Zcash is a cryptocurrency with a strong focus on the privacy of transactions in a blockchain network. The Zcash network was founded back in October 2016 and runs the cryptocurrency ZEC.
Read on to learn more about Zcash, how it works and how you can use it.
What is Zcash?
Since Zcash is a direct fork from Bitcoin, the two networks share a few similarities. Much like Bitcoin, Zcash is a decentralised peer-to-peer cryptocurrency network with a limit of 21 million coins. The token ticker for Zcash is ZEC. Led by privacy specialist and long time cypherpunk Zooko Wilcox, Zcash was launched with the belief that privacy is essential for businesses, protects societies and is critical for core human values such as dignity, ethics, and intimacy.
“Zcash is another blockchain and cryptographic currency, which permits private exchanges (and by and large private information) in an open blockchain. This permits organisations, buyers, and new applications to control who gets the chance to see the points of interest of their exchanges, even while utilising a worldwide, authorisation less blockchain”
Zooko Wilcox for Blockgeeks
Zcash enables privacy
Shielded and transparent transactions and addresses
When you make transactions on the Zcash network, you have the option to choose if you want your transaction to be transparent or shielded. Transparent transactions are visible on the Zcash blockchain and publicly include information about the sending and receiving parties (public keys) along with the value of the transaction. Shielded transactions use encryption to create strong privacy surrounding the transaction. Shielded transactions aren’t visible on the blockchain and information about the value and participants is kept private.
|Shielded Addresses||Transparent Addresses|
|Are not visible on the blockchain||Are visible on the blockchain|
|The address and value of the transaction is fully shielded and private||The address and value of the transaction is considered public|
|Offers strong privacy||Does not offer strong privacy|
|May not be supported by some wallets*||Supported by all wallets|
Within the Zcash network, transparent addresses will begin with “t” and shielded addressed will begin with “z”.
What is Zcash is used for?
Zcash offers users the ability to conduct private transactions across a blockchain network. There are many reasons for a Zcash user to want to keep payments private.
You may want to pay a family member for a medical bill or a gift, but you might not want anyone else to know.
Zooko describes privacy as being a showstopper for businesses. When making trades with other parties, businesses may want to use Zcash to complete the transaction. Businesses might want to keep their trading activity private in a competitive business market. Using Zcash is an effective way to do this.
The Zcash network can be utilised to ensure consumer protection. In certain industries, businesses may be required by law to protect the personal details of the customer base. The Zcash network and zero-knowledge encryption technology may be used to fulfill some of the privacy requirements.
Zcash uses zero-knowledge proof
What is zero-knowledge proof?
Zero-knowledge proof encryption essentially proves that transactions are legitimate and not fraudulent while maintaining full privacy for the participants and the value of currency involved in the transaction. The zero-knowledge proofs on the Zcash network are called zk-SNARKS (zero-knowledge succinct non-interactive arguments of knowledge). This allows the network to maintain a secure ledger of transactions without publicising the information about its users or amounts of currency involved in transactions.
With zero-knowledge proof, there are two parties involved (the prover and the verifier). The prover is able to prove to the verifier that they possess certain information without sharing what exactly the information is.
In order for zero-knowledge proof to work, there are certain criteria that it must satisfy:
- Completeness: If the statement is true then an honest verifier can be convinced of it by an honest prover.
- Soundness: If the prover is dishonest, they can’t convince the verifier of the soundness of the statement by lying.
- Zero-knowledge: If the statement is true, the verifier will have no idea what the statement actually is.
Why use zero-knowledge proof?
Unlike most proof systems, zero-knowledge questions the maliciousness of the verifier rather than the prover.
Imagine you sign in to a website using a username and password. General protocol requires you to write in your password to be sent to the server to verify your login. The server will then validate this information that is stored in their system and grant you access. This however also means that your password is stored in this server (in plain text) and your privacy is in the hands of the server. If this server was to be hacked or compromised then your personal details along with your password will be in the hands of the malicious third party. This is where zero-knowledge proofs come into play by encrypting all information ensuring total privacy but still being able to validate that a transaction is legitimate.
Where to get Zcash?
On an exchange
You can buy and sell ZEC on any exchange that supports the Zcash network. You can also receive it from someone else into your digital currency wallet. Once you are a verified CoinJar user, you will be able to buy and receive ZEC with your CoinJar.
Much like Bitcoin, ZEC is a mined cryptocurrency. New ZEC will be created each time a block is added to the Zcash blockchain. These new blocks are created about every 2.5 minutes (4x faster than that of Bitcoin). Currently, 12.5 ZEC will be mined per block with the number halving every 4 years.
Where to store your Zcash?
As with all other cryptocurrencies, we recommend storing your currency in a wallet that will keep your coins secure. To learn about the best wallet for you, read the ‘Keeping your Coins safe’ section of this guide.
To buy Zcash (ZEC) with Australian Dollars, open a CoinJar today.
*Currently CoinJar does not support shielded Zcash transactions