Zcash: A detailed analysis of the Zcash crypto including futuristic projections
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Zcash: A detailed analysis of the Zcash crypto including futuristic projections

By Infotips | Cryptocurrency Ish | 28 Feb 2020


Introduction

Zcash's genesis block was mined in October 2016, and since then cryptocurrency has been programmed to provide its users with enhanced privacy and security. Zcash uses advanced cryptography, dubbed zk-SNARKS or Zero-knowledge proofs, to protect transactions. It enables one party to prove to another that something is true, without disclosing any detail, apart from the fact that this particular statement is true.

Zcash was able to capitalize on Bitcoin's privacy issues and forked its code base. There are two forms of transactions on its blockchain: shielded (using zk-SNARKS) and unshielded (just like the original bitcoin blockchain), rendering anonymity a choice for its users.

Thanks to optional anonymity, Zcash faces tough competition from both forms of payment coins: private and non-private. Realistically, the privacy of the zcash transactions is only 12%.

Still, in the privacy coin sector, players like Monero have privacy by default and a higher level of acceptance among their users.

So while Zcash is considered a privacy coin, it needs to find its place in the market. Alternatively, with no clear use cases, it will lose either to a more sophisticated and private altcoin counterpart or to Bitcoin, which has a greater user base.

Zcash has the potential, as a payment solution, to threaten many markets. It possesses the ability to become a method of retail payment. Retail sales in the US alone amounted to $5.7 trillion in 2017, while worldwide retail sales are expected to grow by more than $27 trillion by 2020. Growing penetration in this market represents a significant opportunity for growth.

However, while more than half of the world's adult population has access to banking, 1.7 billion people remain unbanked (without a financial institution or a mobile money provider) according to the Global Findex Database.

Blockchain payment solutions can offer all sorts of banking services, such as payments, loans, money transfers, etc. These individuals represent a large audience outside the traditional banking system that is ready to adopt blockchain payment solutions.

Zcash will win the offshore capital market with its privacy features, too. The extremely wealthy have raised at least $21 trillion in hidden offshore accounts. If even 1% of it is invested in Zcash, the price of the coin would rise to new heights.

One of the most promising spots for the blockchain industry was the payments market.  Cryptocurrencies have the potential to remove several "intermediary payments" to make transfers cheaper. Thus, various coins have come out to challenge and act as a payment mode for the cryptography adopters.

Zcash refers to different payment options, such as credit cards, bitcoin and cash.

The market is challenging and the company faces intense competition across all industries.  Below is a table that reflects some of the main blockchain-based rivals.

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Zcash is currently losing to rivals in the crypto industry, in both private and non-private sectors.

Its main competitor in the private coin sector is Monero. Through nature, the coin is anonymous and is considered the first option for those who wish to hide from the general public transactions. If you use private Zcash transfers your acts may be considered suspicious, just for doing so. When someone uses shielded transactions while everyone else uses open ones, problems are likely to occur, as the Zcash network masks just 12 per cent of transactions.

Moreover, as coins switch from "unshielded" to "shielded" and back to "unshielded" addresses, they can lose some of their privacy. It partly explains why Zcash has a low percentage of private transactions on its ledger.

The competition for private coins is dynamic, and competitiveness can go beyond' doing a better product.' For example, the president of the Zcash Foundation worked on a research paper that looked at the linkability of Monero transactions.

The paper was published an hour before the planned Monero hard fork and was deemed to have been "paying for attack" by the group since the largest flaw in the paper had been found about two years earlier, was mitigated over a year earlier, and was almost completely resolved before the first edition of the paper was written.

In the non-private sector, businesses like Stellar have been able to move much further in terms of infrastructure and network growth, and 3 to 5 seconds of approval time is much more acceptable for payments.

Dash is another coin that offers anonymity as a choice. Although there are many concerns about the level of privacy it offers, Dash is probably the most popular cryptocurrency in Venezuela and continues to build partnerships and networks in different countries, growing popularity and continuing to gain market share.

The NVT analogy shows a story similar to that. Zcash sales are valued even cheaper than Dash and Stellar. This is fair because users, for the most part, use Zcash as a non-private currency, making it the same as bitcoin, but with a much smaller network effect.

Zcash is also likely to face pressure from firms that are not currently building blockchain, but already offering payment services in traditional markets. These companies have high network effects, and they can quickly become dominant players if they enter the blockchain market.

Western Union, for one, is already testing Cryptocurrencies and is ready to add them to its network. MarketCap also filed a patent that suggests a multi-currency ledger.

If these companies adopt some of the technologies that the current blockchain payment systems have, they could become dominant players on the market.

 

The team behind the Zcash project

Zooko Wilcox - Zooko is Zcash Company's Chairman. He has over 20 years of experience with stable distributed systems, open source and free software, and startups. He's known for his work on DigiCash, Mojo Country, ZRTP, "Zooko's Triangle" and more.

Andrew Miller – Andrew is the Chairman of the Board of Directors of the Zcash Foundation. In addition, he is an associate director of the Center for Cryptocurrencies and contracts, an adjunct professor in the Electrical and Computer Engineering Department of the University of Illinois at Urbana Champaign.

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cross section of Zcash team

 

Zcash Company has built a well-rounded team of more than 30 individuals with diverse backgrounds, including web developers, marketing professionals, analysts, legal staff, company managers and more.

The Company's team also have over 30 seasoned marketing professionals, web developers, legal personnel,  scientists,  business developers etc.

Prominent professors that oversees high-end research on ZK-snarks are also on the team. It is however noteworthy that the ZK-snark technology is highly ambigous to understand, and only few people in the world really understand the mathematical manipulations behind it. The Zcash company has also got a great research team which is a valuable asset for them and will obviously drive further research on ZK-snarks for the industry.

They are also supported by popular advisors including: Vitalik Buterin (Founder of Ethereum),  Arthur Brietman (Founder of Tezos), Gavin Andresen (Founder of Bitcoin foundation) etc. With such advisors in place, it can open Zcash to  for the numerous partnerships and business development.

 

The Underlying Technology of Zcash

Zcash is a bitcoin fork using the Equihash proof of work agreement algorithm. It is an all-inclusive operation. Equihash was initially chosen on the basis of its very powerful authentication capabilities, which are important for certain practical advancements such as the light client implementation, the Z-cash framework on Ethereum, and more.

Zcash also provides for the protection of privacy by zero-knowledge proofing (zk-SNARKS). The term zk-SNARK stands for "Zero-Knowledge Concise Non-Interactive Statement of Knowledge" and applies to an evidence design in which it is possible to prove existence of certain facts without the release of that information and without any interference between the prover and the verifier.

Nevertheless, due to its cryptographic limitations, such parameters must be created during the setup process. The easiest way to build SNARK public parameters is to have someone develop a private / public key pair and then remove the private key. When the keys are not lost, an infinite number of ZEC tokens can be issued, and the cumulative distribution can be inflated.

The organization also developed a multi-party measurement procedure to mitigate this danger by allowting multiple users to create a' shard' of the private / public key pair, then remove their private key shard, then merge their public key shards to shape public SNARK.

In the run-up to its launch in October 2016 and in October 2018 Zcash was awaiting the upgrade of the Sapling Network through two multiparty calculation ceremonies.

The quality of this stable set-up is generally considered a cryptocurrency limitation, because it does not depend on encryption or mathematics and depends on general confidence that entrepreneurs will not jeopardize the set-up.

If the procedure has not been breached, four simple Zcash transfers are carried out: internal, disconnecting, shielding and public.

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Personal Z addresses are accessible and open T-addresses are available.

On the shared ledger a Z-to-Z transaction occurs, but the emails, the transaction number and the memo area are not available to the public.

As in the initial Bitcoin, the T-to-T trade is transparent.

Transactions Z-to-T and T-to-Z are not completely private and can be connected in some situations to each other, exposing delicate details.

Today, Zcash blockchain has only about 12% of secured transactions.

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Looking further, for a coin that is considered private, the number of transactions between Z and Z is around 0.4% of all transactions ever made.

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The problem with low shielded transaction adoption was expected to be fixed by the Sapling update, which implemented major efficiency improvements for shielded transactions: a 90 percent reduction in transaction time and a 97 percent reduction in memory. 

Confidential transfers were fairly heavy and uncomfortable to use before Sapling. They required more than 3 GB of memory and more than 40 seconds. This has been reduced to 40 MB of data and done for a few seconds.

Sapling will enable the adoption of shielded transactions by large web, exchange and seller, and is a significant advancement for the company. In fact, it emerges from the discussion with the team that there is significant interest from wallets and exchanges in introducing shielded addresses.

On the other side, switching to Sapling discloses funds from consumers. The creators did this intentionally to show that the first multipartmental measurement procedure had not been corrupted.

The update to Sapling reveals the money of users on the other hand. This was done intentionally by the creators to ensure that the first multi-party programming event was not corrupted. The fact that Zcash is a privacy coin is a major concern. In the future, the legislature, which can theoretically replicate the case, will have an impact over key decision makers. Such a precedent will frighten people searching for secrecy.

This can partly explain why there was no significant increase in covered transaction behavior since its publication in October 2018. The number of transactions shielded remains relatively small, showing little concern among Zcash users in privacy.

 

The Road map of Zcash

Zcash's Plan has a public availability plan for 2019, with several key objectives including promoting the introduction of shielded transfers and introducing the next update to the protocol.

The protocol update is expected to be triggered in October 2019 and should include some important features:

Harmony Mining: dual-proof-of-work system, compliant with current mining hardware, as well as temporarily with GPU's.

Light Client Protocol Dovetailing: Change the foundation agreement protocol to improve the assistance of light clients.

Split Founders' Prize: alter the rules of agreement so that the Zcash Organization, the Zcash Group Strategic Reserve, and the others have distinct emails.

Transaction Validation Usability and Security Improvements: enhance usability and protection of payments and confirmations when accounting for increasing volume and demand of transactions.

 

BOLT assistance: Basic arrangement protection for second-layer application BOLT.

Custodian Enhancement: Which includes a variety of new enhancements that can effectively safeguard both traditional end-users and professional custodians.

 

Zcash will be able to complete its technical improvements in the coming year, by providing its past performance. One of the most important issues the company will work on, however, is that acceptance. On this side the roadmap isn't clear. The complementary effect of technology enhancement may not be enough to push for further adoption of the cryptocurrency.

 

Conclusion

A number of prominent professors push advanced ZK-snarks work. It should be remembered that knowledge of this technology is highly complex, and there are few people in the world who grasp the logic behind it. The research team is a valuable asset for the company and will push more industry research into ZK-snarks.

The organization is also funded by well-known advisors such as Vitalik Buterin (Ethereum Founder), Gavin Andresen (Bitcoin Foundation Founder), Arthur Brietman (Tezos Founder), etc. Getting these experts will open a wide range of doors to the Company in terms of various collaborations and business development.

But the team does not consider it as an optimal long-term development strategy to have a centralized company responsible for a private cryptocurrency. The Group then agreed to create the Zcash Base in 2017, which is meant to be completely independent from the Zcash Business.  A part of the Founders Reward will be allocated until November 2021 to the Zcash Foundation.

Zcash Company is still pushing the momentum on the roadmap at the moment, and that will continue for at least a few years. If Zcash Foundation ever matures and becomes truly independent of Zcash Company we may see a shift toward more democratic decision-making.

But for the organization and for the group these systems remain unclear.

Zcash has a large project team that will remain there for at least several years until Zcash has to shift its management to a new funding scheme. ZEC token has a strong link with the sector, which still has a long way to go through the whole implementation process. The token is primarily used for betting and mining purposes. In general, both these groups worry about anonymity and secrecy, and they are concerned with the advantages of the token.


Infotips
Infotips

A crypto/internet internet business enthusiast. A geophysicist. A songwriter. I am down to earth and I believe that everyone should be given a chance to express their talent/gift.


Cryptocurrency Ish
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