Bitcoin was used to buy drugs online because it was believed to be anonymous. Turns out, it’s surprisingly easy to track Bitcoin transactions.

In comes privacy coins. They are much harder to track and try to make digital cash as anonymous as, well, cash.

Let’s dig deeper...

What is Zcash?


Zcash is a privacy coin for making digital payments that are anonymous. It uses a cryptographic tool to ensure that transactions are kept private.

It is a fungible cryptocurrency. This means tokens are all exactly the same and don’t contain their transaction history. This makes it harder for payments to be tracked.

Zcash seeks to be a better alternative to Monero, a privacy coin that obfuscates transactions.

Who invented Zcash?

Zcash was created the Zcash company in October 2016. Led by CEO Zooko Wilcox-O’Hearn, the team is comprised of blockchain engineers and computer scientists.

The company says it is committed to the principles of decentralization and does not own or run the network. They see themselves as participants in the network; helping to build and develop the protocol by suggesting updates that have to be agreed upon by the Zcash community.


Did you know?

Zcash coins were created in a “ceremony” where the first private key was split into six shards. Not only were the shards destroyed but so were the computers that processed them.

A brief history.

  • May 2013 – A research team at John Hopkins University proposes Zerocoin, a privacy protocol built as an extension for the Bitcoin network.
  • Jan 2016 – Zooko Wilcox announces the launch of the Zcash company and Zcash project, a privacy coin inspired by Bitcoin.
  • October 2016 – Zcash launches.
    March 2017 – The Zcash Foundation is launched to guide the evolution of the Zcash network.
  • October 2018 – The Sapling upgrade, which will improve the efficiency of Zcash’s cryptography, is activated.

Did you know?

When Zcash launched, a sudden surge in demand leads to the coins spiking in value above $4,000. The price went back down beneath $100 within a few weeks.

What’s so special about it?

Privacy – It protects users’ data by encrypting transaction information using zero-knowledge proofs. This technology enables transactions to be verified without having to see specific details like wallet addresses or the amount being sent.

Options – Users can send transactions in a variety of ways. They can send them privately, where no personal information is divulged or send them publicly, which is like sending a payment on Bitcoin or Ethereum. There is also the option for one party to “shield” just their own personal information.

Fungible – Zcash tokens are fungible, meaning it is impossible to identify a single token. This makes it is difficult for third parties, or the authorities, to build up full transaction histories.

Regulatory Friendly – Transactions can be sent publicly on the network which means it has not faced as much as regulatory scrutiny as other privacy coins, like Monero. This has allowed fully-compliant cryptocurrency exchanges to list Zcash on their servers.

Did you know?

The Gemini exchange, owned by the Winklevoss brothers, listed Zcash in May 2018. This included a custody service and had the full backing of the New York State Department of Financial Services.

How is Zcash produced?

Zcash uses proof-of-work to validate transactions, the same consensus mechanism as Bitcoin.

It also has the same mining reward scheme as Bitcoin. Miners are awarded tokens for every block they mine and these rewards are halved every four years. The miner keeps 80% of the reward and the rest is split between the founders, investors and Zcash employees. The Zcash Foundation and Zcash Company also take a cut.

Did you know?

There are plans for Zcash to migrate to a new form of proof-of-work in 2020.

How does Zcash work?

*zk-SNARKS *– Zcash uses a form of zero-knowledge proofs known as ‘Zero-Knowledge Succinct Non-Interactive Argument of Knowledge’. Yes, bit of a mouthful. Thankfully, it is frequently shorted zk-SNARKS within the crypto community.

zk-SNARKS check to make sure that the conditions for a valid transaction are met, without checking private, or confidential, information. They enable a user to prove he has the correct money and authorisation, without having to actually show it. Wax seals were used for messagers to know letters were authentic without having to actually open and check. zk-Snarks works in the same way.


What can you do with Zcash?

Zcash has been heavily influenced by Bitcoin. It is a peer-to-peer cryptocurrency meaning that it is designed to be used for everyday purchases. Its various privacy features means it can also be used to send or receive transactions anonymously.

Some newer cryptocurrencies have features that make the tracing of them quite complicated. These new anonymity-enhanced cryptocurrencies are clearly ripe for illicit use in an effort to subvert legitimate law enforcement inquiries.” Greg Nevano, deputy assistant director for Homeland Security Investigations.

The Future.

People are aware that their data is not completely private. Privacy coins give users some sort of protection from third-party surveillance. Zcash has an edge where users can decide whether to send a private transaction. This has made it slightly more palatable to regulators who have come down hard on the pure privacy protocols, like Monero. That said, this does not necessarily mean total support for Zcash. Some exchanges will only list it if the private transaction function is disabled on their servers. Supporters of Zcash, and privacy coins in general, still have to persuade regulators that encrypted transactions have a legitimate use.

The majority of transactions sent on Zcash have been sent publically in the past. zk-SNARKS currently takes up a lot of computational power and are expensive to make. The launch of Sapling will help make its privacy features more efficient. It might even make it possible for users to send private transactions from their mobile devices.

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