What is Zcash Cryptocurrency? Know its Origin and Features

Zcash is a cryptocurrency built on a decentralized blockchain that uses developed cryptography to ensure the security and privacy of the address are robust. It was invented by a group of scientists who want to enhance the security and anonymity that the previous blockchain like Bitcoin is lacking. They first invented Zerocoin which became Zerocash afterward and eventually it turned out to be Zcash.

Zcoin can be mined on computers and devices but currently, it is best mined on dedicated systems (application-specific integrated circuits). In the whitepaper of Zcash, some scientists like Eli Ben Sasson, Alessandro Chiesa, Christina Garmen, Matthew Green, Ian Miers, Eran Tromer, and Madars Virza believe the security flaws in transactions on Bitcoin.

In 2015, they created Zerocoin and in 2016 the name changed to Zcash by the Electric Coin Company. Zcash uses the zk-SNARK security protocol to confirm that the parties involved in a transaction are verified without revealing much information to the network.

zkSNARK is a zero-knowledge proof technology that permits nodes on a blockchain network to validate the transactions without disclosure of the user’s information. It needs a set of public parameters to permit users to make and verify private transactions. To comply with the tax audits and regulations, Zcash permits the users to share the transaction information along with the addresses.

Zcash Features

Address: The two types of Zcash addresses are Private (z-addresses) and Transparent (t-addresses). Both the addresses are interoperable which means the funds can be transferred between them in both directions. Most of the wallets and exchanges can support t-addresses and others are in the process of upgrading to support z-addresses.

Transaction Types: There are 4 types of transactions: Public, Shielding, Deshielding, and Private. Public transactions are visible to the public on the Zcash blockchain. It is the same as Bitcoin transactions. It occurs between two transparent addresses (t addresses).

Shielding transaction takes place between the t address and z address. The transaction and the balance amount are shielded. it means the balance and transaction amount are not shown on the z address while it is public on the t address.

A private transaction occurs between two z addresses. Both the balance and the transaction amount are private.

Funding Structure: The creation of new ZECs is done in the form of block rewards, this means that when the new coin is mined and added to the blockchain, coins are minted and split in the ratio of 80:20. This means that there are 80% miners reward and 20% into founders reward. The block reward is halved when the ZEC limit reaches 21 Million. This is done every four years to slow the pace of the issuance rate.

Viewing Keys: A z-address user can share the transaction details through the viewing keys. As the name suggests, it gives read-only access. This is an essential disclosure allowed for the avoidance of fraud, money laundering, and tax regulation.

Other supported features: This includes a low fee transaction of 0.001 ZEC by default, and encrypted messaging. The default transaction expiry is 40 blocks. It also has multi-signature transactions but is presently available on public transactions only.

How Zcash Differs From Bitcoin

Zcash uses built-in zk-SNARKs privacy protocol and this is not on Bitcoin. Zcash transactions do not disclose the address of the sender and receiver but in Bitcoin are pseudonymous and addresses that can be traced back to the identity of the user. Zcash comes with 75 seconds of block time whereas Bitcoin comes with 10 minutes of block time.

Goals of Zcash and Security

Zcash is focused on anonymity which makes it different from Bitcoin. This type of anonymity is realized through the use of zk SNARK, a special type of zero-knowledge proof technology. It permits the nodes on the blockchain network to validate transactions with the disclosure of more information about the user. zk-SNARK needs a set of public parameters to allow the users to make and verify private transactions.

The cryptocurrency allows sharing of information regarding the user addresses to comply with audits and tax regulations through the viewing keys. Private transactions also come with legal obligations. The company complies with these laws to confirm that it works within the law.

The most important challenge that Zcash faces in terms of regulatory compliance is to confirm that it is not used in criminal activities such as terrorism financing and money laundering.

To solve this problem the platform has incorporated various measures to avoid criminal activities on the platform which includes Know Your Customer procedures and screening. Comprising the privacy features, it includes shielded transactions, transparent transactions, and selective disclosure.

Zcash network is secured by the proof-of-work SHA-256 hash function which belongs to the SHA-2 set of algorithms, the same as Bitcoin.

Mining Zcash

For mining Zcash the user has to obtain suitable hardware. It can be efficiently mined with ASIC mining machines. Download the necessary software for setting up the device. Sign up, create an account and log in. Configure the mining device.

The miner must be connected to the f2pool server listed below for the hash rate and revenue to be recorded and monitored. Add the payout address by registering. This way the mining revenue will be collected. One can make changes to the payout address in the payout settings. This way mining can be started as machines are ready and users can manage account settings and monitor hashrate.

Zcash’s Supply

At press time, the market cap of Zcash was $452,644,746. Its circulating supply is 16,328,269 ZEC. The currency has a total supply of 16,328, 269 ZEC. Zcash is available at several major exchanges including HitBTC, Huobi Global, and OKX, among others.