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What is Zcash and why is it becoming increasingly popular?
- Zcash is a cryptocurrency focused on privacy and anonymity and is represented by the abbreviation ZEC
- Zcash has just been added to both the Circle cryptocurrency investment app as well as the Gemini Exchange, opening up Zcash trading to thousands of new investors
- Some cryptocurrency market watchers believe that Zcash could eventually be even bigger than bitcoin
- Zcash utilizes zero-knowledge cryptography which keeps all user transaction and balance data completely anonymous
- Zcash is unique in the sense that users have the choice of being anonymous or not
- JPMorgan Inc. is already using Zcash derived technology in its own enterprise ready Quorum blockchain
In early February 2017, privacy-focused coin Zcash was trading at just $30. A little over a year later in early 2018, Zcash was dazzling cryptocurrency investors at over $300 per token.
The reason for such rapid gains is simple.
Privacy coins like Zcash and Monero are exploding in popularity. Such coins offer privacy to individuals in oppressed nations, criminals and privacy-focused people.
Until recently, privacy coins had been held back somewhat in their growth by the fear that regulators may not feel comfortable with them. However, the approval of Zcash to be listed on the heavily-regulated Gemini exchange in May of 2018 shows that this fear was unwarranted.
As a top contender for the number one spot when it comes to the safe, secure, and completely anonymous transactions, Zcash is, therefore, reaping the rewards.
Immediately after the announcement that Zcash would be listed on the Gemini Exchange, Zcash’s price increased by 30%.
This is a very exciting time to be an owner of Zcash.
The only question is, what is Zcash?
What is Zcash?
Zcash (ZEC) was introduced to the cryptocurrency market in October 2016.
Developed and launched by the Zerocoin Electric Coin Company and its CEO Zooko Wilcox, Zcash is designed to allow the completely private exchange of funds on a fully transparent and open blockchain.
Zcash uses a technology called zk-SNARK, developed by professional cryptogrophers, to shield the identity of Zcash users.
Users of Zcash can choose between shielded and unshielded addresses. The unshielded addresses provide full anonymity, while the unshielded is relatively transparent.
This option uniquely positions Zcash to fill the needs of a wide variety of investors and users of cryptocurrency.
In addition to gaining increased acceptance on cryptocurrency exchanges, Zcash is becoming more accepted as a form of payment. For example, one of the most dominant VPN providers, Private Internet Access, recently began accepting Zcash shielded payments.
Aren’t Cryptocurrency Coins like Bitcoin Private Already?
Contrary to popular belief, very few cryptocurrency tokens are truly private.
With coins like Bitcoin, every transaction and individual wallet balance can be viewed by anyone who inspects the Bitcoin blockchain.
Much more importantly, because many Bitcoin users buy Bitcoin at exchanges which require confirmation of their real identity, almost all Bitcoin balances (and transactions) can be traced back to real-world users.
Zcash 101: How Does Zcash Work?
Zcash enables more robust privacy for users, thanks to the Zcash zk-SNARK protocol, which is the abbreviation for ‘Zero-Knowledge Succinct Non-Interactive Argument of Knowledge’. zk-SNARK allows transaction participants to verify the validity of transactions without revealing any information about transactions themselves.
Zero-Knowlege – In other words, you can prove something or verify that something is correct or accurate without having to give out the information.
To explain it another way, the Zcash blockchain uses cryptographic shields to encrypt and hide transaction information from all parties participating in the transaction.
What Zcash refers to as ‘secret randomness’ then allows each transaction participant to verify that funds are able to be sent and received, despite users not necessarily knowing who is sending coins or receiving them.
In other words, Zcash is private and anonymous (as long as you are using a z address).
Zcash’s Z Addresses vs. T Addresses
Zcash allows users to use either “Z” or “T” addresses.
Addresses that start with a “z” are fully shielded and anonymous. Addresses beginning with a “t” are transparent and behave just like bitcoin, which is more suitable for international finance.
Zcash Pros and Benefits
- Using Zcash zk-SNARK protocols, transactions can be settled instantly
- The Zcash mining algorithm is resistant to ASIC mining – meaning that the blockchain can never be partially centralized by individual groups of miners
- Zcash mining and zk-SNARK privacy protocols have been fully peer-reviewed
- Zcash supports a secondary ‘semi-transparent’ transaction settlement protocol suitable for use in mainstream finance
- Zcash technology is already being used by JP Morgan, which lends support to its quality
As well as being one of the worlds foremost privacy-centric cryptocurrencies, Zcash is also a mined cryptocurrency with a fixed supply which matches that of Bitcoin.
Unlike Bitcoin, however, Zcash mining uses an Equihash proof-of-work algorithm which is fully resistant to commercial grade ASIC mining. This means that the Zcash coin supply is much more stable and that the network itself is much more genuinely decentralized.
Zcash vs Monero
Zcash is often contrasted with Monero, another one of the most notable privacy altcoins.
While the goal of both is anonymity and privacy, there are differences in their methods of achieving this.
Although the technical nature of this is beyond the scope of this article, there are a few aspects of each worth pointing out which will give you an idea of the future trajectory for each coin.
- Monero is one of the most commonly used cryptocurrencies on the Dark Web
- Zcash was designed and built by academic and professional cryptographers
- Whistleblower Edward Snowden has stated that Zcash is the most interesting alternative to bitcoin
- Zcash, provides the option to use either shielded and unshielded addresses. Monero’s transactions are all private.
- Zcash was recently approved by New York regulators to be listed on the Gemini Exchange, suggesting that regulators may be more comfortable with Zcash, than Monero or Dash
What are the Best Zcash Wallets for Storing ZEC?
With Bitcoin looking set to start a renewed bull run, now is (arguably) the ideal time to be investing in a cryptocurrency like Zcash. That said, if buying Zcash, users should first invest set up a trusted Zcash wallet.
At present, the most secure wallets to use to store Zcash include:
- The official Zcash desktop wallet (free but not the most user-friendly)
- The Jaxx mobile and desktop wallet (user friendly, but not as secure as a hardware wallet)
- Ledger Nano S hardware wallet (the most secure, but not free)
Of course, popular wallet offerings like Coinomi and Cryptonator also support Zcash. It should be noted, however, that some users have reported significant security concerns with such wallets, particularly when attempting to recover wallets and funds using their recovery passphrases.
Where and How to Buy Zcash
While there are quite a few places where you can buy Zcash, there are a couple which are safer, easier and simpler than others.
The fastest, easiest and most secure way is to buy Zcash on Changelly.
Another one of the best places to buy Zcash seems to currently be Binance. This is preferable to Changelly if you want to buy and sell on an exchange (on Changelly you can only buy and then send the Zcash to your Zcash wallet).
Binance offers the most liquidity for Zcash transactions and has very low fees. After purchasing your Zcash, you can send it directly to your wallet, such as a Ledger Nano S.
What are your thoughts on Zcash? Do you think it has a bright future? And how does it compare to other privacy coins?
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Richard has developed and ran multiple online websites and communities with tens of millions of monthly visitors. He first discovered bitcoin and blockchain in 2012 and has been helping to educate others on its potential since then. Richard is very passionate about the crypto community. Read his inspiring story into cryptocurrency here.