Zcash (ZEC) 101 - Complete Guide

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.

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.

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.