The Electric Coin Company (ECC)—which builds privacy coin Zcash—has some grand ambitions.
Zcash was invented in 2016 by the Zcash founding team, which included Zooko Wilcox, a Colorado-based cypherpunk who has designed multiple network protocols. With a $750 million market cap, Zcash is the second biggest privacy coin, behind Monero. The ECC's plan is to make crypto as anonymous and easy to use as cash—and, like most cryptocurrency companies, it wants to be the most widely-used coin in the world.
But since that means scaling its out-of-date technology to serve potentially billions of users, Zcash’s infrastructure could require massive changes that will result in the birth of a new blockchain. The challenges were outlined today during the annual Zcon1 conference in Split, Croatia.
“I think we should make Zcash usable by 10 billion people by 2050 if we can,” Nathan Wilcox, chief engineer at the ECC, said during the opening session, to a roomful of 230 enthusiasts at a waterfront hotel.
In essence, the ECC is working out how to turn the Zcash blockchain—which was based on bitcoin’s code and has inherited many of its limitations—into one that can handle thousands, if not millions, of transactions per second. That shakeup is so radical, it’s likely to involve an entirely new blockchain to enable “sharding,” a scaling solution the foundation is considering. However, unlike a chain split, this will not result in a new coin.
Sharding is a complex way of architecting databases, sometimes across a variety of servers, to dramatically speed up transactions. Indeed, the Zcash roadmap shares a lot of similarities with Ethereum, which is also moving toward a sharding-based blockchain.
But for Zcash to make the switch, a new blockchain will need to be built from the ground up, says Daira Hopwood, an engineer and product designer at the ECC.
Hopwood said the new design they’re working on may well be an “entirely new protocol and blockchain.” Crucially, effort would be made to ensure the value of the native Zcash coin ZEC will be transferred onto the new chain, so that users don’t lose their wealth.
The new blockchain could also solve one of Zcash’s biggest problems: That nobody is using its private transactions. Unlike Monero, private transactions on Zcash are not enabled by default, and as a result, fewer than 2 percent of transactions are fully anonymous. In the past, private transactions used to be noticeably more expensive and slower but strong improvements have since been made. Hopwood suggested that this new blockchain might be incompatible with transparent transactions, meaning all transactions will be fully private, by default.
But, with such an ambitious goal, how does the ECC, the Zcash Foundation and the wider community work together to make it happen? Wilcox argued that it’s all about making sure everyone has an economic incentive to keep building, from the developers to the miners.
“The people doing the development and coordinating the governance will need to make money,” he said, adding, “I believe that is a way to make an effort sustainable. It’s not the only way. There are other motivations for people to do things. But I think, on a global scale, this is a key motivation.”
Wilcox outlined three ways to ensure that the development and the governance continues via funding mechanisms.
First, he said that miners need to make money when operating infrastructure, such as running nodes. The obvious answer to this, he suggested, is transaction fees. However, he said he wanted to see a reward mechanism that encouraged people to add more infrastructure, helping to make the network stronger, something that transaction fees in themselves wouldn’t do.
Second, he said the ECC and the Zcash Foundation need to become more closely aligned. Since those two entities are the main ones encouraging network growth, it makes sense for them to be working on the same page. Wilcox said that in Q3, 2018, the two entities worked more efficiently together and that going ahead, this will be a key objective.
Third, Wilcox said that development and governance need to be funded. Currently, the ECC and the Zcash Foundation are funded through mining rewards. These are slated to stop in 2020. He argued that continued funding is necessary for development, but failed to specify how that might work.
Update [June 24, 6.50 UTC] A comment was added that this is not a chain split.