Hey guys :) Today I’ve compiled for you, a comprehensive list of questions and answers for one of the most technologically-advanced privacy coins – Zcash (ZEC).
This piece lays everything out on the line so that you can fully understand what Zcash is and how the project is progressing. It’s very similar to my latest articles on Cardano (ADA), Tezos (XTZ), and Monero (XMR).
If you haven’t already seen those ones, be sure to check them out as well.
Hope you enjoy!
The Q&A is pretty long so first comes the list of questions that I have prepared the answers to:
- What is Zcash (ZEC)?
- Who and When Created Zcash?
- What is Zcash’s (ZEC) use Case?
- What Algorithm Does Zcash Use?
- Is Zcash a Privacy Coin (Anonymous)?
- How is Zcash different from Monero?
- Can you mine Zcash?
- Does Zcash have an explorer?
- Is Zcash centralized?
- How long does a Zcash transaction take?
- Where to store Zcash?
- Where to Buy Zcash?
1. What is Zcash (ZEC)?
ZCash website homepage
Zcash (ZEC) is a digital currency, like Bitcoin, but with privacy-protecting features built on strong science.
The Zcash digital currency, or cryptocurrency, enables its users to transact efficiently and safely with very low fees while maintaining financial privacy if they so choose. Like Bitcoin, Zcash is built on a decentralized open-source blockchain, but with major differences in privacy and fungibility.
Zcash Key Features:
- Efficient and Usable
- Audit and Regulatory-Friendly
- Decentralized and Attack-Resistant
- Private Addresses and Transactions
Efficient and Usable
Zcash is a fast, reliable, efficient, and inexpensive peer-to-peer digital currency that can be used to purchase goods and services. Zcash is supported by top cryptocurrency exchanges and wallet services as well as certain offline and online businesses.
Zcash features fast transactions, roughly 2.5 minutes, with extremely low fees of just 0.0001 ZEC per transaction.
Audit and Regulatory-Friendly
Private Zcash addresses and transactions can be disclosed by Zcash users if they choose to share this information for the purpose of third-party audits or to comply with regulatory requirements.
Zcash offers this transparency feature by offering two types of addresses: shielded addresses that start with “z”, and transparent addresses that start with “t”. Transparent addresses and transactions are publicly viewable on the Zcash blockchain.
Decentralized and Attack-Resistant
Zcash is maintained by a decentralized network of people and machines, instead of a centralized entity, like a bank or government. Since Zcash has no central database, the network has no single point of failure and cannot be attacked in this way. No government or central authority can shut Zcash down.
Private Addresses and Transactions
Zcash transactions can be kept private with the use of an encryption technology called zero-knowledge proofs, or zk-SNARKs. This technology is built into the core of Zcash and enables good people to send, receive, and store ZEC anonymously.
To take advantage of Zcash’s privacy features, users must transact with shielded addresses (“z” addresses), which are not visible and do not reveal a user's address, their transaction amount, or the contents of the encrypted memo field.
2. Who and When Created Zcash?
Zcash was created as a fork of the Bitcoin blockchain and launched with the release of its genesis block on October 28, 2016.
Zcash was launched and created by a company called the “Electric Coin Company” and the zk-SNARKs technology behind Zcash was conceived by scientists at MIT, Johns Hopkins, and other respected academic and scientific institutions.
The Founder and Chief Executive Officer of Electric Coin Company is Zooko Wilcox, who is a cypherpunk with more than 20 years of experience in open, decentralized systems, cryptography and information security, and startups.
Zooko Wilcox, Electric Coin Company and Zcash Founder
Wilcox is recognized for his work on Tahoe-LAFS, BLAKE2, ZRTP, Mojo Nation, DigiCash, and more, before founding the Electric Coin Company and designing the Zcash protocol.
Other members of the Electric Coin Company include the scientists who invented the Zerocash protocol, engineers with a specialized track record in open privacy technology, advisors who are leaders in the Bitcoin, Ethereum, and academic communities, and well-regarded investors.
When Wilcox and the Electric Coin Company first conceptualized Zcash, they called it the “Zerocoin Protocol”, then changed it to the “Zerocash System”, before finally settling on “Zcash”.
To date, the Electric Coin Company continues to support the development of Zcash along with a global community of developers and contributors as well as the nonprofit Zcash Foundation.
Zcash (ZEC) Launch, Distribution, and Investors
Unlike many cryptocurrencies, Zcash did not launch through an initial coin offering (ICO). Instead, the Electric Coin Company received private funding from 19 public investors including Pantera Capital, Naval Ravikant, Roger Ver, and other notable names.
Then in another funding round closer to launch, the Electric Coin Company raised even more money from some of the same investors and some new ones such as Erik Voorhees, Shapeshift, Barry Silbert, and more.
As for distribution, 10% of Zcash’s total supply (2.1 million coins out of 21 million coins) was reserved for a Founders’ Reward.
This Founders’ reward was distributed as follows:
As for the rest of Zcash’s (ZEC) supply – 90% goes to miners as rewards for validating transactions and securing the network.
3. What is Zcash’s (ZEC) use Case?
Spend Zcash anywhere you see this seal
Zcash (ZEC) has the following use cases:
- Zcash is Money - you can spend it at vendors accepting Zcash
- Zcash is a Store of Value - has a capped 21 million supply
- Zcash is an Investment - custodians, institutions, and family offices support Zcash
- Zcash is for Trading - trading firms and exchanges support Zcash
Zcash is Money
Zcash (ZEC) is a global peer-to-peer digital currency with a growing number of ways to spend it. There are literally hundreds of merchants across various industries that accept Zcash as payment.
Such industries with merchants accepting Zcash include: Internet Services, Apparel/Products, Hosts/VPN/VPS, Legal Services, Medical, Non-Profits, Travel, Food, and more. A few websites with long lists of merchants accepting Zcash include: zcashcommunity.com, paywithz.cash, and openbazaar.org.
Zcash is a Store of Value
Zcash, like Bitcoin or gold, can be considered a store of value because it is limited in supply with a cap of 21,000,000 ZEC. However, unlike Bitcoin or gold, Zcash is considered to be a private store of value.
Contributing to this point, Zcash is supported by multiple trusted third-party custodians to help minimize the risk of lost keys or theft. Such custodians include: Anchorage, BitGo Custody, Coinbase Custody, Gemini Custody Services, Kingdom Trust Digital Custody, and Matrixport.
Zcash is an Investment
Zcash is considered to be an investment among not just individuals, but institutions and family offices as well. Institutional investors have access to two investment vehicles being Grayscale Zcash Investment Trust and Morgan Creek Digital Asset Fund.
Zcash is for Trading
Zcash is a popular cryptocurrency for trading as it has lots of liquidity and is supported by many leading cryptocurrency exchanges. As well, Zcash is supported by leading trading firms for large over-the-counter (OTC) trades including: Circle Trade, Coinbase Prime, Cumberland, Galaxy Digital, Genesis Trading, GSR, and Matrixport.
4. What Algorithm Does Zcash Use?
Zcash uses a Proof-of-Work (PoW) mining algorithm called Equihash for validating transactions and mining blocks.
Zooko Wilcox and the developers behind Zcash decided to use Equihash for mining Zcash because it has very efficient verification, which could be important for future light clients and is a memory-oriented Proof-of-Work, which made it unlikely for ASICs to mine Zcash.
However, as of May 2018, Zcash’s Equihash parameters have been implemented in ASIC miners and developers are still evaluating whether Equihash will resist ASIC implementation long-term.
5. Is Zcash a Privacy Coin (Anonymous)?
Yes, Zcash is a privacy coin that enables users to remain completely anonymous with private accounts and private transactions.
With Zcash, your personal and transaction data remains completely confidential with shielded Zcash transactions and zero-knowledge proofs to verify transactions without revealing the sender, receiver, or transaction amount.
However, Zcash also allows for transparent transactions and accounts for the purpose of regulatory compliance or audits. This is because certain wallets, exchanges, merchants, or services don’t support private transactions.
6. How is Zcash different from Monero?
Zcash logo and Monero logo
The differences between Zcash and Monero are:
- Privacy Features - Zcash has opt-in privacy features, Monero is private by default
- Privacy Level - Zcash is NOT as private and anonymous as Monero
- Privacy Technologies - Zcash uses zk-SNARKS, Monero uses Ring Signatures
- Total Supply - Zcash has a fixed supply, Monero has an inflationary supply
- Mining Algorithm - Zcash uses Equihash, Monero uses RandomX
- Block Time - Zcash is 1.25 minutes, Monero is 2 minutes
- Transactions per Second - Zcash is between 6 and 26, Monero is theoretically unlimited
Zcash is not private by default like Monero, users must opt-in to using Zcash’s shielded “z” transaction addresses to maintain privacy.
The default setting for Zcash is to use transparent “t” addresses. Zcash has this feature to be more regulatory compliant and enable third-party audits if needed.
Monero, on the other hand, is solely focused on maintaining anonymity and transactional privacy and is therefore private by default with zero options for transparency.
Since Zcash is not private by default, most users (around 80%) have their accounts and transactions visible to the public.
This poses a problem for users who maintain their Zcash privacy because these known public addresses make it easier for blockchain analysis companies to track users and form connections with private users.
In Monero however, all transactions and accounts are private by default so it is much more difficult, if not impossible, to trace transactions to and from accounts.
Also, Zcash users have to be careful not to accidentally give up their privacy by using transparent “t” addresses instead of using shielded “z” addresses. In Monero, users do not have to worry about such mistakes.
Zcash utilizes shielded transactions and zk-SNARKs while Monero utilizes confidential transactions and ring-signatures as their primary privacy-enabling technologies.
The primary difference between the two technologies is that zk-SNARKs use the entire blockchain when making transactions whereas ring-signatures hide it in certain parts of the blockchain chosen randomly (4 parts by default in Monero).
Like Bitcoin, Zcash has a capped total supply of 21 million ZEC, meaning there will never be more than 21 million ZEC in existence.
Monero differs from Zcash, it has an inflationary supply with a total end supply of 18,400,000 XMR (+ 0.3 XMR/minute) thereafter.
Zcash uses the Equihash mining algorithm which has now been implemented into ASIC miners and requires computationally heavy and energy-intensive ASIC machines for mining.
Monero uses the RandomX mining algorithm which supports mining on CPUs and is ASIC resistant.
Zcash transactions and blocks are validated (mined) within 1.25 minutes, formerly 2.5 minutes. As for Monero, its transactions and blocks are validated (mined) within 2 minutes.
Transactions per Second
Zcash can facilitate between 6 and 26 transactions per second, while Monero’s transactions per second is theoretically unlimited.
7. Can you mine Zcash?
Yes, you can mine Zcash (ZEC).
Each time a new block is added to the Zcash blockchain, the miner who successfully mined the block is rewarded with 12.5 ZEC. Zcash blocks are mined every 75 seconds (1.25 minutes) and every 4 year period, the ZEC creation amount is halved (from 12.5 to 6.25 to 3.125 to 1.5625 and so on). In total, 840,000 ZEC blocks are mined during each 4 year period.
As of May 2018, Zcash’s Equihash parameters have been implemented in ASIC miners and it is no longer possible to successfully mine ZEC using your computer's CPU. ASIC miners are so powerful that it’s nearly impossible to compete with these expensive units and turn a decent profit. Therefore, unless you own an ASIC mining farm, solo mining Zcash is not worth your while.
However, you can still mine Zcash through cloud mining, which is done by purchasing (leasing) the mining capacity of hardware in data centres. Cloud mining Zcash may still be profitable for individuals looking to mine ZEC and it doesn’t require you to purchase expensive mining equipment, set it up, pay electricity bills, etc.
Some Zcash cloud mining services include:
8. Does Zcash have an explorer?
Zchain block explorer
Yes, Zcash has multiple exclusive blockchain explorers including:
In addition to the explorers listed above, a wide variety of other explorers supporting multiple blockchains also support Zcash (ZEC).
The majority of Zcash block explorers feature the following search functions:
- Block Height
- Shielded Value
- First seen
- Last seen
- Total value exchanged over a pool type
- Block reward distribution
- Miner Distribution
- Volume of transactions
- Usage Statistics
- Top Countries
- Top Cities
- Mining Pools
9. Is Zcash centralized?
No, Zcash is an open-source digital currency built upon a globally decentralized public blockchain that’s maintained by a wide network of people and machines, instead of a centralized entity, like a bank or government.
Zcash’s code is forked from the Bitcoin blockchain and maintains the same decentralization and censorship-resistance attributes with added fungibility and privacy-preserving aspects. Zcash does not have a central database that can be hacked, nor does it have any central point of failure. Therefore, Zcash cannot be shut down by any government or authority.
10. How long does a Zcash transaction take?
Zcash transactions take an average of 75 seconds (1.25 minutes) to complete as this is Zcash’s average block time.
In any blockchain-based digital currency, the time it takes for a transaction to be processed is the same as the time it takes for a block to be validated (mined in Zcash’s case).
Therefore, Zcash transactions are faster than some of its competitors such as Bitcoin’s 10 minute block time, Litecoin’s 2.5 minute block time, and Monero’s 2 minutes.
11. Where to store Zcash?
Popular Zcash wallets
Zcash (ZEC) is a popular and well-established cryptocurrency with a wide selection of reputable cryptocurrency wallets to choose from.
However, not every Zcash wallet is the same. Some Zcash wallets have both shielded-address and transparent-address support while others have transparent-address only support.
Wallets with both shielded and transparent-address support:
Wallets with transparent-address support only:
- Atomic Wallet (desktop, mobile)
- Exodus (desktop, mobile)
- Ledger (hardware)
- Trust Wallet (mobile)
- Coinomi (mobile)
Wallet for Zcash (ZEC) Mining:
- ECC Zcashd full node (desktop)
This wallet is for users who want to mine Zcash and validate transactions and blocks in addition to sending and receiving ZEC. It is a full node wallet that is maintained and updated by core developers from the Electric Coin Company.
12. Where to Buy Zcash?
Zcash (ZEC) can be bought and sold on a peer-to-peer (P2P) basis but the most popular way to buy, sell, or trade Tezos is through cryptocurrency exchanges.
You can buy ZEC with cryptocurrency or fiat at the following top exchanges. In most cases, you will have to fund your account with fiat, buy Bitcoin or Ethereum, and then use BTC or ETH to buy Zcash (symbol ZEC).
- Bitfinex - BTC, USD
- Huobi - BTC, USDT, HUSD
- Binance - BTC, ETH, USDT, USDC, TUSD, BUSD, USD, BNB
- Kraken - BTC, EUR, USD
- OKEX - BTC, ETH, USDT, OKB
- Bithumb - BTC, USDT, KRW
- Folgory - USDT, USDC, BTC, ETH
In addition to the exchanges listed above, Zcash (ZEC) is also traded on a wide array of other exchanges and platforms that enable people to buy, sell, or trade cryptocurrencies.
Hope you enjoyed that read :) Let me know if I have missed something in the comments.