What is Zcash
Zcash (ZEC) is a fully decentralized, peer to peer, open source cryptocurrency which offers all the benefits of bitcoin while adding newer features, especially in security and anonymity. It describes itself as being “the first open, permissionless cryptocurrency that can fully protect the privacy of transactions using zero-knowledge cryptography.” A total supply of 21 million coins will eventually be created, just like with bitcoin.
History of Zcash
Zcash is born out of ZeroCoin project which started in 2016. In October 2016, the coin was made public. The lead developer of Zcash is cypherpunk and ex-hacker Zooko Wilcox-O’Hearn, while Matthew Green looks after cryptography implementation and updates. A few prominent names in the cryptocurrency world, such as Roger Ver, were some of the initial investors of Zcash.
In April 2017, for the first time. Zcash made it to the top 10 list of the cryptocurrency world.
How Zcash Works
Zcash is a cryptocurrency and works using blockchain technology, much like bitcoin. However, there are several differences in its operation. Like bitcoin, Zcash can be transferred between two users of the network when the sender initiates a command which contains the receiver’s wallet address, sender’s address, and the amount of Zcash to be transferred. This information is cemented in the blockchain via miners, who act to confirm the transaction. Zcash is then deducted from the sender’s account and added to the receiver’s account. Miners charge a small percentage for facilitating the transaction.
Unlike bitcoin, Zcash offers the sender the option of complete anonymity during the transaction, using a modern implementation of Zero knowledge zk-SNARK cryptography. Thus, a user can remain completely anonymous while transferring or receiving Zcash, if they so wish.
Zcash differs from bitcoin in that if offers very advanced cryptography and anonymity features. If bitcoin is thought of as being HTTP, Zcash is HTTPS. Basically, Zcash adds one layer of security beyond the Bitcoin protocol.
- Private Transactions: Zcash offers completely private and anonymous transactions within the network by adding maintaining a secure ledger of transactions without disclosing addresses of the parties involved in the transaction. Their in-house developed zk-SNARK cryptography is used for this purpose.
- Selective Disclosure: However, if the parties involved want to disclose certain transactions to the blockchain, they can do so by opting for selective disclosure. This is beneficial when participating in a tax audit or an anti-money laundering investigation.
- “Every Coin is Created Equal”: The motto of Zcash states that every unit of a cryptocurrency should carry equal value and they achieve it by unlinking shielded coins from the blockchain history. Total fungibility is thus obtained.
- Futuristic Application Compatibility: Zcash allows completely anonymous transactions, utilizing the latest cryptographic techniques. Moreover, applications can be built upon this technology so the apps can receive and send money without disclosing any data to the public.
- Common Benefits: Zcash also offers all the benefits of bitcoin including fast and direct transactions between users, no third party involvement and small transaction charges.