What is Zcash?

What is Zcash (ZEC)? How does the Zcash algorithm work? What is the price of Zcash? Where to buy Zcash? Is it worth investing in Zcash cryptocurrency?

Zcash is a peer-to-peer protocol that allows you to perform payment transactions in which all information remains confidential. Users can enjoy all the benefits of the blockchain, protecting their financial data from other network users. Transparency, which is part of blockchain technology, becomes the user's choice. You can choose at least four different transaction methods, depending on your personal privacy preferences.

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What is Zcash (ZEC)?

What is Zcash (ZEC)?

Blockchain technology provides many advantages, such as security and transparency. Transactions are executed in a peer-to-peer network, where they are verified using a consensus algorithm. Blockchain uses open source code, where transparency is the central element. Each digital wallet has a unique address consisting of numbers and letters. Despite the fact that your personal data is not directly related to the transaction, the concept of privacy is questioned here.

Zcash is a cryptocurrency that fully guarantees financial privacy. The protocol ensures the security of your financial information, so it cannot be viewed, transmitted or used for other purposes.

Bitcoin Fork

Zcash, like Bitcoin, aims to become an alternative means of payment. Despite the power and potential of bitcoin, according to the Zcash team, one important component was missing - confidentiality. That's why Zcash appeared in 2016 as a fork of bitcoin. There are also only 21 million tokens. As in the case of Bitcoin, the reward for mining Zcash is halved every year (this process is called halving).

Privacy

When we pay in cash, no one knows how much money we actually have and where this money comes from. However, with the development of the blockchain, the situation has changed. Thanks to transparency, everyone has access to your financial data.

For example, you can enter a bitcoin address through sources such as blockchain.com , where all information is available. In the example below, we see the address of one person who has at least 288,126 BTC. Here you not only see confidential financial information, but also from which address this person sent and received bitcoins.

What is Zcash (ZEC)?

See also what Solana is.

How does Zcash work?

The Zcash algorithm uses the Zero-knowledge proof protocol, with which miners can verify transactions without receiving any information about these transactions. This method implies that the statement is true without revealing the details of this statement.

Thus, personal data is encrypted in the block chain, but can be verified by the network based on consensus. This refers to a special construction of evidence by which it is possible to prove possession of certain information without actually disclosing this information.

Consider an example. Users A and B make an encrypted transaction on the network using Zcash. Miners on this network must confirm this transaction. Users A and B use a test key to protect transaction information. As an example, let's take the random number "17", a code that both sides know. How is this transaction verified?

The miners don't know the content, so they send the code to user A. For example, this number is 22. User A then adds this number to his confirmation key, the number 17. The sum of this digital code is then equal to 39. User A sends this number to user B. But together they agreed on 17 as the key, so user B subtracts this number from the resulting code, resulting in 22. He sends this number to the miner, and it serves as a kind of password.

Thus, the miner can see that both people have a common key and both have authorized the transaction. At the same time, the miner does not have access to the contents of the transaction. In practice, of course, these are complex cryptographic proofs.

The Zero-knowledge proof protocol has 3 distinctive features:

  1. Completeness. This indicates that the transaction has been verified and that permission has been granted to process it.
  2. Reliability. The protocol checks whether the transaction is correct, and whether it is erroneous or fraudulent.
  3. Zero disclosure. The person confirming the transaction does not have any information about the contents of this transaction.

What is zk-SNARKs?

zk-SNARKs is a short, non-interactive, zero-knowledge argument that refers to the anonymity of transactions. Thanks to this technology, no interaction is required between the sender and the recipient. This is realized by a complex mathematical formula.

Lambda

The Zcash protocol is possible only through the implementation of the Lambda parameter. Therefore, it is important that this parameter remains secret. If someone finds out about this parameter, this person will be able to create false evidence, which will disable the system.

Types of transactions

Zcash offers users the ability to encrypt their transactions, but this is not a requirement. Thus, they have the freedom of choice, to do it or not. Two types of Zcash addresses are possible:

  1. Z-addresses: these are private addresses.
  2. T-addresses: they are transparent and therefore publicly available.

This makes 4 different types of transactions possible. Users can also choose a fully open transaction via Zcash, where the entire network can view the data. On the other hand, they can also choose partial protection or a completely private transaction.

Zcash transactions

The transaction from Z to Z is visible in the block chain and is therefore publicly available. This way you can make sure that this transaction has taken place and that the fees associated with it have been paid. However, the address, transaction costs and other information are encrypted and therefore not publicly available.

Halving Zcash and Updating Canopy

The first halving of Zcash took place at the end of 2020, as a result of which the network was updated under the name Canopy. It has created a new network development fund for four years until the next halving. Thanks to the Canopy update, the financial flow support mechanism has been improved and new security standards have been introduced.

The Zcash Team

The Zcash cryptocurrency was launched in October 2016 by Electric Coin Co, an ambitious team of independent scientists and cryptographers. The founder of the protocol is Zuko Wilcox, who has more than 20 years of experience in open and decentralized systems. It is supported by the Zcash Foundation. This is a non-profit organization whose task is to maintain and constantly improve the protocol. This fund was established in 2017.

See also what Cardano is.

What is the price of Zcash?

If you want to invest in Zcash, then first you need to know its price. To do this, you can use the CoinMarketCap service. If you are going to trade Zcash, we recommend that you do technical analysis to see the best moment to buy or sell.

The Zcash token appeared on June 11, 2016 at a price of $ 575. Within six months, this token has already reached its preliminary maximum on October 16, 2016 at a price of $ 5973.83. After that, the price dropped again quite quickly. The next peak of the ZEC price was observed on January 7, 2018 and was $880.76. In the period from December 2018 to December 2020, the price was low, Zcash was trading around $ 30-70. But since January 2021, the price has gone up again. At the time of writing, at the end of December 2021, the price was $167.94.

Zcash price

In the CoinMarketCap rating, the ZEC cryptocurrency is in the TOP 100 by capitalization in 64th place. This coin has good prospects, especially if Bitcoin continues to grow in 2022.

Where to buy Zcash?

Most of the leading exchanges offer to buy Zcash, for example, Binance. There are also many liquidity pools on DEX, such as Uniswap, where you can find Zcash.

See also what brokers exist with cryptocurrency trading.

Conclusions

The emergence of blockchain technology has brought a number of advantages, including transparency of transactions. This transparency is more often used to study the actions of whales in order to anticipate the market. However, such transparency in the network is accompanied by a privacy problem.

Zcash can guarantee privacy and anonymity on the network. As a result, no one will know from whom you received the cryptocurrency and to whom you sent it. The only reason for criticism is the Lambda parameter, which should always be kept secret. If it gets hacked, the Zcash protocol will have problems. Fortunately, the team is constantly optimizing and improving this parameter to and further guarantee the privacy of its users.

Read also the article "The best anonymous cryptocurrencies".