Zcash is a decentralized and open-source cryptocurrency that offers strong privacy protections. It has been on the market for just over two years, but it still hasn’t reached its full potential.
ZCash is a decentralized and open-source cryptocurrency that allows users to keep their transactions anonymous. It was created in 2016 by an American programmer named Zooko Wilcox-O’Hearn. The currency has been growing in popularity, with the price of one coin reaching $1,500 on November 13th, 2017.
Blockchains have been hailed as the next big thing in cutting-edge technology, much as the personal computer and the internet transformed how people viewed computing and information exchange. Despite emerging from a new era, there is no denying that blockchains have certain fundamental faults that have yet to be addressed. Two of them are the strange instances of fungibility and privacy, which we’ll learn more about in our ZCash review.
However, the advent of ZCash may put an end to those remaining concerns. ZCash is one of the first blockchains devoted to eliminating the traceability aspect of public blockchains. It was created as a decentralized, privacy-first blockchain to enable virtually anonymous bitcoin transactions. Instead, it claims to provide users maximum anonymity wherever they transfer money, as well as a lot more as a side consequence. If you’re interested in learning more, check our ZCash review.
What Is ZCash and How Does It Work?
ZCash was first launched in 2013 as ZeroCoin, an experimental privacy extension to the Bitcoin blockchain that subsequently spun off into its own network through a hard split. This is because Bitcoin’s creators deemed it impossible to include ZCash’s zk-SNARKs encryption and its “zero-knowledge proofs” onto the Bitcoin network. ZCash, on the other hand, uses a lot of Bitcoin’s core technology but adds their own privacy layers and innovative solutions on top of it.
When compared to Bitcoin, ZCash is perhaps a better day-to-day money since it has a faster block time of 1.25 minutes vs Bitcoin’s 10. Overall, ZCash’s primary aim is to address two major concerns with Bitcoin and other UTXO-based ledgers or public blockchains: the possible lack of or dubious fungibility, as well as the seeming lack of any privacy protections, given that every single transaction can be tracked.
What Problem Does ZCash Hope to Solve?
As we said previously in our ZCash review, their blockchain aims to address two major problems that plague most blockchains today. It would first and foremost be a question of fungibility.
Fungibility, by definition, implies that a specific item may be exchanged for another depending on its worth. A pound of gold bars, for example, is worth the same as a pound of gold coins. Using this example, gold is intrinsically fungible since it has the same value as other metals.
Because most cryptocurrencies are fungible, it doesn’t matter whether they’re in a different form or condition. One entire Bitcoin, for example, is worth the same as a collection of fractional Bitcoins that make up a full unit. However, because Bitcoin is traceable, there have been concerns about this. This implies that a person requesting 1 Bitcoin may refuse 0.25 Bitcoin because they believe it was spent in illegal behavior, for example. As a result, the argument rests on the fact that Bitcoin isn’t always fungible.
The second point to consider is privacy. Most blockchains, contrary to common perception, are not fully anonymous. In reality, they’re at best pseudo-anonymous, since all of your transactions are still recorded on a public ledger. However, since anybody can see your address and the amount you’ve deposited, this full openness comes at the expense of privacy. They may be able to track you down as a result, even if they aren’t sure it’s you.
What Makes ZCash So Different?
So far in our ZCash study, we’ve seen a clear correlation between privacy and fungibility. If other blockchain users can track your transactions using specific addresses, you can’t guarantee 100 percent fungibility. If they see that you’ve sent cryptocurrency to someone they don’t like, for example, they may withhold a portion of the coins you’re transferring. Since a result, the value of your crypto transfer may not always be what it seems to be, as it may be denied at any time.
How does ZCash deal with this in such case? ZCash’s Proof-of-Work (PoW) consensus includes privacy-enhancing zk-SNARKs by default (zero-knowledge succinct non-interactive arguments of knowledge). As a result, the network will be able to verify transactions without having to disclose any personal data. In other words, a user may demonstrate their ownership of particular data, such as secret keys, without exposing that data or requiring interaction between the prover and verifier.
Users will be able to witness this in action firsthand when they transfer bitcoins to one another. On the ZCash blockchain, there are two types of addresses to choose from: z-addresses and t-addresses. Users may send money from a z-address to a t-address since the two addresses are interoperable. The major distinction is their anonymity inside the ZCash blockchain network, which we’ll go over in more detail in our ZCash review.
Z-addresses are fully anonymous and private addresses. As a result, since ZCash’s blockchain is public, a Z-to-Z transaction will still show on the chain. This is to ensure that users are informed that a transfer has occurred and that the transaction costs have been paid. The two z-addresses, as well as additional data like the transaction amount and memo, are, nevertheless, fully encrypted. As a result, no one will be able to see who transfers how much money to whom.
T-addresses, on the other hand, function similarly to other blockchains. A T-to-T transaction makes the sender and recipient (through addresses), as well as the amount transferred and any other associated information, publicly visible on the ZCash blockchain. When completing a transaction, users have a variety of options for which address they want to use. Even though a z-address transaction is completely encrypted, the owner of that address might freely reveal all transaction data if they so choose.
What Does ZCash Have to Offer?
As we saw in our ZCash review, this flexibility makes ZCash extremely strong by giving consumers the option of opting out of maximum privacy. This is particularly useful for users who, for example, want to reveal their private z-addresses as well as all of their transaction data for audits or to comply with laws. Apart from that, ZCash has a lot more features and capabilities, which we’ll go over in detail in our ZCash review.
1. Transactions with Low Fees
ZCash wants you to use its ZEC cryptocurrency in the same way you would any other normal currency, such as making payments or sharing money with friends and family. To make this more accessible, ZCash’s blockchain allows for quick transactions with a charge of just 0.0001 ZEC tokens. This makes ZCash extremely affordable to use, and companies who want to accept ZCash as a payment method don’t have to pay any fees (read: fee-free).
2. Memos Encrypted
You may attach memoranda to a transaction, just as you do with a bank transfer, such as a brief message or a set of instructions. ZCash combines this with their emphasis on privacy to allow you to encrypt your transactions. For example, the Z-to-Z address transaction mentioned earlier in our ZCash study may transmit messages via those memoranda without being seen by anybody else on the ZCash blockchain. Users may also opt to decrypt and make those memos public.
3. Payment Disclosure and Viewing Private Keys
Users that want to transmit tokens via such private, anonymous, and “shielded” z-addresses may have their keys encrypted, according to what we’ve discovered so far. However, if users need to comply with laws or for auditing reasons, ZCash gives them the option of disclosing this information, along with any other transaction data. Currently, you (as the sender) cannot reveal the receiver’s z-address using this function, however in the future, ZCash will make it possible to see all transaction data in its entirety.
Expiration of the Transaction
Another unique element of the ZCash blockchain is the transaction expiry mechanism, which is intended to mitigate the effect of non-mined transactions. This manner, if a transaction hasn’t been mined after a certain number of blocks, it will expire and won’t be executed, without impacting the money itself. The ZCash network currently has a transaction expiry limit of 50 minutes or 20 blocks.
5. Transactions with multiple signatures
Multi-signature (or multi-sig) transactions, in which several signatures are required before a transaction can be verified, are natively supported by ZCash. For example, before a transaction can be confirmed by the network, two or three other users must agree to sign it off. Multi-signature capabilities are presently limited to public t-addresses. ZCash will, however, continue to work on expanding this functionality to include private z-addresses in the future.
What Are ZEC Cryptocurrency Tokens in ZCash?
The ZEC token is the ZCash ecosystem’s native cryptocurrency. ZEC is primarily a utility token that is used to maintain blockchain incentives, such as being awarded to miners or being used to pay transaction fees. Apart from that, ZCash has intended ZEC to be a viable alternative to other currencies, such as the US Dollar. ZEC tokens may therefore be used to make payments in a number of all-in-one crypto PoS systems, where ZCash’s ZEC has been incorporated.
ZCash’s ZEC coins, on the other hand, are not as volatile as some other cryptocurrencies. The price of a single ZEC token is approximately $214.07 at the time of this ZCash review, which is 96.40 percent lower than its all-time highs and 1,030.47 percent higher than its all-time lows. With a circulating supply of 11,618,169 ZEC tokens, ZCash’s native cryptocurrencies have a market valuation of $2,487,122,368, making it the world’s 48th most valuable coin.
In terms of tokenomics, ZCash is quite close to the Bitcoin code beneath it. It has a fixed supply limit of 21,000,000 ZEC, similar to Bitcoin’s BTC, and therefore shares Bitcoin’s deflationary economics. Block rewards are likewise halved every four years as so with ZCash. The halving, which took place in November 2020, reduced block rewards from 6.25 ZEC per block to only 3.125 ZEC at the time of writing this ZCash review.
What Will ZCash’s Roadmap Look Like in the Future?
In the past, ZCash’s network has been upgraded many times. The most recent was the Canopy upgrade in November 2020 (which happened to coincide with the halving), which was the blockchain’s fifth major update. The ZCash Open Major Grants (ZOMG), the Electric Coin Co., and the ZCash Foundation will each get 8% of all block rewards, while the remaining 20% will be divided as follows: 8% to the ZCash Open Major Grants (ZOMG), 7% to the Electric Coin Co., and 5% to the ZCash Foundation.
The NU5 upgrade was the next major update we discovered while researching this ZCash study. The planned update includes, among other things, an improved Halo 2 zero-knowledge proving system, cross-chain interoperability and compatibility with other blockchains, and planning for future scalability by incorporating layer 2 scaling technologies.
Conclusion of the ZCash Review
After finishing our ZCash review, we were pleased by how dedicated they are to preserving user privacy at all costs while introducing fungible value to cryptocurrencies, as well as a slew of other features. ZCash’s blockchain could gladly trade any number of ZEC tokens not just fast but also with minimal costs as a normal currency since it was built that way. In summary, it performs well, as one would expect of any currency.
Its blockchain, on the other hand, is not as strong or flexible as others. It doesn’t allow smart contracts or dApps, for example, and you can’t create anything on top of its blockchain that can be used for anything other than payments, like DeFi or NFTs. Our ZCash review shows that you may definitely remain anonymous on a blockchain when it maintains a steely-eyed commitment to offer the greatest privacy for anybody utilizing its blockchain… If you so want.
Review of Zcash
- Values of the Project
- Model of Tokenomics
- Sustainability in the Long Run
- Users have the choice of remaining anonymous during transactions or transacting money openly.
- The inherent integration of zero-knowledge cryptography, such as zk-SNARKs, provides strong privacy characteristics.
- If necessary, users may choose to provide their private and encrypted data for regulatory compliance or audits.
- Transactions on the blockchain are fast and cost very little in fees.
- Blockchain is just for payments and does not enable smart contracts, dApps, or other applications.
Zcash is a private and anonymous cryptocurrency that has been in the market since 2016. Monero is also a privacy-oriented cryptocurrency, but it was released in 2014. Reference: zcash vs monero.
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