What is Zcash (ZEC) and how does it work? | OWNR Wallet
What is Zcash (ZEC) and how does it work?
There are a lot of projects in the crypto industry that show great promise, one of which is Zcash. Zcash is unique in that it strives to make its currency accessible to everyone, regardless of status or geographic location. Zcash also provides complete privacy to its customers, most notably the confidentiality of transaction history.
In this article we will look at all the intricacies of the Zcash project, from the history of its creation to how to mine Zcash (ZEC). Therefore, if you are still in doubt whether to trade Zcash or not, then this article will sort everything out. Interested? Then lets go ahead!
What is Zcash (ZEC)?
Zcash stands out as the pioneer of confidential open-source cryptocurrencies leveraging blockchain technology. Developed by Zerocoin (Electric Coin Company) in 2016, Zcash not only serves as a digital payment system but also introduces a unique level of privacy and transparency.
The Zcash platform provides users with the flexibility to choose between complete confidentiality or transparency when exchanging coins within the network. Transactions are recorded on a shared blockchain, but crucial details such as sender, recipient, and transfer amounts remain concealed from other network participants. This sets the Zcash protocol apart from other digital assets, as it utilizes zero-knowledge proof-based cryptographic methods.
By employing such methods, the Zcash blockchain ensures the mathematical validity of transactions while safeguarding the privacy of the second participant in the exchange. This innovative approach offers a level of anonymity that goes beyond what is typically seen in the crypto sphere.
What makes Zcash unique?
Zcash's main advantage lies in its unmatched anonymity, making it stand out among other cryptocurrencies. With mathematically guaranteed privacy, the Zcash protocol offers a level of confidentiality that surpasses all others. In a climate of increasing government control, such a currency is expected to grow in demand. While Bitcoin offers theoretical anonymity, it falls short in practice, with transactions and identities being easily traceable. In contrast, Zcash employs advanced cryptographic methods to keep transactions and identities hidden, making it the preferred choice for those seeking utmost discretion.
How does Zcash (ZEC) work?
Zk-SNARK, short for Zero-Knowledge Succinct Non-Interactive Argument of Knowledge, is a cryptographic tool that lets users prove they own certain data (e.g., a private key) without revealing it or needing constant interaction with validators. It works by converting a transaction's hash into an algebraic equation-solving circuit.
To check the circuit's authenticity, zk-SNARK uses a Quadratic Asymmetric Program (QAP), introduced by cryptographers in 2013. The QAP generates a secret verification point known neither to the sender nor the validator, enhancing security. This process relies on cryptographic techniques like homomorphic encryption and elliptic curve pairing to ensure privacy and data security.
This process relies on cryptographic techniques like homomorphic encryption and elliptic curve pairing to ensure privacy and data security. When delving into the world of confidential transactions within ZCash, it all starts with the recipient of funds initiating a key set creation process. This unique set comprises three key components:
- Expense Key
- View Key
- Billing Address
What sets confidential transactions apart is that these key details remain concealed within the browser until a specific request unveils them. Now, when a sender decides to engage in a confidential transaction, they embark on crafting a note packed with crucial particulars, including:
- Payment Key
- Transfer Amount (measured in Satoshi)
- Nullifying Set
- Transfer Trap
This note essentially serves as the assurance that the specified amount can be spent by the recipient, given they possess the spending key that corresponds to the payment key. These meticulously crafted notes, courtesy of JoinSplit technology, find their designated spot within an incremental Merkle tree with a designated depth, ensuring the utmost security and privacy.
Should a transaction remain unconfirmed for over an hour, it becomes invalid, and the funds are returned to the sender.
In the realm of Zcash blockchain, public keys come in two distinct varieties: Z-addresses, recognized by their encryption and the initial 'z' character. T-addresses, which are open and bear the 't' prefix.
Transactions between two T-addresses on the Zcash blockchain are transparent, much like the Bitcoin network, where all information is publicly accessible. The beauty of this system lies in the seamless interaction between public and private addresses. This allows for frictionless transactions between Z and T addresses, without any complications.
Transactions in the Zcash (ZEC) cryptocurrency ecosystem can be divided into 4 types:
- Public: t-address/ t-address;
- Protected: t-address/z-address;
- Unmasked: z-address/t-address;
- Confidential: z-address/z-address.
Notable features of Zcash
Confidentiality in the Zcash protocol is achieved by creating a single signature on a public transaction ledger using secure Zcash addresses. This signature stores transaction data. Zcash does not encrypt data for multisig, does not protect against correlations in public transactions, and does not hide sender and recipient IP addresses.
Therefore, sending funds on the Zcash blockchain network requires preliminary work, but then the transaction can be confirmed within a few seconds, and its size will not be more than a hundred bytes.
Main features of the ZEC crypto network:
- Transactions with low commission fees (0.0001 ZEC);
- Privacy of addresses and transactions;
- Encrypted fields for notes;
- View keys for voluntary disclosure of payment information;
- Fixed expiration date for unprocessed transactions (20 blocks);
- Possibility of using multi-signature.
Let's consider each possibility separately.
Minimal Transaction Fees
Zcash distinguishes itself with its low transaction fees, making it an ideal choice for cost-effective cryptocurrency transactions. With a standard transaction fee of only 0.0001 ZEC, users can enjoy a seamless and affordable payment solution.
Secure and Private Memos
One of the standout features of Zcash is its ability to support encrypted memos. When conducting shielded transactions, users can include relevant information in the memo field, ensuring that it remains completely encrypted. This feature not only allows for secure messaging and communication, but also helps fulfill compliance requirements.
Multi-Signature Transaction Capability
Zcash's innovative wallet offers the convenience of multi-signature transactions. This allows multiple parties to securely initiate transactions, increasing trust and security. While privacy concerns exist with multi-signature transactions, the Zcash team is actively working on enhancing privacy measures through shielded addresses.
Viewing Key Functionality
ZCash revolutionizes privacy by introducing viewing keys. These keys empower shielded address owners to selectively disclose transaction information, striking a balance between privacy and transparency. Future plans include full viewing keys, offering a holistic transaction history for specific addresses.
Transparent Auditing and Compliance
ZCash's flexibility transcends typical crypto boundaries. It allows users to opt for payment disclosure, making transaction details accessible to third parties. This unique feature streamlines auditing and compliance procedures, positioning ZCash as the preferred choice for those prioritizing regulatory adherence.
Optimal Utilization of Transaction Capacity
Efficiency is a core design principle of Zcash, exemplified by its support for transaction expiration. Unmined or redundant transactions are automatically removed by the protocol after 50 minutes. As a result, transaction capacity is optimized, and users receive a refund of their transaction fees if their transaction expires.
Who Are the Founders of Zcash? (History of ZEC)
The Zcash foundation started from the basics of Zcash, which were developed in 2013 by Matthew Green, head of the cryptography department at Johns Hopkins University. Cryptographers Eli Ben-Sasson from the Israel Institute of Technology, as well as a group of researchers from the Massachusetts Institute of Technology and Tel Aviv University, later took part in the development. All of them are now employed by the Zcash company, which receives 10% of new coins from miners.
Zcash made waves in 2017 by forging a prominent collaboration with JPMorgan Chase, where the banking titan incorporated Zcash's cutting-edge zero-knowledge security layer into its own Ethereum-based blockchain project, bolstering security measures. Additionally, Zcash shares ties with Ethereum, as the Electric Coin Company, overseeing Zcash, forged a partnership with the Ethereum Foundation and the entities managing Filecoin, namely Protocol Labs and the Filecoin Foundation.
This collaboration, initiated in 2021, aims to explore the integration of Zcash's Halo 2 technology—a zero-knowledge protocol—into Ethereum and Filecoin, while concurrently seeking to enhance interoperability between the two distinct blockchain ecosystems.
How is Zcash (ZEC) secured?
Zcash relies on the proof-of-work consensus mechanism, and it's likely to stick with this approach because it offers the best protection for the network.
In this consensus model, all miners and nodes in the network reach an agreement on the block creation order. As each block is completed, the network progresses to the next one, effectively recording all information. This mechanism acts as a shield against attacks, as potential attackers would need to control a significant portion of the network.
Proof of work serves the purpose of extending the blockchain, and miners are motivated to keep this process going within the Zcash network. Creating a separate chain isn't very enticing for miners, as users consistently opt for the longest or "official" chain. Nonetheless, disputes over development and roadmap differences have led to the emergence of forks like Ycash.
Is Zcash a good investment?
We do not give any investment recommendations, but Zcash is still primarily a tool of anonymity, and not an investment tool.
Zcash prices have been quite stable over the past few years. Of course, you can invest in Zcash to support the project, but so far in the arena of the crypto industry, Zcash has an uncertain purpose. On the one hand, from the point of view of privacy, Zcash is inferior to Monero; however, on the other hand, if we consider public Zcash transactions, then there are a lot of other cryptocurrencies that are ready to offer the same public transactions.
How to buy Zcash
The cryptocurrency is traded on 100 exchanges. The most important of them are
- Coinbase Pro;
- Huobi Global;
We advise you to use only popular and reliable exchanges to purchase any cryptocurrencies.
You can easily buy Zcash (ZEC) using OWNRwallet. You will need to select assets in the order form (Zcash in this case), log into your account or register, enter your card details. If you haven't passed kyc, then You will be asked to enter the Descriptor ID and a set of documents to verify your identity. After the kyc you will be able to buy Zcash. If you are already registered, then the process of purchasing zcash will be much faster.
How to mine Zcash
The hashing algorithm used to mine Zcash is called Equihash. It was developed by programmers Alex Biryukov and Dmitry Khovratovich based on the latest theories in computer science. During the creation of the Zcash mining algorithm, much attention was paid to protecting against collision of cryptographic hash functions called the “Birthday Paradox” and other potential blockchain vulnerabilities.
At the end of 2019, at block 653,600 in the Zcash ecosystem, a network update took place, codenamed Blossom. Its implementation made it possible to reduce the block generation time to one minute and 15 seconds and increase network throughput. At the same time, the block reward was reduced to 6.25 ZEC, and the processing fee remained the same. In the fall of 2020, another halving took place on the Zcash network, and now the block reward is 3.125 ZEC.
The most productive mining devices are ASICs:
- Bitmain Antminer Z15 - profit $12.79 per day (with an electricity price of $0.05).
- Bitmain Antminer Z11 - profit $2.99 (with an electricity price of $0.05).
- Innosilicon A9++ ZMaster - profit of $3.01 (with an electricity price of $0.05).
Income from Zcash mining depends on the current value of the Zcash (ZEC) coin on the market. You can order equipment directly on the manufacturer’s website or from regional dealers. If you have not worked with ASICs before, please note that devices based on air-cooled integrated circuits, due to their very high noise level, cannot be kept in residential areas.
How many Zcash (ZEC) coins are in circulation?
Zcash ZEC boasts a circulating supply of 10,922,059 tokens, while its total maximum supply is capped at 21,000,000 ZEC tokens. This limit is a steadfast commitment, assuring that the supply will never see an increase.
Miners play a pivotal role in the ZEC ecosystem by maintaining and managing the network. Interestingly, Zcash didn't opt for an Initial Coin Offering (ICO) like many other cryptocurrencies. Instead, its founders chose a different route – deriving a fee from mining rewards. As time unfolds, a fraction of all Zcash coins, specifically 10% or 2.1 million tokens, will flow into the hands of the founders.
It seems that Zcash aims to make the cryptocurrency what Bitcoin should have been from the very beginning, with anonymity and privacy as the main goal. Let's see to what extent their plans will be realized. At the very least, cryptocurrency Zcash looks like an ideal currency for underground markets — and a leading candidate for legal bans in countries where government regulation of the Internet is practiced.
What is Zcash used for?
Zcash (ZEC) is used for investment, anonymous transfers and storage. This is the ideal digital currency for those who value complete anonymity.
Is Zcash better than Bitcoin?
The Zcash development team was able to do what Bitcoin was originally supposed to do: provide complete anonymity. However, as a tool for investment and speculation in the crypto market, Bitcoin has greater authority.
What is the disadvantage of Zcash?
One of the disadvantages of Zcash is its high computational requirements, which can make it resource-intensive for certain devices or systems. The complex nature of its encryption and privacy protocols requires substantial computational power, potentially resulting in slower transaction processing times compared to other cryptocurrencies.
What is the value of 1 Zcash (ZEC)?
As of fall 2023, the Zcash price is $27 for 1 ZTC.
Does Zcash have a future?
Of course Zcash has a future. Hope comes from a team of talented specialists and the network’s unique path of anonymity. Zcash (ZEC) definitely still has room to grow.
DISCLAIMER:None of the authors, contributors, administrators, or editors connected to OWNR Wallet encourage readers to invest in Zcash or other cryptocurrency without doing proper research on their own. This article is purely for educational purposes only.