Updated: Dec 20, 2019
Zcash is a decentralized, privacy-protecting, peer-to-peer digital currency, which was created as a Bitcoin fork. Like, Bitcoin, Zcash also has a hard limit of 21 million ZEC tokens. However, this is the extent of the comparison because everything else about Zcash is different. Zcash transactions can be shielded through a zero-knowledge proof, called zk-SNARKs or stay transparent like Bitcoin.
This guide will explain why Zcash is designed, the team behind it, how the coin works, and its various uses and applications.
What Is Zcash Designed For?
Zcash was designed as an improvement over Litecoin and Bitcoin. The makers wanted a cryptocurrency with total anonymity, by enabling zero-knowledge transfers and enhanced privacy, which could set the digital currency separate from existing options.
Zcash was created to address privacy issues in Bitcoin, where data and identity are made public. Savvy criminals could gain some measure of anonymity on the platform by using coin mixers and IP cloaking, leaving the average user with no privacy. This impacted businesses since information could not be kept confidential and were vulnerable to attacks.
Zcash attempted to solve transparency and privacy issues by creating a digital currency, which acted more like a fiat currency for first and third world countries.
Who Is the Team Behind Zcash?
The Zcash Company, founded by Zooko Wilcox-O’Hearn created the Zerocoin protocol in 2016, which later became the Zcash cryptocurrency. The team has a mix of scientists, engineers, designers, and business pros from universities across the globe, like MIT, Johns Hopkins, and Tel Aviv University.
Zcash did not have an ICO or a crowd sale. It was created through private investments from renowned individuals like Roger Ver (early Bitcoin investor), Naval Ravikant (Angel list founder), Erik Voorhees (Shapeshift founder), Fred Ehrsam (founder of Coinbase), and Barry Silbert (Digital Currency Council founder.)
How Does Zcash Work?
Zcash is significant because the crypto coin works hard to provide a secure transportation layer for the participant’s data and identity. It can be best explained as the HTTP of money. Think of it as an armored car carrying your data in a box. The armored car is the added layer of protection that prevents another from viewing the content of the box while providing safe passage.
zk-SNARK (Zero-knowledge Succinct Non-interactive Arguments of Knowledge) is the answer to mining issues because if all aspects of a transaction are hidden, then miners cannot verify it. This scientific breakthrough allows the transactions to be validated without the need for disclosing all the details of a particular action.
zk-SNARKs are mathematical proof constructs that ensure all information regarding the sender, receiver, and amount is encrypted. It also prevents double-spending, which is a critical element to any successful cryptocurrency architecture.
Further Zcash makes privacy optional through its selective disclosure function. Transactions have a customizable memo field that can be used to divulge additional information or transaction data, which is viewable only to the recipient.
ZEC can be stored in the Linux command line client, zcashd or hardware wallets, like Trezor and Ledger.
What are Current and Future Applications of Zcash?
ZEC can be purchased on most major exchanges, including Binance, Bittrex, Coinbase and Kraken among others. Zcash is coined by its developers as money with a growing number of places to spend it.
It can be used for virtually everything that hard cash can buy, such as electronics, real estate, groceries, and even donations to nonprofits. It is accepted in the following categories as a payment mode:
Agora, BitcoinCards, Bookcoin, Crypto Bantam, Open Bazzar among others
CoinTippy, LovingDomains, Living Room of Satoshi, and Aave Pay among others
Burrell Law, Ratio Legal Services, and Migronis Citizenship among others
Atlanta Dental, Medical Dent Dentistry, JCM Pharmacy, and others
HighFlow, Retro Towers, Gemma LED, and Direct Voltage among others
Bitcoin Venezuela, Blender Foundation, AntiWar, and Fight for the
Future accept ZEC
ZEC can be used by institutional investors and family offices for investment purposes as well. Grayscale Zcash Investment Trust and Morgan Creek Digital Asset Fund are investment vehicles, which allow investors to enjoy the benefits of Zcash without having to hold it themselves.
The Zcash team is currently working on consecutive versions of the ambitious project, Sapling, which is focused on improving shielded transactions for better performance. It involves enhanced shielded keys and decoupling of zero-knowledge hardware proof from transaction signature hardware.
Zcash’s biggest competition is Monero, PIVX, and Dash that approach private transactions in their unique way. However, for the most part, ZEC has secured a nice little consumer base for itself. It has had a great run and seems to be unaffected for the most part by coin-specific news. The future looks promising for this privacy-enabling crypto coin.