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Zcash (ZEC) 101 - Complete Guide

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Author: Charlynn Potgieter Updated: January 28, 2022

The cryptocurrency Zcash is a decentralised blockchain whose main aim is to provide anonymity for the users on its platform and for the transactions they conduct. The digital currency ZEC is similar to Bitcoin and has an open-source code. However, the two cryptocurrencies differ from one another in other aspects. Zcash is focused on privacy and the interchangeability of goods and assets of the same type.  

The continual success of cryptocurrencies on the global markets changes how we see the world and how we trade in assets. Governments are increasingly becoming interested in cryptocurrencies, and some have even begun developing their own. After readers have gone through this article, they should know what Zcash is, how they can go about trading the cryptocurrency, and if they should consider investing in ZEC.

What Is Zcash and Why Was (ZEC) Created?

Zcash is a digital currency that primarily focuses on privacy and allows users anonymous or shielded transactions by using an advanced cryptographic technology called zero-knowledge proofs. This cryptocurrency was founded in 2016 by Zooko Wilcox-O’-Hearn. In 2019, the Zcash Company was rebranded to the Electric Coin Company. 

ZEC is a decentralised peer-to-peer cryptocurrency created as a fork of Bitcoin and, like Bitcoin, also has a fixed supply of 21 million coins. This digital currency was originally known as the zerocoin protocol, which was later transformed into the zerocash system and then to Zcash.  

The digital currency was conceived from the initial observation that Bitcoin did not offer strong privacy for its users. 

At the core of the technology, the crypto uses the zero-knowledge proofs that allow transaction data to be validated without users having to reveal the transaction amounts and the parties involved. On the Zcash blockchain, a user’s address and transaction are either private or transparent. 

The development of ZEC is currently focused on improving upon core privacy features, creating a more accessible user experience, and building bridges and interoperability with other cryptocurrencies.

How Does Zcash Work?

In essence, Zcash is a blockchain and digital currency that allows for private exchanges in an open blockchain. This enables buyers, organisations, and new applications to control who gets to see the points of interest of exchanges even while users use a global authorisation less blockchain. 

With Zcash, a person has two options when they want to conduct transactions. They can either choose to perform a standard transparent transaction or decide to conduct a private shielded transaction. You might be wondering how it manages to achieve high levels of privacy with their shielded transactions? They accomplish this by using a technology called ZK-Snarks, which was developed in the 1980s. 

ZK-Snarks are the specific zero-knowledge proofs that Zcash uses to prove possession of certain information such as private keys without revealing the personal data of the prover and the verifier on the network. 

Zcash uses the Nakomoto consensus, where a valid chain is the longest chain of the most accumulated Proof of Work (PoW) consensus. Zcash has miners that will solve complex computational puzzles to generate new blocks using an Equihash algorithm. During this process, miners on the platform will compete to create a hash less than what Zcash has set the target number on their difficulty adjustment algorithm. 

Recently, mining has become increasingly more competitive, as is often the case with PoW consensus cryptocurrencies. To address this issue, it has now implemented the process where mining is done in pools, and participants contribute hash power to a pool. They will then receive a proportional share of the profits if a pool manages to find a valid block. 

The network of mining and economic nodes maintains the Zcash blockchain by propagating, validating and competing to include pending transactions in new blocks.

Key 3 Selling Points of Zcash (ZEC)


Widely Available

Zcash has recently, in October of 2020, become more widely accessible. This was achieved by a process called wrapping. A synthetic version of Zcash is now available on Ethereum and is compatible with all of its significant wallets and applications. With Zcash being wrapped in such a way, it opens up many more avenues for people to use the digital currency and demand its uses.


Best Cryptocurrency In Terms Of Privacy

ZEC has become known as the best cryptocurrency in terms of privacy, and as such many traders and investors have recently become interested in the digital currency. Arguably the main attraction for Zcash is its privacy structure and how it offers users flexibility when conducting transactions. Users on the platform can choose transparent or private transactions. Many users are increasingly attracted to the fact that they can select the level of anonymity they prefer.


Anonymous Cryptocurrency That Has Real-World Uses

We know that ZEC is one of the most private digital currency forms available to us, but how would we use it in a real-world setting? With ZEC, a person could use the digital currency to privately purchase goods and services without revealing their identity. For example, if someone has a chronic medical condition that they don’t ever want anyone finding out about, they can purchase the medication with Zcash anonymously.

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Is Zcash Worth the Investment?

The notable privacy cryptocurrency Zcash is becoming increasingly popular amongst investors and traders alike. With online transactions becoming more and more prevalent digital currencies are becoming more relevant. In the short term, due to the volatility factor that affects all cryptocurrencies, Zcash is unstable. However, in the long term, buying ZEC could provide massive returns to users. In January of 2020, Zcash gave users returns of nearly 108% on profits alone. 

This coin’s privacy capabilities provides the users with the anonymity they want, which will eventually lead to the freedom of privacy when purchasing goods and services. Many people are impressed by what Zcash can do and what the coin has the potential to do in the future. 

It’s important to remember that investing in any cryptocurrency, not just Zcash is a risky endeavour. Those who decide to invest in ZEC digital currency should do so only after informing themselves of the current market trends and researching the coin in depth. 

When looking towards the future, it is increasingly likely that cryptocurrency will retain its relevance and continue growing in influence on the global markets.

Alternative Cryptocurrencies

Bitcoin Cash logo
Bitcoin Cash
Stellar logo
Ethereum Classic logo
Ethereum Classic
Bitcoin logo
Litecoin logo
Ripple logo

Frequently Asked Questions

  1. Yes, it is known in the cryptocurrency world as one of the best privacy coins available.
  2. Yes, Zcash originally forked from Bitcoin, and as such, Zcoin also has a fixed supply of 21 million, but that is where the comparison ends.
  3. Reportedly, the whole mining process should take a miner on the network in less than 20 minutes.
  4. Yes, you can buy Zcash with fiat currency.
  5. No, it uses a Proof of Work consensus mechanism.
  6. As a privacy cryptocurrency, Zcash gives users the option of how anonymous they want to be. They can either choose to conduct transactions transparently or privately.
  7. The Zcash Foundation is a non-profit organisation or entity that maintains and improves the Zcash protocol.
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