Zcash is similar to Bitcoin but has some key differences. Both Bitcoin and Zcash are peer-to-peer, decentralized cryptocurrencies with a hard cap of 21 million coins. Zcash is a fork of Bitcoin which means that it uses the Bitcoin codebase. The biggest difference between Bitcoin and Zcash is the fact that Zcash transactions have the option to be private.
What Problem Does It Solve?
Bitcoin transactions are not private. The Bitcoin blockchain stores a permanent public record of all transactions which can be seen by anyone. While Bitcoin transactions provide more anonymity than credit card transactions, they provide less than cash.
Zcash uses a cryptographic technique called zero-knowledge proofs to ensure the accuracy of transactions on the blockchain while keeping the sender, recipient and value private. More specifically, Zcash uses a zero-knowledge proof called zk-Snarks. Zk-SNARKs (Zero-Knowledge Succinct Non-Interactive Argument of Knowledge) is the mechanism that enables Zcash transactions to be fully encrypted on the blockchain, yet still be verified as valid. If you want to learn how zk-SNARKs works, visit BlockWolf’s zk-SNARKs guide.
In order to ensure that every coin is equally valuable and interchangeable, Zcash unlinks coins from their history. Because the history of coins that use shielded transactions is unknown, all Zcash coins will be equally valuable no matter what they were used for in the past.
Enables New Applications
Zero-knowledge proofs are a unique way to fully encrypt transactions. This new cryptography enables a new class of decentralized applications to be built.
Zcash permits private and encrypted transactions on the blockchain. Users can receive the benefits of Bitcoin without the concern of private financial information being publicly accessible.
Zcash has an impressive team led by Zooko Wilcox. According to the Zcash website “Zooko has more than 20 years of experience, in open, decentralized systems, cryptography and information security, and startups.”
You can check out the rest of the team here. https://z.cash/team.html
One major criticism of Zcash is the fact that miners are required to pay a 20% tax on mined coins to the founders for the first four years. In addition, most Zcash transactions do not use the anonymous shield feature. Finally, privacy coins may face additional government regulation because of their potential to be used for crime.
Coinbase recently announced that they are exploring adding Zcash to their platform.
Bitgo, a custody solution for cryptocurrency funds, recently added support for Zcash.
October 2018 Zcash is expected to release Sapling, a network upgrade that improves the efficiency of shielded transactions.
The market size for the cryptocurrency that becomes the standard for privacy transactions will be huge. Zcash is trying to become the dominant privacy coin. There are some serious competitors to Zcash such as Monero, Dash, and Zencash. Zcash and other privacy coins may be regulated more heavily than other cryptocurrencies because of their potential to be used for crime.
BlockWolf believes that Zcash has a lot of potential, but there are too many unknown variables to be able to accurately determine if Zcash will outperform the market.