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What is Zcash? Comprehensive Guide to ZEC
Founded in 2015 by Nathan and Zooko Wilcox, ZCash, headquartered in Denver, Colorado, offers a payment service that operates on a decentralized public blockchain without disclosing the sender, the recipient, and the value of transactions. Unlike Bitcoin, only those having the correct view key can see the contents. ZCash provides total control to its users as it is upon the users’ discretion whom they want to share the view key. Resultantly, ZCash transactions are not dependent on the cooperation of the other parties.
Built on rigorous science, with inputs from the researchers of MIT, Technion, Johns Hopkins, Tel Aviv University, and UC Berkeley, Zcash is confidential digital money with low fees. You can purchase the currency and trade it for other currencies on an exchange and spend, send, and receive it via mobile phone, desktop, or a digital wallet. Regardless of what demographic or social strata you belong to, you have equal access to Zcash like anyone else.
ZCash Pros & Cons
Pros
One of the most trusted protocols for preserving anonymity and protecting privacy.
Complete fungibility or interchangeability makes it efficient and flexible.
Supports democratic mining
Cons
Being a privacy coin, its utility often comes under suspicion.
Being designed primarily for Linux users, Zcash is limited to CPU mining.
How Does Zcash Work?
There are two types of addresses in Zcash. The private addresses are known as z-addresses, while a transparent address is known as the t-address.
Four types of transactions happen between these two addresses.
- A private transaction is one that happens between two Z addresses. Since such a transaction happens on the public blockchain, it is known to have occurred and the fees were paid. But owing to the zero-knowledge proof encryption, the transaction amount and the memo fields are not visible.
- A deshielding transaction is one that happens between a Z address and t-address. It is called a deshielding transaction because such transactions meet the needs of auditing and compliance. Users may perform such transactions to meet payment disclosure obligations through view keys.
- The opposite of the deshielding transaction that happens between a z-address and t-address is known as the shielding transaction.
- Users often assume that all transactions on Zcash are mandatorily private. This perception gives rise to doubts about Zcash’s trustworthiness. However, that is not the case. A ‘t-address’ to ‘t-address’ transaction in Zcash is similar to that of a Bitcoin transaction. It is fully public in the sense that the sender, the receiver, and the transaction value – all three are publicly visible.
The transaction fee in Zcash is low, 0.001 Zcash. A transaction in Zcash will expire and funds unencumbered if no one mines it within 50 minutes or 20 blocks.
Advantages of Zcash
Maintaining user privacy and anonymity is undoubtedly the biggest standout feature of Zcash.
Zcash leverages the zK-SNARK zero-knowledge proof technology which allows the nodes of the network to verify transactions without having to reveal any sensitive information about the transaction. However, this does not make the role of a public blockchain redundant. Zcash transactions still need to be relayed through a public blockchain. But unlike pseudonymous cryptocurrencies like BTC, ZEC transactions do not reveal the sending and receiving addresses or the amount being sent. To add transparency and to comply with the regulatory requirements Zcash transactions can be revealed for auditing or regulatory compliance.
ZEC coins are much more flexible and effective than many other relatively popular crypto coins because they are fungible or completely interchangeable. Coins like BTC, for example, come with their prior records and stamped history. But, in ZCash transactions, the previous records have no bearing upon its present-day efficacy.
ZCash is ASI-resistant, where ASIC stands for Application-Specific Integrated Circuits. Being ASIC-resistant implies that ZCash does not mandate a heavy dependence on expensive hardware, and graphic cards. It lowers the barrier to entry and makes mining more accessible and democratic. However, the ASIC community has voted against prioritizing this feature any more than it already is.
As far as ZCash protocol’s consensus mechanism is concerned, it has altered the Proof of Work mechanism and made it Equihash PoW. Equihash PoW makes equipment optimization possible. Along with the merits of the protocol, some roadblocks may limit the growth of Zcash and ZEC in the days to come.
Disadvantages of Zcash
The biggest strength of Zcash may turn out to be its biggest drawback as well. As a privacy coin, it is difficult to trace if someone is using ZEC to meet unscrupulous goals. There is no simple way of tracing the route a Zcash coin would travel. With reports of dark web marketplace AlphaBay contemplating the use of Zcash, the protocol’s trustworthiness remains to stay behind a screen of doubt.
Being designed primarily for Linux users, Zcash is limited to CPU mining. While there is no restriction on using it on Windows or MAC, CPU mining is not profitable with these mining options.
Now, that we know what works in favor of Zcash and what does not, let’s look at how the protocol works to have a better understanding of where the opportunities to overcome the barriers lie.
Zcash (ZEC) Tokenomics
Zcash was first released on October 28, 2016. Bitcoin’s codebase was used as a building block to develop the Zcash protocol. The circulating supply of Zcash is 11,035,031 ZEC coins or a little more than 11 million, and the maximum supply is fixed at 21 million ZEC coins.
ZCash Ratings
Supply
Maximum Supply: 21,000,000 ZEC coins
Network Speed
Rating: Low – Medium
Transactions per second: 6-26 transactions per second
If the network is processing private transactions only, the speed is around six transactions per second. If no additional anonymity is used by the transactions filling the block, the speed goes up to 26.
Liquidity
Rating: Low – Medium
Reason: On most of the major exchanges, the liquidity rating of ZEC is less than 500 on a scale of 1 to 1000.
FAQ
There is some anecdotal evidence, as mentioned earlier, of dark web marketplaces like AlphaBay contemplating the use of Zcash, there is no evidence of its widespread use for illicit purposes.
The European Union Agency for Law Enforcement Cooperation, popularly known as Europol, has flagged Monero and Zcash, along with Bitcoin, for use in internet-based crime.
No. ZCash is digital money built for internet and mobile transactions.
There are quite a few cryptocurrency ATMs, spread across different locations globally, through which you can buy Zcash for cash. Use any ATM locator or tracking service to find out if there is any such ATM in your vicinity.
Yes. It is possible to mine Zcash through Pool mining and Solo mining
