What is Zcash?
The popularity of privacy-centric cryptocurrencies has increased drastically with time, as most of the investors have realized that the anonymity is not able to offer proper security for those who are focused on privacy. Considering this, there are an array of advance cryptocurrencies that made their way to the market and once such digital currency is Zcash (ZCH) that came into existence on 28th October, 2016. Emphasizing on identify protection and privacy, ZCH still maintains the features of public blockchain with 100% anonymous transactions.
How is Zcash Different From Other Cryptocurrencies?
Zcash is an open source, decentralized electronic currency that provides users transaction transparency and most importantly, the much-needed privacy. When the transactions are showcased on the ZCH blockchain, details associated with transactions such as the amount, the recipient and the sender remain private. The currency brimmed out of Zerocoin project, with an idea to enhance privacy for cryptocurrency users, precisely to overcome the drawbacks of bitcoin. The operational structure of ZCH is crafted with the help of Bitcoin Core software’s codebase.
The improvement that ZCH delivers over the powerful bitcoin is based on the fact that it is backed by advance privacy techniques known as Zero Knowledge Proofs (ZKP) that ensure validity of different financial transactions but without disclosing any relevant information. The developers have created the currency’s own ZKP system denoted as zk-SNARKs, which has significantly contributed towards the Zcash price.
What is zk-SNARKs?
Zero Knowledge- Succinct Non-Interactive Argument of Knowledge (zk-SNARKs) is a form of cryptography that enables members of the network to have a proof of financial transactions without providing any basic details about them. Using this, a sender is able to prove a transaction (secret key), which will allow them to spend their ZCH, but without having to disclose that secret key to the entire world.
In case of Bitcoin’s network, anytime you make use of the bitcoins, you need to generate reference about previous transactions (information sent to the address) to come up with a proof of owing the bitcoins that you are about to send. In addition to that, you need to include address of the recipient and then secure the information using private key.
When Zcash wallet is used, the transactions are shielded because proofs are created to generate validity of recipients of previous transactions, and the output value should be equivalent to the total input value from the existing transactions. So, as compared to Bitcoin, in ZCH the person whom the sender is sending the currency or the sender, both stay opaque, making transaction not only private but anonymous too.
Things To Consider While Using Zcash
There are three important things that you must consider when you are about to have a Zcash wallet and these are:
- The currency implements a relatively new version of cryptographic algorithms. Like most of the new technologies, its own proprietary program zk-SNARKs is being tested, developed and explored. This is something that triggers the possibility of unexpected vulnerabilities that the users need to beware of.
- Zcash is equipped with one of the finest privacy tools, however this is not programmed anonymous by nature. Further, shielding transactions from the blockchain happens to be an optional feature, so only a small portion of the users might reap maximum benefits of the ability.
- Unlike the common cryptocurrencies, a company has given birth to Zcash. Zooko Wilcox known as the developer of the currency works as the CEO of the firm. About 10% of the currencies earned through Zcash mining lies in the hand of stakeholders under the “Founder’s Reward” program.
Is Zcash Profitable Investment?
As of now, the Zcash project has acquired $3 million dollars from over 35 investors, out of which 2 million accounts from mere 17 investors. Since, the coins of ZCH are not pre-mined as other Altcoins, instead they are forwarded through the founder reward program. The monetary base of the currency is similar to that of Bitcoin, but out of maximum value of 21 million currency units can be mined with the help of Zcash mining, 90% goes to the miners and the rest 10% (2.1 million) stays with the founders of the company for about four years.
Investors gain 16.5% from the founder reward and this means the investors who had paid about 2 million where benefitted with 131,250 Zcash units and this evaluates to Zcash price of $15.24 dollar per units and this value increases when converted from Zcash to INR. After the span of four years, these rewards segment into blocks halves, as a result of which the 100% reward comes back to the miners. Such an approach is meant to incentivize the role of founders and the support that they provide to the company.
A brief comparison will help you analyze the difference of Zcash from Bitcoin (the core software of the currency).
- Information in Transaction: In case of bitcoins, the output and inputs are transparent including the address of sender and recipient, while in case of ZCH the information is heavily encrypted through advance coding systems.
- Ownership of Currency: zk-SNARKs is able to prove the ownership of coins without having to provide any details of previous transactions. For bitcoins, you have to reveal public key and then secure them using a secret key.
- Information Extracted by Analyzing Your Blockchain: The observes only get to see completely protected transactions and remain unaware of the valuable information contained in them, where the inputs had arrived and how they are moving. In bitcoin, if the address turns out to be public then tracing the same may not be such a difficult task.
What Might Be The Future of Zcash?
From where investors see it, there might be two turning points in the life of ZCH and these the development of cross-chain atomic swaps or teaming up with Ethereum. More information on this is mentioned below:
Cross-Chain Atomic Swaps
Also known as XCAT, these has been on the roadmaps of Zcash from a long period of time. This will enable instant trades between the blockchain and cryptocurrencies. Moreover, the company is working towards integration of Ethereum blockchain, focusing on inter-portability of common digital currencies and their blockchain.
Collaboration With Ethereum
Zcash’s team is working to introduce the privacy algorithms into the systems of Ethereum and this ongoing effort creates a vision of larger bride between Ethereum and Zcash blockchain. Moreover, such a collaboration will help the currency to flourish and make its presence count in the crypto marketplace. Similarly, the Ethereum community would be able to take advantage of this partnership, bringing the ultimate idea of private, configured globally scalable infrastructure for political and economical systems.