What Is Zcash?
Zcash is in the same category as other so-called “privacy coins” such as Monero, PivX, and Verge. The creators of Zcash want to use the underlying technology of Bitcoin and improve it by giving their users the ability to make their transactions untraceable and thus maintain their privacy. The privacy coin market is highly competitive and Zcash sets itself apart with its focus on science-backed technology and a team that is dedicated to decentralization and privacy.
Who Is Behind Zcash?
As the origins of Zcash lie in academia it’s not particularly surprising that the team behind the cryptocurrency contains a number of experienced computer scientists and cryptographers. This highly experienced team used cryptography to design a way to “shield” ZEC transactions and thus protect user privacy. Zcash gives users the ability to engage in two types of transactions. The first is a transparent transaction, which works essentially the same way as a Bitcoin transaction. Users also have the option to store and send their currency from a shielded address. This allows users to hide the metadata behind their transactions and thus maintain control over their privacy. zcash shielded wallets. A user can send money to a shielded wallet from a transparent wallet and this will only reveal the funds sent and not the funds received, this also works in reverse.
What Is Zcash’s zk-SNARK?
These shields are created using zk-SNARKs (the acronym stands for Zero-Knowledge Succinct Non-Interactive Argument of Knowledge). This is an interesting form of zero-knowledge cryptography. They allow one party (the prover) to prove to another (the verifier) possession of data (e.g. a secret key) without ever revealing the information or directly interacting with each other. Zcash is a privacy-focused cryptocurrency. See our cryptocurrency guides on Monero, Dash, and Verge — these are also known as privacy-oriented coins. This means that rather than directly validating the sender and receiving addresses, Zcash is able to validate a transaction without revealing any of the underlying information.
What Proof Is Required To Validate A Zcash Transaction?
In order to validate the transaction, the sender of a ‘shielded transaction’ constructs a proof to demonstrate that: The input values sum to the output values for each shielded transfer. The sender proves that they have the private spending keys of the input notes, giving them the authority to spend. The private spending keys of the input notes are cryptographically linked to a signature over the whole transaction, in such a way that the transaction cannot be modified by a party who did not know these private keys. A shielded transaction is also able to verify that a user possesses enough ZEC in order to process the transaction by using “commitments” and a corresponding nullifier.
What Are Zcash’s Unique Identifiers?
These commitments are all given a unique identifier called an “rho”, which is used to verify the payments. When a shielded transaction is spent the sender publishes a nullifier, which is the rho’s hash from an unused commitment. This provides a zero-knowledge way to demonstrate that they are authorized to make the transaction. The team behind ZEC insist that their blockchain is truly independent and decentralized, despite accusations that it is a corporate coin. They argue that because the protocol behind Zcash is open-source, they don’t have any control over the mining and distribution of ZEC, nor have access to any special shielded features.
Bitcoin vs Zcash: Similarities And Differences
How does Zcash compare to the leading cryptocurrency Bitcoin? What are the key differences? See below for our head-to-head comparison:
The Brief History Of Zcash
The precursor to Zcash started its life in form of Zerocoin. This John Hopkins University (Baltimore, USA) project was designed to address one of the primary drawbacks of Bitcoin, its lack of privacy. This eventually led to collaboration with cryptographers from MIT and Tel Aviv University in 2014, who improved the underlying protocol of Zerocoin. In 2015 the first mentions of collaboration between the Zerocoin team and Zooko surfaced and the coin was rebranded Zcash and released on October 28th, 2016 by the Zcash company.
How Was Zcash’s Launch Welcomed?
The launch of the coin was met with a lot of hype that resulted in the cryptocurrency being worth more than 6 Bitcoins (over $5,000) on the day of launch. This speculation quickly died down and since then ZEC has grown at an organic rate. The original launch was met with some controversy. Zcash was created using a “Parameter generation ceremony”. This involved 6 individuals who each created a fragment of the eventual “master passkey” necessary for Zcash to work. These keys were described as toxic waste.
How Do Zcash Master Keys Work?
A master key requires all 6 shards. This requires a lot of trust in the 6 individuals involved and the ceremony has been described as little more than security theatre. If the passkeys were somehow leaked or the individuals involved had colluded then it is theoretically possible for somebody to acquire the master passkey, which would give them the ability to create their own ZEC. It is impossible to prove the process worked. That being said, the security surrounding the event was particularly tight and there were no reported problems, bar a journalist’s phone acting very strangely.
How Could Zcash Be Compromised?
Despite the potential problems, it is also worth keeping in mind that only a single participant needs to have successfully destroyed all traces of their shard in order to ensure the ceremony was a success. So in order for someone to gain access to the master key, it would require all six participants to either be dishonest or compromised. By May 2017 the Zcash foundation had launched as “A non-profit organization, serving the Zcash community and promoting financial privacy”. This was a major milestone for Zcash which had always maintained that the currency was decentralized to serve the public’s interests, despite claims to the contrary.
How Is Zcash Made?
Zcash is mined in a similar way to most other cryptocurrencies. Governments or banks are centralized institutions that physically print money. Instead, Zcash and other cryptocurrencies take a decentralized approach. ZEC is created by its community through mining. The principles of the basic technology behind Zcash are the same as the technology behind Bitcoin. Both coins are mined through solving algorithms using computing power. The blockchain is secured through a consensus mechanism called Proof-of-Work (POW).
How Does Zcash Mining Work?
A miner uses their computer in order to solve complicated equations. Once the equation is solved, a new block is added to the chain and the miner is rewarded with ZEC. This reward system serves two purposes. The first is to encourage miners to devote computing power in order to complete transactions on the Zcash blockchain. Ethereum is now moving from using a proof-of-work (PoW) mechanism to implementing a proof-of-stake (PoS) protocol. The second is to regulate the creation of new ZEC, which is then distributed by the miners.
What Is The Zcash Founders’ Reward?
Zcash differs significantly from other cryptocurrencies because until 2020 the founders will receive a “founders reward” of 20% of all ZEC created. They have agreed to set aside 10% of this in order to create the Zcash foundation. This means that until 2020 miners receive 80% of all coins produced, the founders receive 10% and the Zcash foundation receives the other 10%. After 2020 the reward will halve and miners will receive 100% of all ZEC produced.
What Do Experts Say About Zcash?
As with most cryptocurrencies, the short-term price outlook for Zcash can be described in one way — volatile. The cryptocurrency market is still young and therefore still unstable. You should expect fairly big peaks and troughs in the short term. In the medium, to long-term, you may see Zcash experience a slow and steady increase in value as it has in the past. You will see ups and downs and while some do buy low and sell high, this is a more risky approach than holding for the long term.
Edward Snowden’s Opinion On Zcash And Privacy Coins
Zcash has proven to be fairly divisive amongst experts. Some, such as Edward Snowden, have argued that Zcash is important because it is one of the few privacy coins developed by actual cryptographers. Snowden has argued that this makes Zcash safer to use than Monero which he has described as “amateur crypto” pointing to traceability issues and design errors with Monero. “Zcash’s privacy tech makes it the most interesting Bitcoin alternative. Bitcoin is great, but if it’s not private, it’s not safe.” Edward Snowden
Manfred Karrer On Zcash
Regulation And Competition Others have also come out in support of Zcash and privacy coins in general.
Manfred Karrer, Developer and Founder of Bitsquare said: “I expect three things. One, regulations on cryptocurrency exchanges will come. Two, the war on cash, gold, and cryptocurrencies will accelerate. And three, privacy-protecting technologies like Monero and Zcash will elevate in importance.”Manfred Karrer, Founder of Bitsquare Despite these positives, there are a number of experts who believe that Zcash is too centralized to be considered a true privacy coin.
By Saul Bowden