Zcash & Confidential Transactions
Some tokens that have found favour with digital currency enthusiasts include Chronoly (CRNO), Zcash, and Bitcoin Cash. Although, Zcash (ZEC) has struggled to live up to its potential but it is still preferred by investors as it offers privacy and selective transparency of transactions.
What is Zcash?
Zcash is the most popular privacy coin or cryptocurrencies that offer confidential transactions. The level of privacy with Zcash is within your control. You can decide whether you want your transaction details to be shielded (private) or transparent (public).
These are very important time for ZCash for a specific reason. Unlike Bitcoin, which contains the element of traceability in transactions on public blockchain networks, despite introducing anonymity, the working of ZCash completely depends on shielded addresses. Hence, it helps in ensuring better privacy of transactions.
ZCash is a privacy-centric, blockchain-based payment network that leverages zero-knowledge proofs or ZKPs for shielding transactions. It evolved as a hard fork of Bitcoin blockchain, with the initial foundations in Zerocash protocol.
An interesting aspect of ZCash operation is: the emphasis on the use of zero-knowledge proofs or ZKPs technology that help two parties in verifying information without sharing other related data. ZCash added another crucial improvement over ZKPs with ZK-SNARKs or Zero-Knowledge Succinct Non-Interactive Argument of Knowledge toolkit, which has been successful in shielding transactions on ZCash by ensuring complete encryption on the blockchain alongside verification of transaction validity through network consensus.
Whose idea is ZCash?
In 2013, Johns Hopkins University professor Matthew Green and some of his graduate students came up with the idea for Zcash (at the time called “Zerocash”). The founder of the ZCash Company, Zooko Wilcox, recognized the need for introducing a privacy cryptocurrency that could prevent exposure of transaction history.
It was originally going to be a privacy extension to Bitcoin, but Bitcoin’s core developers weren’t on board. Zcash’s developers ended up building the coin on the original Bitcoin code base. Zcash Company later rebranded as the Electric Coin Company. Along with the nonprofit Zcash Foundation, it manages the Zcash protocol and blockchain.
Zcash has two types of wallet addresses: z-addresses and t-addresses. A z-address is a private address, and a t-address is a transparent address. These addresses are interoperable, and users can choose the type they want to use for each transaction.
What is so unique about Zcash?
Cryptocurrencies are misunderstood as confidential or untraceable. In fact, the majority record every transaction on a public blockchain. The transactions don’t have names attached, but they show the amount, and the wallet addresses for the sender and recipient. If a person’s name is tied to their wallet address, other people can learn how much crypto they’ve sent and received.
Privacy coins keep amounts and wallet addresses confidential. If you send or receive ZEC tokens, you can choose to shield your wallet address and the amount.
Zcash is also different from most privacy coins. While these cryptocurrencies typically only offer confidential transactions, Zcash has transparent transactions available. If you choose that option, your wallet address and the transaction amount will be public information.
ZCash Tokenomics
ZCash follows a Proof of Work mining algorithm like Bitcoin for generating ZEC with every new
successful block verification. Block rewards with ZCash follow the same halving mechanism as Bitcoin for a period of four years, thereby ensuring deflation.
ZCash network has undergone several upgrades as well. The prominent advancements of ZCash include the Halo and Halo 2 ZKPs, ZCash wallet, Heartwood, Canopy and NU5. Each network upgrade delivered significant improvements to ZCash alongside encouraging institutional support.
The ZCash ecosystem introduced ZCash Wallet in 2019. Initially, it started off as an experiment for ECC
Reference wallet as a light-client reference wallet. It was intended to allow the functionality of shielded transactions on mobile devices. ZCash launched the fully functional wallet in June 2020 with a software development kit for testing and demonstration.
The Electric Coin Company came up with the Heartwood network upgrade in July 2020, which
introduced support for Flyclient and Shielded Coinbase.
ZCash underlines the rise of a privacy-focused cryptocurrency. One of the primary traits of
cryptocurrency transactions is the advantage of anonymity. ZCash has proved how cryptocurrencies can evolve with better value improvements.
Features of ZCash
- Low transaction fees. With the default transaction fee of 0.0001 ZEC, users can find an effective cryptocurrency solution.
- Encrypted memos. Encrypted memos can help in passing messages as well as instructions alongside addressing compliance requirements.
- Multi-signature transactions.
- Owners of shielded address have the option to disclose details about incoming transactions and memo fields.
- Efficient design that enables support for transaction expiration.
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