Humankind has been blessed with cryptocurrencies for almost a decade now. While many have skyrocketed concerning their market capitalization, many have failed as well in delivering results. Only a few of these digital currencies have backed a punch regarding providing users a higher level of privacy and fungibility.
Bitcoin had its genesis block mined in 2009 and was the first cryptocurrency to achieve scalability. While many people at that time decided to get involved in bitcoin because of its promise of privacy, Bitcoin failed to deliver what was expected of it. The reason for this seems to be (I am not a 100% sure about this ) that all or rather any interested parties can examine the transactions recorded on bitcoin’s blockchain to get a sense of precisely what a person or entity has purchased.
However, the Zcash blockchain launched on October 28, 2016, is a cryptocurrency that anyone can make use of to maintain the anonymity of his or her transactions. It was created as a fork of Bitcoin.
So I think so you guys know by now that we are going to be discussing Zcash in this post. What is Zcash, how does it work and all other fantastic stuff is what we are going to explore today.
What is Zcash
Zcash (ZEC) is a cryptocurrency just like bitcoin but slightly different to bitcoin. The Zerocoin protocol was amended and transformed into the Zerocash system. In 2016, this Zerocash system was converted into the Zcash cryptocurrency by Zooko Wilcox-O’Hearn (Founder and CEO of Zcash).
It leverages the power of cryptography to provide enhanced privacy for its users compared to other cryptocurrencies such as Bitcoin.
With Bitcoin, if you are aware of the blockchain address of a particular person, then you can follow this address and see the transactions history of that specific person whosoever he/she may be. Therefore, everyone involved can be aware of the amount of money moving around in the blockchain. However, with ZCash all the information concerning N no. of transactions is encrypted within its network. Therefore, you can rest be assured that not any Tom, Dick or Harry can view your transaction history just like that. Pretty cool. Right?
So with that let’s keep moving forward through this fun journey of Zcash to the next point down below.
How does the platform of Zcash operate on a daily basis
Zcash encodes the subject matter of shielded transactions. Because the payment information is encrypted, the protocol employs a novel cryptographic method for checking the validity of every transaction.
It utilizes a zero-knowledge proof construction known as zkSNARK, created by its team of experienced cryptographers centered on the latest advancements in cryptography. The developments mentioned above assist the network in maintaining a secure ledger of balances without needing to disclose the names of the parties involved or the amount of money transacted. Therefore, rather than openly displaying spend-authority and transaction values, the transaction metadata is encrypted and for proving that nobody is defrauding the system, zk-Snarks are employed.
This cryptocurrency also provides its users the ability to send “free payments” (i.e., transactions without using the private encryption feature) which functions identically like Bitcoin. Although it possesses the characteristics of both shielded and transparent addresses, users can opt to send their Zcash privately or publicly. Payments sent from a shielded address to an open address show the received balance, whereas payments made from a transparent address to a shielded address do not display the received amount on this blockchain. Pretty simple. Eh?
Alright, now if you guys are interested in learning more about Zcash’s zero-knowledge proving scheme for private payments, then please visit this site.
How is ZCASH Funded and Allocated a.k.a. Supply system
Zcash achieved its funding goals in a somewhat unorthodox fashion; as in it has not gone through the routine delineated “Series A” or “Seed” round nominations which is the case for other similar technology companies.
As per the official site, its first public investors included: Pantera Capital, Digital Currency Group, Fenbushi Capital, London Trust Media, and a couple of other people. In the summer of 2016, a private fundraiser was held that included the following new and already established funders: Aaron Grieshaber, Branson Bollinger, Maple Ventures (Amir Chetrit and Steven Nerayoff), Brian Cartmell, etc.
The investors mentioned above offered the company $1 million as funds for its development and operations. As a result, they received a 10% reward of the total supply cumulative over the first four year period.
This 10% reward is known as “Founders Reward” which in layman’s terms means that how much ever Zcash gets mined for the first four years, 10% of that amount is going to be incrementally allocated amongst the investors mentioned above.
As a result, the initial investors may receive approximately 2.1 million $ in the first four years. As a side note this founders reward can also be viewed as a tax on mining of this digital currency.
But then what will happen after four years?
The total mining reward will be distributed among the miners as it often happens in a typical proof-of-work system.
One more random thing regarding funding is that Zcash does not intend on having a crowdfunding round.
Now after having covered how this cryptocurrency is funded let’s see how the supply system works.
Zcash like Bitcoin has a total maximum supply of 21 Million coins, and you can mine it by using a POW Equihash algorithm. It is expected that all 21 million ZEC are going to be mined by 2032. Just like Bitcoin, the Zcash block mining reward is divided into half every four years. For example: Hypothetically, if you are getting 5 Zec/block for the first year then after 4 four years you will be getting approximately 2.5 ZEC/block mined.
Another case in point is that this cryptocurrency was not pre-mined or ICO-funded as several other crypto projects. The reason for this could be that it follows a different funding and distribution strategy.
So with that, I am concluding this section on funding and supply system of Zcash. Now on to the next segment. Tatatadah.
Differences between Zcash and Bitcoin
Zcash seems to have created some commotion in the cryptocurrency market concerning its method of distributing its cryptocurrency. However, still there exists a couple of differences between Zcash and Bitcoin. Some of these are as follows:-
- Zcash was branched out of the bitcoin protocol. This means that it is a separate blockchain with its own currency tokens. It leverages the existing work from the Bitcoin core team to enable privacy-preserving transaction data using zero-knowledge proofs. It also includes some non-privacy changes to bitcoin, including its proof of work algorithm.
- If you mine bitcoin, then everything related to the transactions that you or anyone else gets involved in gets broadcasted on to the Bitcoin network for everyone to see. Mining requires the use of blockchain technology and confirms the transaction in the public ledger that is blockchain. On the other hand, Zcash mining ensures safe encryption of all transactions without any third party involvement. Due to these features, users or businesses may want to buy Zcash through Zcash mining algorithm. It is also because of these features; your transaction history remains hidden regarding sender, receiver, x amount of coins traded. God, I have said this many times now. Now even if you guys do not remember anything then at least you will go away knowing this privacy feature of Zcash. Hahahaha. Moving on to the next point.
- Their plan to incentivize investors and workers in the Company which is through a tax on mining rewards called “Founders reward.”
That about wraps it up for this segment regarding differences between Zcash and Bitcoin. Now we’re heading to the next point.
Consensus system and algorithm
ZCash makes use of Equihash as its hashing algorithm, which is an asymmetric memory-hard PoW algorithm based on the generalized birthday problem. It needs high RAM requirements to bottleneck the generation of proofs and making ASIC development unfeasible, mostly like Ethereum.
For more information check this out, guys.
Problems solved by Zcash
Presumably, a significant problem solved by a digital form of money seems to be that of privacy in transactions. Now by no means is this a very small to be taken for granted thing. Why? Because with the added benefit of privacy you can be assured that not any random stranger becomes aware of your transactions and then use it for his or her ulterior motives. ( however, that may be ).
Awesome that was another instance where we discussed that Zcash has this privacy feature for transactions. Awesome. High five. Awesome. Moving on. There might be other problems as well, but this is the most significant problem I encountered during my research. So, if you guys know about any other issues that Zcash tends to solve, then please do let me know in the comments section below.
How to mine Zcash
ZCash uses Equihash as a hashing algorithm, which is an asymmetric memory-hard PoW algorithm based on the generalized birthday problem. It relies on high RAM requirements to bottleneck the generation of proofs and making ASIC development unfeasible, much like Ethereum. To avoid Instamine ZCash will have a slow mining start, where block rewards will be issued slower than usual. So this an overview of Zcash mining. More on this in another article.
You Can Convert or Buy Zcash here, Faster & at a cheaper price. Here for Mobile User
FOUNDER AND CHIEF EXECUTIVE OFFICER: Zooko Wilcox.
You can meet the rest of the team here.
Where to store safely
A few popular Zcash wallets are as follows:
- Hardware Wallets (Most Secure for Storing)– Ledger Nano S, Trezor.
- Mobile Wallets (Convenient) – Coinomi (Android), Jaxx (iOS, Android)
- Browser/Web Wallets – Jaxx (Chrome Extension),
- Desktop Wallets – Jaxx (Windows, Mac, Linux)
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- What is Zcash? A Bitcoin Based Private Centric Coin - March 3, 2018