It’s true that cryptocurrencies are becoming more and more popular, but it’s also true that a large number of cryptocurrency projects are following a path in which certain values are sacrificed in exchange for profitability or growth. Today, it’s probable that one area that routinely is sacrificed is privacy.
This was the reason for the creation of ZCash (ZEC), the first cryptocurrency that, for several years, has been striving to maintain maximum security, privacy, and anonymity for its users using high-level cryptographic technology.
Since everyone is not comfortable with the fact that their cryptographic addresses, their balance, and the data of each transaction are publicly available to everyone, ZCash is presented as an excellent option to solve these problems.
Let’s explore ZCash and see what its benefits are for us common cryptocurrency users.
What is ZCash?
ZCash is a cryptocurrency based on a decentralized blockchain that was born as a fork of Bitcoin, with the objective of providing a privacy solution for the crypto ecosystem.
This cryptocurrency guarantees the anonymity of its users and the transactions that occur on its blockchain, using a model based on “zero-knowledge proofs” to verify transactions while at the same time hides its users’ personal information as well as the data of their operations.
Although it has many similarities to Bitcoin, ZCash offers greater anonymity, privacy, and fungibility than its big sister: ZCash has continued the model on which Bitcoin is based by using a public ledger, but with the important difference that it encrypts information about transactions and users.
This means that the transaction log is only visible to authorized users, thus solving a major problem for thousands of cryptocurrency users around the world who care about the security of their data and their privacy when operating in the crypto world.
History of ZCash
ZCash began in 2013-2014 as a joint venture between Johns Hopkins University students Matthew D. Green, Ian Miers, and Christina Garman.
They were the minds behind the design of Zerocoin, a protocol to improve the privacy and anonymity of Bitcoin. However, this first project had several points of failure.
Some months later, and in order to solve several of Zerocoin’s problems, they implemented the Zerocash protocol, which already featured the use of zk-SNARKs to increase the overall performance of this new cryptocurrency – more on this later.
Thanks to this, users could make direct payments to each other using a much more efficient cryptographic protocol that concealed not only the origin but also the amount of the payments.
It was then that on January 20, 2016, Zooko Wilcox-O’Hearn would make the official announcement presenting ZCash as a fork of Bitcoin to which support for the Zerocash protocol would be added. The rest is recent history.
How does ZCash work?
Basically, ZCash uses two types of addresses to carry out transactions, private addresses identified with the letter “z” and public addresses identified with the letter “t”.
Any transaction of the type z -> z will appear reflected in the blockchain, so it’ll be possible to know that this transaction was actually carried out.
However, the addresses, the transaction amount, and the memo field will remain encrypted and won’t be publicly visible, unless the users involved so decide.
This means that the participant of a transaction can choose to disclose the z address and details of that transaction with other people. This is possible thanks to the use of view and spend keys, which enables the display of transactions to trusted third parties for various purposes, such as audits, for example.
On the other hand, transactions of the type t -> t, work in the same way as transactions on the Bitcoin network.
Note that both z and t addresses are interoperable, so it is possible to transfer ZEC between z addresses and t addresses without any problem.
zk-SNARKs, the key protocol behind Zcash
zk-SNARKs means “Zero-Knowledge Succinct Non-Interactive Argument of Knowledge,” and it has to do with the elaboration of a test in which the possession of certain information can be demonstrated, without revealing the information as such, and without the existence of any type of interaction between users of a given transaction.
The main feature of zk-SNARKs is that their generation and verification are very efficient since their computational cost is very low. This increases its execution speed while promoting scalability.
Equihash, a different PoW algorithm
Although originally ZCash used the same algorithm as Bitcoin (SHA-256), it was changed in 2014 to Equihash.
Equihash is a Proof of Work (PoW) algorithm based on a cryptographic and computing problem called the Generalized Birthday Problem. This problem refers to the probability that in a group of 23 people there is a 50.7% probability that at least two of them have a birthday on the same day.
Based on this math problem, Equihash provides a very efficient verification that is ideal for thin clients on less powerful devices. At the same time, its high memory consumption makes it very resistant to specialized mining with ASICs and FPGAs, preventing the centralization of mining power by powerful groups.
What are the benefits of ZCash?
Although ZCash inherited some of the essential features of Bitcoin, it also brings some unique benefits that allow it to gain some ground against its elder sister. These are the most important:
Focus on anonymity
The Zero-knowledge Proof technology used by ZCash, which allows the network to process and verify transactions without revealing their information, such as payment addresses and the amount of the transaction, is a great advance in the crypto space.
In addition, the use of two different types of addresses – private and transparent – and their ability to interoperate with each other, provides great versatility to this cryptocurrency.
A currency that you can exchange for another that has exactly the same characteristics, regardless of whether it was used in legal or illegal operations – since it is impossible to trace – is a fungible currency.
The advantage of this is that if someone else did something “bad” with the coins you now have, it doesn’t necessarily affect you.
Maintaining a good speed when processing transactions as the volume of these on the network increases, is a determining factor for a cryptocurrency to be considered as money for daily use. ZCash has managed to solve this problem with great efficiency, but it is something that Bitcoin is still struggling with.
Very, very low fees
Carrying out money sending and receiving transactions with ZCash is very affordable since the average transaction fee is very close to zero; in fact, most of the time the transactions have a cost close to 0.0001 ZEC. Even in situations where the network experiences a high volume of transactions and the blockchain is very active, fees don’t increase significantly.
Disclosure of information
The sender or recipient of a transaction have the option to disclose specific details of their operations to other people
Thanks to the use of view keys, users can reveal their information to a third party in cases of regulatory audits. This allows them to maintain their privacy while staying within the margins of the law.
Another very useful feature of ZCash is its ability to send encrypted memos. This is especially useful for including messages such as instructions for the use of funds.
Since the ZCash blockchain is truly decentralized, the network is “naturally” very resistant to censorship and cyberattacks. Nor is there a central authority that has influence over the network operation.
Expiration of transactions
ZCash allows transactions to have an “expiration date” in order to minimize the impact on the network of unexploited transactions. By default, transactions that have not been processed after 50 minutes, will expire automatically and the funds will be returned to the sender.
Another interesting security feature of ZCash is that it supports transactions that require multiple signatures. This implies that some transactions, under certain circumstances, may require the authorization of two or more parties before funds can be sent. However, multi-signature transactions cannot be private, only public.
Acceptance in the real world
ZCash is a viable monetary alternative accepted by many merchants around the world, including service providers, vendors, retailers, and NGOs. You can find more information about this at the following Pay with ZCash link.
Being one of the top cryptocurrencies on the market, ZEC is widely available in the main cryptocurrency exchanges and brokers that you can find on the Web. On top of that, it is easily accessible from multiple platforms, both desktop and mobile.
The evolution of the crypto ecosystem doesn’t stop, and as problems arise throughout this process, it’s important to focus on solutions with an open mind.
ZCash is one of those projects that offers practical solutions to problems that have arisen; a cryptocurrency to protect the sensitive data of its users without the need to trust any centralized data center or custody mechanism, in addition to being a guarantee of privacy.
When creativity is coupled with a vision, and people’s needs are taken into account, almost anything can be successfully accomplished. ZCash is the current proof of this.