Monero vs. ZCash Analysis

Monero vs. ZCash Analysis

By Filip Poutintsev | poutintsev | 14 Jan 2021


Monero (XMR) and ZCash (ZEC) are the two most popular privacy-centric peer-to-peer crypto-networks of confidential value circulation (or crypto-hawalas, if you will). Although both in practice conceal sender, receiver, amounts and balances, they implement very different mechanisms and protocols and work in altogether different ways to achieve that. We've already covered both in two separate articles, but below we'll make a brief comparison between the two to get a better understanding of their properties in order to make more informed choices when to use which and the particular purposes best suited for each one of them.

Monero

First released in 2014, Monero's protocol involves highly sophisticated cryptographic schemes, apparently designed and developed by professional cryptographers and is perhaps the most cypherpunk-ish crypto project out there. It is sometimes even referred to as what Bitcoin had been intended to function as (but does not, since the ledger is public and auditable, as well as immutable, transactions traceable and prone to analyses which could link them to real-life identities, etc.)

Another reason Monero is sometimes referred to as "the real Bitcoin" is its continuous efforts to maintain egalitarian decentralization of mining and rewards distribution, geared towards CPU-mining (as Bitcoin had initially been) and ASIC-resistance.

The latest version of Monero currently implements a unique consensus PoW algorithm called RandomX, described in more technical detail here.

Monero's strong security and privacy properties have made it a popular cybercrime tool when it comes to money laundering (such as, for example, in the case of the WannaCry ransomware, the Bitcoins from which were then flipped to Monero, breaking the audit trail and making it possible to basically launder the funds - using Shapeshift at the time, the well-known cryptocurrency converter, which didn't require any registration or implement any KYC/AML policies at the time, as it does now). It is also the preferred method of payment in the Darknet and underground online markets where the purchase and sale of illicit goods and services takes place (such as illegal drugs, stolen personal and credit card information, arms, malware and bot nets for rent, etc.)

All this also makes Monero difficult to conform with much of regulatory compliance, making its listing on exchanges more difficult. But it could be said, nonetheless, that Monero is one of the most successful cryptocurrencies as such, not least insofar as fulfilling the original purpose of what Bitcoin was meant to function as (as it makes little sense to trade and keep decentralized assets on centralized exchanges, while at the same time completely revealing ones' identity and person information in order to do so).

For more in depth technical description and explanation, as well as history and background of Monero, the community co-written book "Mastering Monero" is highly recommended and available for free in PDF format here.

Mining Monero

Monero's RandomX algorithm is specifically tailored for ASIC-resistance and egalitarian CPU mining, as mentioned already. It would be even be mined using a web miner, as described in a previous article comparing Monero and Masari (two somewhat similar privacy-oriented coins). The caveat here is that those properties allow for easily spreading Monero-based crypto mining malware, as also described on the Monero mining software Github page:

Antivirus / browser warnings
Unfortunately some bot herders point their botnets to download miners directly from github, which leads them to be flagged by antivirus software. If you want to use the pre-built binaries, you might need to add them as an exception in your antivirus. Another way to prevent antivirus flagging is to compile the code yourself.

As with other mining operations, mining Monero is usually mined in pools and in the cloud. The best known Monero cloud mining services at the moment are Minergate and CCG.

Being mostly CPU-based, Monero's mining process is much less intensive in terms of processing and computing power consumption. To get started with mining Monero, visit their official site's mining section and follow the instructions.

Links and Resources:

ZCash

ZCash (initially known as ZeroCash), on the other hand, started out as a modified Bitcoin fork which additionally implemented zero-knowledge cryptography in how transactions are carried out across the network. Being in many ways more of a research-invested and involved experiment, with potential for a very wide variety of application implementations beyond just cryptocurrency (having academic cryptographers and institutions involved in the R&D, such as Israel's famous Institute of Technology, Technion - which, when thought about, also makes a lot of sense, given Israel) - as already witnessed by the wide spread implementation of its ZkSNARKs (Succinct Non-Interactive ARguments of Knowledge) protocol in other cryptocurrency applications (e.g., Ethereum and others). This is unlike Monero, which is more of a community run project and also the reason why such a large portion of the mining rewards from ZCash go to the founders in order to finance further core scientific research (another example would be the BLAKE3 hashing function developed by ZCash founder Zooko Wilcox and others in January 2020, which is significantly faster than MD5 and SHA-1/2/3, additionally implementing some other very useful properties as it is itself a Merkle tree on the inside).

Development work on Zcash began in 2013 by Johns Hopkins professor Matthew Green and some of his graduate students at Johns Hopkins University, and was completed by the for-profit ZCash Company, led by Zooko Wilcox (well-known figure in the crypto space), raising over $3 million from Silicon Valley venture capitalists for the purpose. It was first mined in October of 2016 and currently implements an equihash type Proof-of-Work consensus algorithm.

ZCash supports both transparent and shielded transactions (in their respective pools). Transparent transactions function pretty much in identical fashion as regular Bitcoin transactions do, while shielded transactions are concealed, utilizing ZCash's zero-knowledge cryptographic protocol known as ZkSNARKs. Shielded, or private transactions could also be revealed if necessary (for the purpose of audits, proofs or some regulatory compliance reason or other, by the owner of the address/wallet himself). But while only as little as 6% of ZCash's transactions seem to be carried out as shielded, transactions on Monero are, on the other hand, are always 100% anonymouys.

The weakest point in the ZCash's zkSNARK scheme is its dependence on an initial trusted setup phase (or "ceremony", as it is called) that could in theory be potentially compromised. In addition to that, zkSNARKs are vulnerable to quantum attacks since they rely on elliptic curve cryptography. Which is why ZCash also works on developing a different ZK construction to substitute zkSNARKs eventually, called zkSTARKs (Zero-Knowledge Scalable Transparent ARguments of Knowledge). ZkSTARK is said to be much faster, cheaper and most importantly, quantum-proof (as quantum computers and something already existing and expected to make much of the current cryptographic schemes and algorithms today obsolete tomorrow) without relying on any trusted setup ceremony. As Zk-SNARKs researcher Professor Eli Ben-Sasson from Technion explains:

zk-SNARKs use asymmetric public key cryptography to establish security. zk-STARKs instead requires a leaner symmetric cryptography, namely, collision resistant hash functions, and thus removes the need for a trusted setup. These same techniques also eliminate the number-theoretic assumptions of zk-SNARKs that are computationally expensive and prone to attack by quantum computers. This makes zk-STARKs both faster to generate and post-quantum secure.

ZCash Mining

ZCash used to be one of the most profitable coins to mine at one time and for a relatively long period, but with the advent of ASIC miners and the industrialization of the mining industry at scale ("economies of scale"), it is today much less profitable and approximating profits in the medium or long-term involves too many variables to be reliably predictable. Such variables that factor in include difficulty, hash rate, ZEC/USD exchange rate, rewards per block and pool fees, hardware costss and power cost per kWh (perhaps the most crucial point, which means that Zcash mining is most profitable when having access to cheap electricity and cool environment).

As with other PoW-based cryptocurrencies, the total hash rate reflects the amount of computing power dedicated to processing transactions. Average block time is 2.5 minutes and, as with Bitcoin, Zcash difficulty is automatically calibrated to stay within that range no matter how much processing power is invested in mining the coin.

When choosing a GPU card for mining ZCash, one should go for the ZCash NVIDIA miner (which is best suitable for mining ZCash on the Equihash algorithm (whereas AMD cards are better suitable and more profitable for mining on Ethereum) - Equihash having the reputation of being one of the most ASIC-resistant hashing algorithms in the industry.

ZCash mostly uses the Zcash Claymore ZEC Miner, available for download here. Hardware-wise, ZEC miners could be GPU rigs or farms, or even equihash-specific ASICs.

There is also a dedicated Zcash reddit for the purpose where one can get the latest updates. Needless to say, it is useless and futile to try with ZCash CPU miner, whether solo or in a Zcash mining pool. The Zcash Flypool and ZCash Nanopool are the most popular ones, with Nanopool also offering pools for Monero, Ethereum, Ethereum Classic and others. A step-by-step Zcash mining guide to get one started (with ZEC or any of the other currencies supported) can be found here. Flypool on the other hand also mines ETH and ETC (as well as the lesser known YEC, RVN and BEAM). The current ZCash difficulty chart can be found here (among other analytics providing sites). More detailed information and resources regarding the best current ZCash mining hardware can be here.

The way how to mine ZCash doesn't differ much from how other similar currencies are mined - once everything is put together, assembled, set and configured, one chooses one of the available ZCash mining pools and joins, sharing in the profits in proportion to the computational resources allocated for the purpose. A Zcash mining and profit calculator for roughly approximating costs, profits and ROIs within the range of current parameters as they are can be found here (one among many available, and as already emphasized, the common denominator in proof-of-work mining is always electricity costs).

Otherwise, one can buy ZCash from Coinbase (using fiat via credit or debit card or swapping with other cryptocurrencies listed by Coinbase). Binance, CEX.io and eToro are other reliable options one can use to buy Zcash, trade or exchange it on the markets (where Coinbase and CEX.io act more as sellers and custodians, Binance and eToro are actual exchanges, with Binance even offering Zcash futures contracts.)

Links and Resources:

Conclusion: Monero Vs. ZCash - Which to Use or Mine, When and What For?

Bitcoin transactions, given the immutability of its public records in the ledger, can result in some bitcoins (UTXOs) to become "tainted", or otherwise associated with a particular hack, ransom or illicit exchange (of, say, illegal goods) - which may lead to their further spending along the audit trail be traced and blacklisted by some services, exchanges or users (or at the very least, come into suspicion or closer scrutiny). This is where Monero, ZCash and other privacy-oriented alternatives come in. And it is their anonymity (as opposed to Bitcoin's pseudonymity) that actually does make them fungible.

Overall, for the purposes of private, unlinkable transactions, Monero tends to be preferred over ZCash (when comparing ZCash vs. Monero), while ZCash appears to be more focused on cryptography research and development, using its peer-to-peer crypto-network as something of a testing ground in real life (as seen also by the amount of shielded transactions actually taking place in ZCash). ZCash may also be much more prone to centralization, as Zooko Wilcox himself confirms, citing David Vorick's blog post, "The State of Cryptocurrency Mining" (dated May 13, 2018). However, it would appear that the ZCash team are less concerned with the practical applications of their cryptocurrency than they are with the research, development, innovation and other practical implementations of ZK constructions (and have contributed enormously to the space overall by doing so).

Also importantly, while Monero relies mostly on volunteer developers and donations to subsidize it (i.e., is community run enterprise), ZCash effectively funds its development budget by taking some 20% of the miners' rewards (15% going to the group of founders and early investors and 5% towards funding developers to further improve the protocol and its implementation).

From a regulatory standpoint, however, both Monero and ZCash may face some difficulties in the future, but appear to be operating more or less under the radar for the time being.

Finally, one of the easiest way to acquire and store both Monero and ZCash is by using the Exodus desktop wallet, which supports a very wide range of available cryptocurrencies (here is also a blog entry from their official site, discussing ZCash and Monero). Alternatively, both Zcash and Monero provide their own respective wallets (ZECWallet and Monero GUI, CLI, mobile and hardware wallets).



poutintsev
poutintsev

Crypto Currency, Anarcho-Capitalism and Life Extension Advocate. Bright Future of Wealth, Freedom and Longevity.

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