ZCash is a decentralized and open source cryptocurrency that allows for anonymity for the parties involved in any transaction as well as privacy of the transaction amounts. The cryptocurrency uses a special, dubbed proof of construction or ZK-SNARK, to secure the network.
The protocol running ZCash was first launched as Zerocash in 2014 through a collaboration involving researchers at Johns Hopkins University and cryptographers at MIT. The ZCash Project was formally unveiled on January 21, 2016, by Zooko Wilcox-O’Hearn as an evolution of the existing Zerocoin project.
The new Zerocash protocol allows users to make direct payments to each other. The protocol also makes it possible to conceal the identities of the senders and the recipients involved in a transaction.
With Bitcoin, you can follow someone’s address and see their transactions and how they move their money around. With ZCash, that is not possible. The zk-SNARK protocol ensures that all transactions on the Blockchain are encrypted.
The zero-knowledge proof is also set to enable new classes of Blockchain applications. ZCash is also considered the most fungible cryptocurrency as it unlinks shielded coins from their history in the Blockchain.
How ZCash Works
ZEC is the digital currency that powers the ZCash network. The cryptocurrency can be bought and sold through exchanges. ZCash offers users the choice of shielded transactions using an advanced cryptographic technique in a wide array of applications such as smart contracts and payment transfers.
The Zero Knowledge of Proof-of-Construction maintains secure ledger balances without disclosing details of the parties involved. The protocol is also used to ensure that nobody is cheating or stealing when it comes to Blockchain creation.
ZCash allows people to send public payments that work in a similar way as Bitcoin. However, users can choose whether to send ZCash privately or publicly. Payments sent from a shielded account to a transparent address only reveal the received balance. Payments from a transparent address to a shielded address protect the receiving balance.
ZCash uses an asymmetric memory-hard Proof-of-Work algorithm for mining purposes. Just as is the case in the mining of other cryptocurrencies, miners need specialized computers to engage in the mining process. The Zerocash protocol harnesses a Proof-of-Work algorithm in the mining process.
The computers are configured to evaluate complex mathematical computation of which correct solutions are rewarded with ZCash tokens. ZCash mining is only possible through Graphics Processing Units and Central Processing Units. ZCash is ASIC resistant because of the Equihash algorithm.
The ZCash supply of coins is available through a mining process similar to Bitcoin, although with small variations. For instance, the total number of coins that will ever be in circulation is capped at 21 million. The number of coins that one receives as a reward for the mining of new block will be cut in half every four years.
One major difference between ZCash and Bitcoin is that 10% of the 21 million units mined using Zerocash protocol will go to ZCash stakeholder’s made up of founder’s employees, investors, and advisors.
ZCash enjoyed strong demand immediately after launch, which resulted in a gigantic price surge. However, it quickly retracted, consequently falling. The unexpected price swing was mostly triggered by the fact that the currency’s underlying protocol, zk-SNARKS, is largely untested.
The digital currency is also yet to be adopted by many platforms for widespread adoption. Its price is thus expected to continue spiking as a result of speculation while the details are ironed out. Its future price will mostly depend on the forces of supply and demand in the market.