What is Zcash?
ZCash is a "decentralized and open-source cryptocurrency that provides strong privacy protections."
Essentially, it claims to do everything bitcoin does, but with the information on sender, recipient, and value shielded. The founders want you to think of this protocol analogy:
Bitcoin is to http as Zcash is to https
History and Development
- Zooko Wilcox-O'Hearn (pictured above) founded the Zerocoin Electric Coin Company with the purpose of improving on the bitcoin protocol (bitcoin 2.0 if you will).
- He focused on the lack of privacy and developed the Zerocoin protocol, which evolved into the Zerocash system, and eventually into the Zcash cryptocurrency.
- The Zcash Coin (ZEC) was introduced in Oct. 2016 by the Zcash Company, officially known as Zerocoin Electric Coin Company.
- Here is a nice intro video to how Zcash was initially created, through something they called a "Ceremony".
- As you will see, it is a centralized operation, but you can appreciate why such control was needed to bootstrap the birth of this cryptocurrency. (https://www.youtube.com/watch?v=D6dY-3x3teM)
- Z-Class (ZCL) was forked from ZEC in Nov 2016.
- Then Zencash (ZEN) was forked from ZCL in May 2017.
- Zcash is therefore developed by a central company founded by Zooko. Monero (XMR) had a more grassroots approach with more distributed development.
Features and Technical Specifications
- Key concept for Zcash is Zero-Knowledge Proof. Here is a good youtube video introduction to this concept: https://www.youtube.com/watch?v=0Sy6nb72gCk
- Zcash uses a Zero-Knowledge Proof algorithm known as Zk-Snarks (zero-knowledge Succinct Non-interactive ARgument of Knowledge) to shield transaction data.
- Basically, this is a solution to proving you know something, without showing what that something is. Non-interactive means what it means, making this an innovative solution for secure and private digital transactions.
- ASIC resistant (can only be mined by GPUs and CPUs. No one can develop specialized mining hardware, which can be patented and centralized).
- Relatively low transaction fees (https://bitinfocharts.com/comparison/zcash-transactionfees.html)
- Shielding is optional - you can select to NOT shield your transaction. This might be preferred because shielding costs more and takes longer.
- For a deeper dive into how Zcash transactions work, here is a presentation by Zcash developer, Keving M. Gallagher: https://www.youtube.com/watch?v=HdHI5iyoSv8
- 2Zcash’s monetary base will be the same as Bitcoin’s — 21 million Zcash currency units (ZEC, or ⓩ) will be mined over time. 10% of that reward will be distributed to the stakeholders in the Zcash Company — founders, investors, employees, and advisors. We call this the “Founders Reward”. (https://blog.z.cash/funding/)
- around 3.316 M in circulation as of 2/20/2018.
- The fact that there is a founder's reward is a source of controversy. Monero (XMR) on the other hand does not have this distribution feature. The forks, Z-Classic and ZenCash do away with the founder's reward.
- As of February 2018, mining is still very centralized with huge mining pools controlling significant proportion of mining. This is not surprising because Zcash is a relatively young cryptocurrency and will take time to decentralize.
- In terms of future development, Zcash is working on reducing the computational load required to shield transactions.
- The developers believe that the next upgrade, named "Sapling" will significantly improve performance:
- Don't get too excited just yet, this upgrade is planned for September 2018. The team is still working on some basic network upgrade. (remember this is a very young cryptocurrency, having been introduced in Q4 2016).
- Listed on most big exchanges i.e. Bittrex, Binance, Kraken, Shapeshift etc.
- standard wallets that support Zcash: https://www.zcashcommunity.com/wallets/
- GUI Wallets that support Zcash:
- Zcash is mainly known for its use of Zk-Snarks and the strength of the development team, who is widely known in the crypto community.
- However, some people do not like the founder's reward, which is 20% in the first 4 years, and 10% thereafter.
- The optional shielding feature reduces the fungibility (the feature of being interchangeable) of ZEC because now you have some coins with patches of history, while some others may have all history shielded.
Zcash Website: https://z.cash/technology/index.html
Community Chat: https://chat.zcashcommunity.com