Story of the coin: ZCash

by

Story of the coin: ZCash

You may have seen ZCash, known to miners and exchanges as ZEC, while looking through the list of mineable coins on MinerGate. So what is ZCash and why should you mine it?

Like Bitcoin, ZCash is a decentralized cryptocurrency without a central authority controlling the flow of coins. ZCash is not controlled by a central bank or government. Instead, the blockchain is maintained by miners. These miners earn ZCash coins in return for the use of their resources like electricity and computing power.

Where did ZEC come from?

Where did ZEC come from?  

It all started with ZeroCoin in September 2016, which was inspired by an academic paper of Matthew Green about zerocoin protocol.  

This protocol seeks to improve privacy by “mixing” users’ transactions with others. In other words, the user’s individual transactions and the amount of the transaction cannot be tracked. Matthew Green had further help from two students of his and a developer and current CEO, Zooko Wilcox. The final founder, Roger Ver, is an initial investor to both ZCoin and ZCash. ZeroCoin eventually becomes ZCash in October 2016.

ZCash Partners with JP Morgan

ZCash Partners with JP Morgan

An interesting development in ZEC’s history came in October 2017 when the financial powerhouse JP Morgan partnered with ZCash. This allowed ZCash technology into JP Morgan’s Quorum, their GPL licensed and open sourced system. The idea behind this is to satisfy regulators, who need access to information about financial matters while protecting the privacy of parties that don’t wish to reveal their identities nor the details of their transactions.

Since then, ZCash has become a top-25 ranked coin out of the thousands of cryptocurrencies now available. In late 2017, it reached an all-time high price of over $2 billion in total market capitalization. The development of ZeroCoin into ZCash brought about further improvements to Zerocash protocol, particularly speed and privacy.

ZCash’s Quest for Privacy

ZCash’s Quest for Privacy  

The main improvement of ZCash is its privacy option. ZCash team found Bitcoin (BTC) to be amazing but didn’t like how all of the transactions in the blockchain could be seen by everyone. So, they wanted to create a blockchain that allows people to send and receive funds with increased privacy capability.

Zooko Wilcox improved on the Bitcoin code by increasing transaction privacy and making it faster to use.  The only information you see from a ZCash transaction is the date and time that it occurred. Everything else is hidden due to privacy principles.

Furthermore, ZCash was created with the purpose of sending and receiving funds cheaply and quickly, in addition to privately. The goal of cryptocurrency, including ZCash, is to give people power over their funds.  Also, to be able to send and receive funds without paying exorbitant fees as is the case with modern payment systems and third-party centralized systems.

ZCash is also fast! An international transfer using a centralized payment system could take anywhere from one to five days. However, ZCash transfers are confirmed every 2.5 minutes. This is much faster than Bitcoin, which can take 10 minutes to confirm.

ZCash Mining Improvements

ZCash Mining Improvements

On June 26, 2018, ZCash team updated the network with an upgrade, called “Overwinter”. Basically, it’s kinda of number-zero update, preparing the team and the network for further changes, coming mostly with “Sapling” – update, planned for the late fall 2018.

However, there are several changes done with this 0 upgrade. After the activation of Overwinter, all transactions need to comply with the post-fork format, called “v3.” Older formats don’t work anymore. Another new feature is SignatureHash, some sort of analogue of SegWit: transaction signatures committing to values of the inputs. Moreover, the “transaction version number” feature seems to provide two-way replay protection by adding to each transaction a 4-byte version number.

ZCash Block Rewards

ZEC block reward at the moment is 12,5 ZEC. With a block time of 2.5 minutes, it means that each hour in ZCash network 300 ZECs are issued as a reward.

In the past, mining a block could take 3 days using your home computer. However, as more coin becomes available to the market, the difficulty of mining increases. The reasoning behind this is that as computing power increases, the rate at which coins are produced remains somewhat constant. This helps stabilize the market.

To make mining viable as some coins become more difficult to mine, miners began pooling their resources. MinerGate has significantly reduced the headache of entering the exciting world of cryptocurrency mining.  You can mine ZCash on MinerGate with your computer at home to grab your own share of crypto mining rewards. Or you can run MinerGate mobile app for Android and start mining even with your smartphone.

The Future of ZCash

The Future of ZCash

With the recent push for increased user privacy from the European Union and US lawmakers and increasing concern about online privacy in general, ZCash has caught the eye of many investors.

Bitcoin is not anonymous. Bitcoin is said to be pseudonymous. In simple terms, this means your wallet address acts as your alias, and you can still be tracked by that wallet address. So, ZCash looks to improve on the Bitcoin Code in terms of privacy.

The biggest problem with truly anonymous and private cryptocurrency is government regulation.  Government concerns lie in the ability of anonymous people using cryptocurrency to send and receive illegal funds. It is important that regulators take steps to prevent illegal activities in all financial markets, including cryptocurrency.  However, a balance must be met to ensure that regulation doesn’t unfairly hinder everyday investors, or stifle great technology like ZCash.

All coins face this scrutiny. So, let’s focus instead on the privacy concerns of many honest people.  These users simply desire to keep their identities, their finances, and personal data safe. Although nobody knows the real identity behind a Bitcoin address, it still reveals a lot of information about you. So ZCash is a viable alternative for those who wish to keep their transactions private.

Should I mine ZCash?

ZCash mining hardware is much cheaper than that needed for Bitcoin. If you have a decent computer at home you could mine your own ZCash. The ability to use your CPU or GPU to mine ZCash means that anyone can mine it.  Enjoy and happy mining!

Leave a Reply

Your email address will not be published. Required fields are marked *

eighteen + one =