy coin is the brainchild of several members of the computer science department at Johns Hopkins University in Baltimore. In particular, Zerocoin was developed by Matthew Green, Christina Garman, Jan Myers, and Aviel Rubin.
In 2014, a new protocol emerged after a collaboration with MIT in the field of cryptography. This new coin has more advanced features. It’s called Zerocash. Soon in October 2016, Zcash was created on the network. At the same time, the non-profit Zcash Foundation came into effect. The group is working on the future development and expansion of the Zcash ecosystem.
How to Buy Zcash (ZEC)
Gate.io | Founded in 2013, the exchange is one of the more reputable exchanges to buy ZEC. They accept US residents (except New York State and Washington State). |
Kraken | This is one of the best exchanges for US residents. |
Coinbase | A public exchange listed on NASDAQ. They accept residents from over 100 countries, including Australia, Canada, Singapore, the UK and the US (excluding Hawaii). |
Binance | Best for Australia, Canada, Singapore, UK and most of the world. US residents are prohibited from buying most tokens. Use discount code: EE59L0QP to get 10% cashback on all transaction fees. |
BitPanda | This is the best option for European residents who do not accept clients from outside this jurisdiction. |
WazirX | This is the best exchange for Indian residents. |
How to Store Zcash (ZEC)
Today, there are many ways to store Zcash. One of the most popular methods is to use the official Zcash wallet. This wallet is available as a mobile app and in desktop form. Users enjoy a high level of identity protection when using this protocol.
Storing your cryptocurrency on a hardware wallet is considered the safest option. These devices store your cryptocurrency offline in so-called “cold storage.” In many cases, this state is achieved through an air gap in the device. Additionally, many of these wallets have physical buttons that must be pressed to confirm the transaction. Like the Ledger wallet, the design makes it impossible for hackers to access your funds.
It’s important to never buy a used hardware wallet. Many fraudulent activities were carried out by these units. To properly protect your investment, only buy hardware wallets directly from the manufacturer.
How to mine Zcash (ZEC)
Zcash has a limited token supply, which means that once you hit 21 million ZEC, you can no longer create new coins.
Unlike Bitcoin, Zcash uses an algorithm called Equihash, which is not compatible with specialized mining hardware (ASIC) designed for Bitcoin mining and is more suitable for GPU mining. Other features that make ZEC mining different from BTC mining are that Zcash has a block time of 1.25 minutes (Bitcoin has 10 minutes) and a block reward of 6.25 ZEC tokens per resolved block.
If you want to start mining ZEC, you first have to buy the right hardware and software to mine Zcash to ensure a minimum profit from the activity. So, below I’ll explain how to mine Zcash from your computer, how to choose the best hardware and software, and how to mine more conveniently alone or with a group of miners.
FAQ
Who created Zcash?
In 2013, Matthew Green, Jan Myers, and Christina Garman of Johns Hopkins University presented Zerocoin, a proposed privacy extension to Bitcoin. The community’s indecision and desire to act quickly prompted the team to hire more scientists to create a standalone protocol: Zcash.
Why does ZEC have value?
Because it copies and modifies the Bitcoin code, ZEC retains many of the properties that give Bitcoin its value and enable it to be used as a digital currency. Like BTC, there will always be only 21 million ZEC. The new ZEC is also introduced into a process called mining, in which computers consume energy to solve puzzles, and the winning computer adds blocks to the Zcash blockchain.
Arguably, Zcash’s additional privacy features increase its perceived value. Some investors see privacy-focused cryptocurrencies as a subset of the larger class of cryptoassets and therefore allocate a portion of their portfolios to this opportunity.
The paper argues that as the cryptocurrency market grows, more users and applications will integrate or find alternatives, such as the Zcash blockchain that offers more privacy.
Why use ZEC?
The Zcash (ZEC) protocol was established in 2016 as a fork designed to replace Bitcoin. By providing privacy to users, Zcash promises to protect your privacy and your financial history. Zcash aims to be a fair and open currency that anyone can use, regardless of social status or demographics.
How Many Zcash (ZEC) Coins Are There in Circulation?
The total possible supply of Zcash is 21 million coins. Like Bitcoin, the amount of Zcash minted in each block decreases over time.
Just like how Bitcoin works, “miners” are responsible for the security of the network. For every block of transactions they successfully “mined”, the winning miner is rewarded with Zcash, while 20% of the reward is traditionally distributed to the founders. First, Zcash split this “founder’s reward” into 15% to the founders and 5% to Electric Coin Co., which founded Zcash and continues to support the development of the crypto project.
