What is ZCach (ZEC Cryptocurrency) | A Beginner's Guide
ZEC Coin Price
Zcash or also known as Zerocash is an open, permissionless cryptocurrency that allows for a quick and private transfer of funds without exposing transactions, addresses, wallets or any important information.
Using fungibility and keeping confidentiality are the main features of Zcash which allow it to be an easily accessible and usable currency; without creating a paper trail that can tie you back to something.
THE HISTORY OF ZCASH (ZEC)
When Bitcoin was created it wasn’t necessarily for the purpose of complete anonymity but instead, to be a global decentralized currency.
Although, with the cryptography limited and Bitcoin being an easy to crack blockchain, with publicly recorded transactions, wallet addresses, and what someone was using the Bitcoin for, it started to become a bit useless in the terms of privacy.
This sparked the Zerocoin project in order to bring more anonymity to Bitcoin users.
The coin was then created but the protocol was still a work in progress. It was not until 2016 when it was renamed to Zerocash and then finally being released as Zcash.
Zcash was founded by Zooko Wilcox-O’hearn and Roger Ver was one of the first investors in it.
THE PURPOSE OF ZCASH
ZEC was created with one mission in mind:
Bring privacy to users of the blockchain.
You see, similar to “dirty cash” one of the main issues with Bitcoin and other cryptocurrencies is that if they aren’t fungible, then some Bitcoin become worth more than others.
In other words, someone may not want to use a Bitcoin if they see it’s been used to buy something illegal. Yes, you can view all transactions of Bitcoin, it’s open to the public.
Zcash has a public ledger that allows anyone to see the transactions occurring between wallets and different addresses, but where it differs is its selective ability to create private transactions and turn on selective disclosure.
WHAT MAKES ZCASH DIFFERENT FROM BITCOIN?
Zero-Knowledge Protocol - zk-SNARKS
The main feature of Zcash is a protocol called zk-SNARKS, which helps provide anonymity and privacy to the users of this coin.
zk-SNARKS is an acronym for “Zero-Knowledge Succinct Non-Interactive Argument of Knowledge.”
This protocol allows one to prove a possession of certain information without disclosing a secret key, revealing information, or anything that the user doesn’t want someone to know.
It is the staple mechanism and key selling point for Zcash.
Currently we have seen this protocol being implemented by Ethereum. As Ethereum performs its Metropolis upgrade for quicker and more private transactions.
This zk-snarks works in a very interesting way...
A good definition of each key term in zk-Snarks is the following from Z.cash:
““Succinct” zero-knowledge proofs can be verified within a few milliseconds, with a proof length of only a few hundred bytes even for statements about programs that are very large. In the first zero-knowledge protocols, the prover and verifier had to communicate back and forth for multiple rounds, but in “non-interactive” constructions, the proof consists of a single message sent from prover to verifier. Currently, the only known way to produce zero-knowledge proofs that are non-interactive and short enough to publish to a block chain is to have an initial setup phase that generates a common reference string shared between prover and verifier. We refer to this common reference string as the public parameters of the system.”
In order for this to be completely anonymous, the network has to be able to come to consensus that a transaction is valid or not without actually revealing any of the information that it used to calculate it.
Believe it or not, that is very hard to do.
In Bitcoin, transactions are validated and put into the blockchain ledger revealing input amount, sender address, receiver address and out amount.
Now in Zcash, with zk-SNARKS it works a bit differently.
Using an algebraic formula, Zcash proves whether a transaction has started without the input or output numbers, using a “commitment” identifier vs. an unspent transaction output like Bitcoin uses to verify that a Bitcoin was spent.
In Zcash these transactions are then shielded as the commitment uses a nullifier to verify it and they are stored in a hash, without any of the users data being revealed.
It’s a very intricate process that we don’t want to get into here, but will create a full blown zk-SNARKS article in the near future. Although, your main take away should be:
The power of zk-SNARKS helps Zcash be one of the best anonymous cryptocurrencies
Zcash Has Fungibility:
As we discussed above, Zcash is a fungible cryptocurrency.
Fungibility is “(of goods contracted for without an individual specimen being specified) able to replace or be replaced by another identical item; mutually interchangeable.(1)”
This works to ensure that every single one of the 21 million Zcash is worth the same as the others in value.
Now theoretically, someone could sell 1 Zcash for $20,000 and another for $200, but in value and in reputability, each Zcash functions and operates the same as another.
There is no dirty Zcash, and there also isn’t the ability to reject a certain Zcash based on its history.
Which makes it a stable currency that most likely won’t be banned from any business or exchange, based both on its fungibility and privacy as seeing someone’s illicit transactions with ZEC isn’t possible (if using the privacy feature).
WHAT EXPERTS SAY ABOUT ZCASH
Edward Snowden, the man who helped expose the NSA spying on U.S. citizens, recently chimed in the conversation of privacy coins and had this to say “Zcash's privacy tech makes it the most interesting Bitcoin alternative. Bitcoin is great, but if it's not private, it's not safe."
WHAT WE AT GCA THINK ABOUT ZCASH (ZEC)
Zcash is definitely an interesting privacy coin.
Its protocol is one of the only ones that hasn’t been cracked and judging from zk-snarks being implemented into Ethereum for the same use, it likely won’t be.
Wikileaks accepts it, it was one of the top coins used on Alphabay (a newer version of Silk Road) and it to this day sits around #15 on coinmarketcap.com with an almost $800,000,000 market cap.
Being one of the favorite alternatives to Bitcoin by Edward Snowden also lends to its credibility and us at GCA think highly of Zcash.
Although, it isn’t our favorite privacy coin - it is one that truly keeps privacy at the top of mind while not having the strongest community.
With advent and continual improvements, we are seeing Ethereum exploring a zk-STARKS for long-term and may see the adaption by Zcash as a way to combat Quantum Computing when it comes to security without being hacked.
Watch for news on Quantum Computing as it relates to privacy coins. The first one able to help ensure safety and privacy during this time will be what wins in the privacy coin race.
Short Term (>3 months): Hold for news
Medium Term (3-12 months): Hold/Use - As Blockstream and the government find more ways to trace transactions privacy coins like Zcash will gain fame and raise in evaluation.
Long Term (<1 Years): As security and identity become more of an issue with our growing metadata, and with privacy through Quantum Computing, Zcash may see heavy gains in the next couple of years.
If you liked this review and want to help support the academy donate some ZCash below!
MORE FROM THE CRYPTOCURRENCY INDEX
What is Siacoin (SC Coin)? SC Coin Price What is Siacoin | A Quick Overview SIA is a decentralized cloud storage company that uses Siacoin for blockchain based cloud storage applications. What makes Sia different than traditional cloud servers is its blockchain applicability, privacy, affordability, and it is open-source. The History of SIA David Vorick…
What Is Walton Coin (WTC) | A Blockchain Integrated IoT WTC Coin Price What is Walton Coin? | A Quick Overview WaltonChain aims to create a value-based Internet of Things (IoT) by combining RFID technology and the blockchain. This creates a new standard and value-based internet of things with believable, and traceable business models that…
What is Qash Coin? QASH Coin Price What is Cash | A Quick Overview The goal of the company Quoine Liquid is to take their cryptocurrency Qash and make it the premier cryptocurrency for payment services in the financial sector. As more companies start to use and adopt Qash coin, the utility of Qash will…