Updated: Dec 21, 2019
Zcoin is the first decentralized, digital currency to fully implement the Zerocoin protocol, and primarily focuses on the “privacy” and “anonymity” aspects of a cryptocurrency transaction. The coin utilizes zero-knowledge proofs to enable anonymous transactions. Zcoin is identified by its ticker symbol XZC. It is important to understand that Zcoin is not a fork of Zcash.
This guide will discuss what Zcoin was initially designed for, the team behind it, the way it works, and the various uses and applications.
What Is Zcoin Designed For?
The key characteristic of cryptocurrencies to offer anonymity is often spoken along with Bitcoin and Ethereum. However, this is a major misconception because these coins cannot facilitate 100% anonymous transactions.
Zcoin hopes to change this by offering more anonymity and privacy, in all transactions while retaining the numerous other advantages of crypto coins, like Bitcoin. XZC was designed to prevent network users from tracing their transaction history, which is a feature not prevalent in most cryptocurrencies.
The coin is intended to address the privacy risks, which are present in transactions done on the Bitcoin blockchain, by effectively masking the identities of users through multiple innovative technologies.
Who Is the Team Behind Zcoin?
Zcoin was initially started as Moneta, and made its first appearance in December 2015, with the release of its testnet software. The coin was later renamed Zcoin, made live in September 2016. It was created by Poramin Insom who also serves as the core developer. Insom is the founder of Vertcoin (VTC). Roger Ver of Bitcoin and Tim Lee became Zcoin’s initial investors.
How Does Zcoin Work?
Zcoin enforces zero-knowledge proof, which means that users can send and receive crypto coins without disclosing their transaction details, and the specificity of coins belonging to them. In the Zerocoin protocol, each coin undergoes a cycle of burning and minting, which ensures that all history of that particular coin is effectively erased. This eliminates any chance of identifying or linking a coin to its previous owner and transaction.
XZC coins are spent and destroyed through the RSA cryptographic key, enabling the creation of Zerocoins. These newly minted coins are created at a transaction cost of 0.01 XZC. When a user makes a transaction, Zerocoins are used instead of XZC. The transaction effectively obscures the Zcoin attached to which transaction.
To keep this obscuration secure, it is recommended that users never spend the exact amount of Zerocoins they obtain through XZC. Also, users should wait a minimum of one hour before spending their Zerocoins.
Currently, users can mint Zerocoins in predetermined denominations of 1, 10, 25, 50 and 100. This is because individual mined coin numbers regardless of whether they are random or unique, can be used to trace XZC. The team has plans for adding a 1000 denomination as well.
Zcoin can be mined through a Proof-of-Work MTP mining algorithm. The CPU-friendly algorithm is ASIC resistant, which means that it can be mined using a mining pool or a home computer. The block processing time is 5 minutes, and there are 25 coins awarded to each block. This reward is halved in certain set times until the full supply of XZC can be minted.
What are Current and Future Applications of Zcoin?
XZC is accepted on several cryptocurrency exchanges, including Binance, CHAOEX, Bittrex, and Huobi Global. More than $400,000 worth of this coin is traded daily, and common trading pairs include BTC, XRP, and ETH. Some exchanges offer trading pairs with fiat currencies like USD and EUR as well.
Presently, Zcoins are useful only as an anonymous way of sending money over the internet. You can easily mint coins and spend them in a private transaction. When you want to make another transaction, all you need to do is mint the coins again.
Zcoin seems like a viable solution for achieving anonymity and privacy in a world where concerns over anonymous crypto transactions are continuously growing. However, Zcoin is not without its set of challenges posed by malicious entities, which aims to bypass the coin’s deployed security.
The coin has a promising future and can benefit in leaps and bounds from a skilled team and a loyal community. The development team has been relentlessly adding new features and improving XZC promptly. This shows in the coin’s upward trend as well.
A detailed look at the roadmap suggests numerous innovative and promising features that are going to be deployed shortly, such as RAP: Receiver Address Privacy, Encrypted Node Communications, and Native Mobile Wallet Support.