›   What is Zcash?

What is Zcash?

Zcash (ZEC) is a decentralized and open-source cryptocurrency that offers privacy and selective transparency of transactions. Zcash payments are published on a public blockchain, but the sender, recipient, and amount of a transaction remain private.

Zcash was the first open, permissionless cryptocurrency that can fully protect the privacy of transactions using zero-knowledge cryptography.

Zcash is based on peer-reviewed cryptographic research, and built by a security-specialized engineering team on an open source platform based on Bitcoin Core’s codebase (Hard Fork of Bitcoin). Zcash’s improvement over Bitcoin is the addition of privacy. Zcash uses advanced cryptographic techniques, namely zero-knowledge proofs, to guarantee the validity of transactions without revealing additional information about them.

Like Bitcoin, Zcash has a fixed total supply of 21 million units.

History of Zcash

The initial Zcash protocol was launched as “Zerocash” in 2014. Zcash was developed through a collaboration between the original Zerocoin researchers at John Hopkins University and a group of cryptographers at the Massachusetts Institute of Technology, the Technion – Israel Institute of Technology, and Tel Aviv University. Through this partnership they built upon and improved the original protocol by making it more efficient and private.

The Zcash Project was formally announced by ZECC CEO Zooko Wilcox-O’Hearn on January 20, 2016 as in evolution of the existing Zerocoin Project (the work of Matthew Green, Ian Miers, Christina German, Aviel D. Rubin, at the John Hopkins University Department of Computer Science, Baltimore).

With the new Zerocash protocol, users can make direct payments to each other with a vastly more efficient cryptocurrency protocol that also hides the amount of payment, not just its origin.

Why does Zcash have value?

At the time of this writing, Zcash was trading at $328.49 each, with a total market capitalization of $509,965,352 million making it the 12th highest valued cryptocurrency on coinmarketcap.com.

So what gives it value?

Zcash encrypts the contents of shielded transactions. Since the payment information is encrypted, the protocol uses a novel cryptographic method called zk-SNARK (zero-knowledge proof construction) to verify their validity.

These constructions allow the network to maintain a secure ledger of balances without disclosing the parties or amounts involved. Instead of publicly demonstrating spend-authority and transaction values, the transaction metadata is encrypted and zk-SNARKs are used to prove that nobody is cheating or stealing.

Zcash also enables users to send public payments which work similarly to Bitcoin. With the support for both shielded and transparent addresses, users can choose to send Zcash privately or publicly. Zcash payments sent from a shielded address to a transparent address reveal the received balance, while payments from a transparent address to a shielded address protect the receiving value.

Fungible Cryptocurrency

Fungibility is an important function of currency, it’s considered by many to be an extremely important aspect for the future of cryptocurrencies. Because Bitcoin is pseudo-anonymous, the altcoin space is trying to fill the role of private zero-knowledge transactions.

In order to remain equally interchangeable, units of cryptocurrency must be unlinked from their history so that one unit is as good as any other unit. Zcash brings fungibility to cryptocurrency by unlinking shielded coins from their history on the blockchain.

Zcash is considered by most in the cryptocurrency community as a truly fungible coin.

Enabling New Applications

Zcash is pioneering the use of zero-knowledge proof by applying cutting-edge cryptography to blockchain technology that allow fully encrypted transactions to be confirmed as valid. This new property will enable entire new classes of blockchain applications to be built.

Upholding Confidentiality

In the pre-digital currency world, both individuals and enterprises could justifiably assume their financial transactions would be kept confidential. With Zcash, users can enjoy the advantages of a public blockchain, while still being sure that their private information is protected.

Zcash Mining

The first mining of Zcash occurred on October 28, 2016 with the release of 1.0.0 “Sprout”.

Zcash uses Equihash, which is an asymmetric memory-hard proof of work (PoW) algorithm. It relies on high RAM requirements to bottleneck the generation of proofs, making Application-specific integrated circuit (ASIC) development unfeasible, much like Ethereum.

Currently, Zcash mining is possible via Graphics Processing Unit’s (GPU rig) and Central Processing Unit’s (CPU). Zcash remains ASIC resistant because of the Equihash algorithm.

Not everyone has a computer, or the knowledge and patience to starting mining Zcash on their own, especially since there is no Graphical User Interface (GUI) Miner available yet. But if you do, this means the best hardware for mining Zcash tokens are standard GPUs and RAM. The hope is this will lead to a more decentralized set of miners.

There are two ways to mine Zcash:

1. You can build your own GPU rig or CPU
2. You can mine Zcash via cloud mining

Zcash’s motto is: All coins are created equal.

It’s through the Equihash algorithm that this is possible.

How to Buy Zcash

At this time, Zcash is available for purchase through five primary exchanges:

1. Shapeshift
2. Poloniex
3. Bittrex
4. Bitfinex
5. Bitsquare

Shapeshift

Shapeshift is currently the easiest way to buy Zcash.

Follow the steps at this link in order to complete a successful transaction.

Poloniex, Bittrex, and Bitsquare

If you would like to buy Zcash through Poloniex, Bittrex, or Bitsquare follow their instructions for setting up an account and depositing funds.

Each offers a different environment for acquiring Zcash in that you must buy it by fulfilling other traders’ sell orders. This means that prices may vary, sometimes widely.

If you are uninterested in trading Zcash and would prefer a platform that temporarily guarantees a certain purchasing price, then Shapeshift is a better alternative.

Zcash Wallets

There are three main types of wallets available to to download and hold your Zcash:

1. Web Based Wallets
2. Paper Wallets
3. Cold Storage Wallets

Web Based Wallets

Full Node

Zcash for Windows is not yet officially supported, and there is no official release date of a Zcash node for Windows. However, developer @radix42 has produced an experimental build of a Zcash node running on Windows that can be combined with the Zcash desktop GUI wallet to produce a workable combination for desktop users and developers to use.

Note: The Zcash Node + GUI Wallet on Windows is currently very new and in an experimental phase. Users should be cautious if they use larger amounts of Zcash.

Full instructions on how to run a Zcash node and the Zcash desktop GUI on Windows can be found here.

GUI

This wallet is most suitable for users and miners who work on desktop systems and wish to have full control of their Zcash private keys. GUI wallet features include:

Balance/fund amounts
History of transactions
Management of Zcash address
Ability to send Zcash

Complete information on how to install the Zcash Desktop GUI can be found here on GitHub.

Users who are less experienced with working on a command line, may instead use this user-friendly installation guide and usage guide.

Cockpit UI

This wallet allows users to access their Zcash wallet remotely via a Web UI. It is ideal for managing multiple systems mining Zcash. UI wallet features include:

Balance/fund amounts
History of transactions
Management of Zcash address
Ability to send Zcash

Complete information on how to install the Zcash Desktop GUI can be found here on GitHub.

Paper Wallet

Jaxx Zcash Wallet

On November 1, 2016 Decentral, the creators of the Jaxx wallet, announced Zcash’s integration with Jaxx was officially complete.

Jaxx is a multi-token blockchain wallet that provides a unified experience across 9 platforms and devices including Windows, Apple, Linux desktops, Apple and Android mobile devices and tablets, as well as Google Chrome and Firefox extensions.

The Jaxx wallet enables crypto-to-crypto buying and selling with frictionless in-wallet conversion. Users are always in control of their keys and Jaxx never holds nor has access to customer funds.

Cold Storage Wallet

Hardware Wallets**

We always recommend using a hardware wallet like the Ledger Nano S or the TREZOR.

TREZOR

TREZOR wallet announced in January of 2017, that it’s 11.1 Wallet Release and 1.4.2 Firmware release will support Zcash.

Currently, TREZOR Wallet supports T-addresses only. This is due to the hardware limitations of the device and the requirements of Z-addresses.

The Ledger Nano S does support Zcash. When you receive your Nano S, you only have apps for Bitcoin and Ethereum installed. To move your Zcash onto the Nano S, first make sure your firmware is updated to the latest version; then open the Ledger Manager, find the Zcash app, and download it.

Zcash vs Bitcoin

One of the more annoying side effects of transacting in Bitcoin is that your wallet address essentially also compromises your privacy.

If you give me your Bitcoin wallet address to send you a payment, you immediately compromise the privacy of that particular wallet amount. Because Bitcoin’s blockchain is a matter of public record, I can see the corresponding wallet’s balance, both now and in perpetuity.

The Bitcoin community has attempted to solve these problems by introducing ‘mixing’ features. A more detailed explanation can be found here.

While Zcash thrives in terms of privacy against Bitcoin, in just about every other major category aside from transaction including exchanges, price, acceptance, developer team, wallets, and liquidity – Bitcoin is the more desirable option.

You can find a more detailed comparison in a previous Zcash vs. Bitcoin post on our site here.

This is especially true in terms of security, perhaps the most valuable characteristic of a cryptocurrency. There is no altcoin can match the security Bitcoin provides it’s users.

Zcash vs Bitcoin

Zcash vs Bitcoin. These two cryptocurrencies are often compared and contrasted for their privacy differences. Here is a rundown of their differing features.

Exchanges

Zcash, being a niche alternative currency, is not as easily purchased as as Bitcoin. Where Bitcoin can be bought on local bitcoin, ATMs, and from friends, the purchasing of Zcash is mostly limited to major exchanges. The most noteworthy to mention here are: Poloniex, Bittrex, Yuanbao, BTER, Kraken, Bitfinex, HitBTC, and Yunbi. All in all, the exchanges that sell Zcash are extremely like to sell BTC as well, and most likely more of it.

Winner: Bitcoin

Price

Zcash’s price experienced a recent upswing around the time of the Consensus 2017 conference in New York. But Bitcoin has experienced an incredible surge of almost 300% since the start of this year.

So what does that mean? Essentially, Bitcoin has long established itself as the solid gold-stardard of the crypto world, whereas Zcash is an altcoin that is still quite volatile. If you’re looking to risk a buck for large returns, Zcash might be more promising that Bitcoin. But if you’re trying to hedge your money against Fiat currencies, Bitcoin is your coin without a doubt.

Winner: Bitcoin

Speed

Considering that Zcash is a Bitcoin fork, the confirmation process is largely the same. However, Bitcoin’s current saturation seems to give Zcash the edge regarding transaction speeds.

Winner: Zcash

Security

Zcash’s main claim to fame is its anonymity. Although Bitcoin is sometime used for illegal purchases all over the globe, it is actually only pseudonymous, not anonymous. This means that Bitcoin transactions can be seen and tracked by anyone, but that you will know who is making those transactions is not very likely. Pseudomity is mostly good enough to make private transactions over the internet, especially when the chance of somebody looking for your activity is low. However, if somebody is willing to invest a significant amount of resources in tying the wallet to your identity, they will be able to do so with enough time and money.

Zcash, on the other hand, is anonymous by design. This means that in principle, transactions are not open to the public, meaning that your identity cannot be tied to the activity of your wallet in principle.

In terms of security, privacy is just one facet to look at. Another, and often more common interpretation of ‘security’ with regards to cryptocurrencies, is the strength of the network against malignant users. However, considering that Bitcoin’s widespread use has more miners verifying transactions than in any other Blockchain, there really is not much of a debate in this regard. So in terms of privacy, Zcash takes the cake.

Winner: Zcash

Acceptance

As Zcash is relatively new compared to Bitcoin, which has been around since 2009, it is clear that Bitcoin is much more widely accepted than Zcash. However, we find the use of Zcash is gaining significant traction. Especially now that major Wallstreet players have taken a significant stake in the anonymous currency, we might find the acceptance to rise accordingly. But for now, and the near future, Bitcoin reigns supreme.

Winner: Bitcoin

Developers

Zcash is a fork of the Bitcoin Blockchain, so a lot of the groundwork is the same. However, the Bitcoin core team has a team of developers with an unparalleled amount of experience.

The Zcash project is open-source, and can be found on Github. And although the project is spearheaded by a competent project manager, Zooko Wilcox, it is hard to make the case that Zcash developers are more competent that the tried and tested contributors over at the Bitcoin project.

Winner: Bitcoin

Wallets

When it comes to wallets, Bitcoin is unparalleled. You’ll find that Zcash mostly only has the local wallets (Bitcoin’s core wallet analog), along with a few online wallets, hardware wallets and exchanges.

What’s special about Zcash as an altcoin is that it’s supported on popular hardware wallets like Trezor and Ledger.

Bitcoin, on the other hand, has countless hardware wallets manufacturers, HD wallets (wallets with detailed functions), and an unparalleled number of online wallets and exchanges. Unless Zcash experiences a sudden surge of consumers, this will most likely remain unchanged.

Winner: Bitcoin

Liquidity

Bitcoin is by far the most liquid cryptocurrency in existence. This is simply because most crypto markets require you to trade Bitcoin for altcoins. So, even if Zcash had an unusually large liquidity compared to other altcoins (which it doesn’t), then it would still necessarily be a subset of the liquidity of Bitcoin.

Winner: Bitcoin