In this article, we will analyze and explain what Zcash (ZEC) is, why it was created, and which are the differences with other cryptocurrencies. Zcash is known for being one of the most popular privacy currencies in the world alongside Monero (XMR).
Table of Contents
What is Zcash?
Zcash is one of the most used privacy-coins in the crypto market. The main characteristic is that it uses a technology known as zk-snarks that protect the privacy of the sender and recipient. Zcash has been launched in 2016 by Zooko Wilcox, founder and CEO of The Zcash Company.
Zcash Logo
Zcash offers the possibility to work as a private cryptocurrency. That means not showing the information of the transaction, recipient and sender – or in a similar way, Bitcoin does – registering all the information in the blockchain.
We know that Bitcoin (BTC), Ethereum (ETH) and Litecoin (LTC) have public blockchains. That means that everyone can get access to the most important information registered on it. We are talking about wallet addresses and funds transacted.
It is possible to see all the transactions that are now taking place on the above-mentioned digital currencies. This is why thinking that Bitcoin is anonymous is a mistake. Addresses and fund can be linked to individuals and companies. This is why Zcash wants to help users have a more private solution.
What are Zcash zk-SNARKs?
Zcash is the first widespread application that uses zk-SNARKs, a novel form of zero-knowledge cryptography. Zk-SNARK stands for ‘Zero-Knowledge Succinct Non-Interactive Argument of Knowledge.’
“Zero-knowledge proofs allow one party (the prover) to prove to another (the verifier) that a statement is true, without revealing any information beyond the validity of the statement itself. For example, given the hash of a random number, the prover could convince the verifier that there indeed exists a number with this hash value, without revealing what it is.”
This is one of the main characteristics of Zcash. It allows users to send and receive payments without disclosing the information in the transaction. Blockchain is a decentralized ledger that registers all transactions that take place in the network, and that allows participants to check whether the funds are legitimate or not.
In Bitcoin’s blockchain, that is visible to everyone. Everyone is able to track all the transaction of a specific address, meaning that the information is exposed. But Zcash, implementing the zk-Snarks, is able to show that a transaction is valid, without giving clues about what is inside that transaction, who is the sender, neither the receiver.
Zcash Mining
This is one of the most interesting aspects of the virtual currency, and something that the community has been debating for a long time. In a blog post uploaded by Zooko Wilcox and Jack Grigg, they explain why Zcash uses the Equihash as Proof-of-Work algorithm.
They both explain that they have decided to use this mining algorithm because it is ‘unlikely’ that anyone will be able to build a cost-effective custom hardware (ASICs) for mining in the future. Additionally, they explain that it is very ‘unlikely’ that there will be any major optimization of Equihash – which could give some miners who know the optimization an advantage.
But the team is open to change the mining algorithm for something different. Which is very productive for a community to have the freedom to discuss these issues.
“We can’t know for certain that Equihash is safe against these issues, and the community may collectively decide to change Proof-of-Work again, if we find some flaw in Equihash or if we find another Proof-of-Work algorithm which offers higher assurance.”
The team has decided to use an ASIC-resistant mining algorithm because it allows widespread distributions of coins. And Zooko explained it very well:
“One thing I’ve learned along the way is that GPU mining is absolutely essential to Zcashers in Venezuela. If Venezuelans try to import ASIC miners (i.e. for Bitcoin, currently), then they risk having the miners stolen or extorted by the army which controls all imports. GPUs are not (yet?) nabbed on import like that, and anyway there are a lot more GPUs already floating around inside Venezuela.”
But it is important to mark that Zooko himself says that he did not change opinion during the last years, but that he knows that widespread-distribution-of-coins cannot last forever.
ASIC miners keep expanding and Bitmain launched the ANtminer Z9 mini, an ASIC miner that is able of mining any virtual currency that runs with the Equihash proof-of-work algorithm. That important event shocked the Zcash community. How to solve this problem?
The discussion started and there are already some proposals floating around the topic.
Where Can I Buy Zcash?
You can buy Zcash in a wide range of cryptocurrency exchanges. Indeed, there are more than 80 different virtual currency exchanges all over the world that allow users to buy Zcash. Additionally, it can be traded against many different currencies including the US Dollar, the Euro, The British Pound, Bitcoin, Litecoin, and Ether.
Binance is one of the best exchanges where you can buy Zcash right now. It will require you to follow a few simple steps. Moreover, you can buy Zcash with Euro in just a few minutes.
One of the most important milestones for ZEC was that one of the regulated exchanges in the United States, Gemini, started to list ZEC. This is a very bullish thing for this virtual currency taking into consideration that is one of the privacy coins in the market. If one of the regulated exchanges in the United States has given green light to Zcash, it means that there is something in the privacy coins that is accepted by the regulatory authorities.
This listing gives ZEC and the virtual currency market legitimacy. Moreover, it leaves one message: Privacy Coins can be compliant with the regulatory framework. Nevertheless, it will definitely be important to understand how this evolves in the future. Regulators change opinion very frequently.
Zcash Team
As mentioned above, Zcash has been founded by Zooko Wilcox. He has more than 20 years of experience in cryptography and security-related topics. According to some of the people that surround him, he is an idealist that is not motivated by material gains. – About it we can mention the fact that Zcash team did not filter information about the listing in Gemini, neither traded before in the market.
Zcash has excellent developers and security experts from different parts of the world. We can mention Eli Ben-Sasson, professor at the Computer Science Department at Technion, Israel, Alessandro Chiesa, a faculty member in Computer Science at UC Berkeley, Christina Garman, Matthew Green, Ian Miers, Madars Virza, and Eran Tomer.
The cryptocurrency team is being advised by important figures in the crypto-world, including Gavin Andresen, Vitalik Buterin, Arthur Breitman; Joseph Bonneau, Gordon Mohr, and Brian Warner.
Zcash in the Crypto Market
Zcash is the 21st largest cryptocurrency by market capitalization with $1.39 billion dollars as of May 2018. Each Zcash coin can be purchased for $354 dollars according to CoinMarketCap. Back in January, Zcash has been traded for over $875 dollars when it reached its all-time high.
While the market capitalization and price have been growing over time, compared to Bitcoin its price has been slightly decreasing.
Update January 2021: Zcash is now the 38th largest digital asset. Compared to 2018, it now has a price per coin of $69 and a market valuation of $744 million. This also shows that the issuance of Zcash has been growing in recent years. This could be one of the reasons why the price has been depreciating over the last years.
Conclusion
Zcash is one of the most popular cryptocurrencies in the market. It allows individuals and enterprises to securely send and receive payments – and messages – through Zcash’s blockchain. The privacy features that it has are the most important points to mention about this great cryptocurrency.
The team behind it is professional, experienced and humbles enough to learn and improve every single day. This is a necessary thing to become one of the most used virtual currencies in the world. However, it is not enough. This is why they have to work on a regular basis to improve Zcash and its functionalities.
Even when there are many competitors out there, ZEC proves that it is ready to compete and innovate at all times. However, in recent years, the digital asset has lost its position in the market. This is why it will be very important to understand what the team behind it will do to recover it.
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