Introduction: In this breakdown, we explore how Zcash provides users with enhanced privacy and security features, thanks to its unique implementation of zero-knowledge proofs. Learn more about how this protocol enables fully encrypted transactions, ensuring anonymity, and paving the way for increased adoption and trust in the world of cryptocurrencies!
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Zcash History
Zcash was launched in October 2016 and is a decentralized cryptocurrency that utilizes advanced cryptographic techniques to provide enhanced privacy and anonymity to its users.
Zcash website
The project was conceptualized in 2013 as an evolution of the Bitcoin protocol that aimed to address the transparency issues associated with traditional cryptocurrencies.
The team behind Zcash was led by a group of renowned cryptographers and scientists. The project's founder and CEO, Zooko Wilcox, is a well-respected figure in the cryptocurrency community with a strong background in computer science and cryptography.
Other key members of the team include Eli Ben-Sasson, a former professor of computer science at Technion who played a vital role in developing Zcash's zero-knowledge proof technology, and Alessandro Chiesa, a faculty member at UC Berkeley.
Unlike Bitcoin where transaction details are publicly visible on the blockchain, Zcash offers users the option to conduct fully shielded transactions, where the sender, recipient, and transaction amount remain completely confidential.
Zcash raised a total of $3 million in its initial funding round. Notable investors in the project include Digital Currency Group, Pantera Capital, and Naval Ravikant, founder of AngelList.
Further promoting decentralization, Zcash has a governance structure known as the Zcash Foundation. This non-profit organization is responsible for overseeing the long-term development and improvement of the protocol.
What is Zcash?
Zcash is a decentralized cryptocurrency that aims to provide enhanced privacy and anonymity features to its users.
It achieves this through the use of advanced cryptographic techniques, known as zero-knowledge proofs.
At its core, it utilizes the Bitcoin codebase and builds upon it to introduce its privacy features.
It also incorporates the zk-SNARKs (Zero-Knowledge Succinct Non-Interactive Arguments of Knowledge) protocol, a zero-knowledge proof system that enables secure and private transactions.
This combination allows Zcash to maintain a decentralized and secure network while offering enhanced privacy capabilities.
Key to Zcash's privacy features is its virtual machine, called the zk-SNARKs circuit. This virtual machine is responsible for handling the complex cryptographic operations that maintain user privacy.
It allows users to generate and verify zero-knowledge proofs, enabling them to prove that a transaction is valid without revealing sensitive information such as the sender, recipient, or transaction amount.
Zcash has also implemented several enhancements to improve scalability and transaction throughput. One such solution is the Sapling upgrade, which significantly reduced the size of zk-SNARKs proofs and improved transaction performance.
The introduction of shielded transactions, which utilize the privacy features of Zcash, can also contribute to scaling improvements as they provide additional privacy options for users.
How does Zcash work?
Zcash employs a consensus mechanism known as Proof-of-Work (PoW) similar to Bitcoin. Miners validate transactions and add them to the blockchain by solving complex mathematical problems.
However, Zcash uses a different hashing algorithm, known as Equihash, which is designed to be more accessible to users with standard computing equipment, making it less favorable to specialized ASICs.
Zcash also differentiates itself from Bitcoin by offering two types of transactions: transparent and shielded.
Transparent transactions are similar to Bitcoin transactions and are visible on the public blockchain, while shielded transactions leverage zero-knowledge proofs to maintain privacy.
When it comes to transactions per second (TPS), Zcash's TPS is comparable to Bitcoin's, with around 7-10 TPS with shielded transactions requiring more computational resources due to the zk-SNARKs.
ZEC has gained popularity among privacy-conscious individuals and organizations due to it's privacy and fungibility where all units of a currency are interchangeable and cannot be distinguished from one another.
The advanced privacy features of Zcash make it highly suitable for use cases where privacy is a top priority, such as in financial transactions, personal privacy protection, and for conducting business securely without revealing sensitive information to competitors.
Zcash Coin (ZEC)
Like Bitcoin, Zcash transactions are validated and recorded by miners who compete to solve complex mathematical problems in order to add new blocks to the blockchain.
In return for their efforts, miners are rewarded with newly created ZEC coins. Zcash has a fixed total supply of 21 million coins, similar to Bitcoin.
The issuance rate of new coins started at a slower pace compared to Bitcoin, with the initial four years known as the "Slow Start" period.
After the Slow Start period, the block reward for miners decreases at a predictable rate, ensuring that the supply is gradually released over time.
Zcash (ZEC) Tokenomics
ZEC has a limited supply of 21 million coins, which is the same as Bitcoin. The distribution of ZEC coins is carried out through mining, with a block reward halving occurring every four years.
Initially, the reward for mining a block was set at 12.5 ZEC, but it reduces by 50% every four years. The reward has been halved four times, and it currently stands at 3.125 ZEC per block. This process ensures the gradual issuance of new coins while maintaining scarcity.
Zcash tokenomics also include the founders reward which is a feature intended to incentivize the founders and developers involved in the project.
Upon each block reward halving, 20% of the newly generated coins are allocated to the founders reward for the first four years, gradually decreasing to 10% over the next four years.
This allocation is designed to support the ongoing development and maintenance of the Zcash ecosystem.
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Author
Mike Harry
Mike is a passionate crypto enthusiast who bought his first Bitcoin in 2016. With a natural curiosity and a love for learning and tinkering, Mike is always trying out new DeFi applications. Mike excels at breaking down difficult concepts into easy-to-read guides for beginners.
