Zcash cryptocurrency: what is it?
Zcash is a cryptocurrency payment system, the development of which began in 2013
. The creators of the cryptocurrency were cryptographers from several American and Israeli institutions, as well as Zerocoin developers. In the beginning, the Zerocoin protocol was proposed as a supplement to Bitcoin, but the community and developers refused to make changes to the original protocol. Since 2014, Zerocoin has been developing as an independent blockchain. And in 2016, the Zcash project led by Zuko Wilcox was launched based on it.
The most important competitive advantage of Zcash is complete anonymity. Moreover, this function is optional. Users can make both regular transparent payments and anonymous ones. If they choose the second method, the zero-disclosure proof protocol guarantees 100% confidentiality to both parties of the transaction. By activating the appropriate Zcash settings before making a payment, the sender of cryptocurrency funds will keep their data secret. This way, secret benefactors do not have to worry about revealing their identity when donating.
In addition, Zcash offers the lowest fees, starting at just 0,001 ZEC. Also, all ZEC coins are fungible. There is no difference between those that have been purchased and those that have been mined. Thanks to the zk-SNARK protocol, transactions cannot be tracked. It leaves only the timestamp available while hiding all other information.
What are Zcash cryptocurrency transaction types?
Zcash addresses can be transparent or private. The former are designated as t-addresses and the latter ones, as z-addresses. Cryptocurrency transfers are available between any addresses, so there are 4 types of transactions:
- Private (transfers from z to z-address).
- Public (transfers from t to t-address).
- Deshielding (transfers from z to the t-address).
- Shielding (transfers from the t to the z-address).
T-addresses support multi-signatures. This is when a cryptocurrency transaction becomes impossible without the approval of two or more parties.
The highest level of anonymity is achieved with z to z payments. Shielding transfers may contain note fields in encrypted form. The sender specifies in such memo fields the information required by the recipient, which will be encrypted and only the recipient of the Zcash transaction will be able to read them. If desired, or at the request of authorized bodies or an audit company, the owner of the shielding address may disclose details of their transactions.
Wallets for receiving and storing Zcash
The official Zcash wallet is designed for Linux operating system only. Versions for other operating systems, as well as online wallets, simply do not exist. That is why most holders of this coin use third-party solutions, mainly multi-currency wallets.
Cryptocurrency wallets are divided into 5 categories:
- A desktop wallet is a PC application. It can be heavy (contains a full copy of the blockchain) and light (contains only private keys).
- A mobile wallet is a mobile application, the keys are stored either on the mobile device or in the online wallet.
- Online wallet - you can log in from any device via a browser.
- A paper wallet is a printout with a QR code and access keys.
- A hardware wallet is a compact device in the format of a flash drive.
The latter kind is the most reliable and secure. The Ledger Nano S is a good example. Outwardly, it is a flash drive with a display. Inside, it is a smart device with which you can store any cryptocurrency, including ZEC, and fear neither hacking nor information leaks. The OLED display shows the information about transactions, and the side button allows to confirm them with a single click. The device also has a mechanism to restore the owner's account in case of damage or loss.
Popular wallets that usually store ZEC:
Exodus is one of the simplest wallets where you can keep various crypto assets, including Zcash.
Holytransaction is an online wallet in which, in addition to standard operations with cryptocurrency, the possibility of exchanging fiat money for cryptocurrency is implemented
Zecwallet is a convenient software solution for PC, there are versions for Linux, MacOS, Windows.
Guarda Wallet is a universal multi-currency wallet that has the function of acquiring cryptocurrencies for fiat funds. That is, if you want to buy ZEC, you can do it through a bank card.
Coinomi is a wallet that supports over a hundred crypto coins. An application for PC and smartphones is available.
Jaxx is storage of multicurrency format. It can be accessed via a browser, an application on a PC, or a smartphone.
Why miners are trying to get as much Zcash as possible in 4 years
The point is that every four years there is a halving of Zcash. This is a significant event in which the size of the reward for a mined block is reduced. Since the coin was issued in 2016, there has only been one halving since then, reducing the payment for the block by 4 times, from 12,5 to 3,125 ZEC.
It turns out that the miners who had been mining this coin from the moment of its launch until last year earned several times more than their followers. Now the miners of Zcash will have to get by with very little, and those who become active in a few more years will get even less.
The Zcash halving is designed so that 21 million ZEC will eventually be mined. The same mechanism maintains the value of other popular cryptocurrencies as well. It was developed as a way to combat inflation and regulate the issuance of new coins.
What else is good to know about Zcash cryptocurrency
The market capitalization of this coin has currently reached the $1,69 billion mark. 10,94 million ZEC have already been mined and are circulating. The market capitalization is $2,9 trillion.
Some exchanges decided not to trade ZEC and delisted - they took the coin out of circulation on their platforms. As an example, the Bittrex exchange decided to delist three cryptocurrencies, including Zcash, at the end of 2020. There has been no official comment on the reasons for the delisting. We can only assume that this is due to the anonymity of assets and anti-money laundering programs.
Cryptocurrencies, including ZEC, are banned in the following countries:
In Russia, Zcash is not separately regulated by any legal acts, and therefore it is subject to declaration, like any other cryptocurrency, according to the law “On digital financial assets.” And just like any other cryptocurrency, it is prohibited to use it to pay for any goods or services.
According to data published in 2020 by researchers at Carnegie Mellon University, 99% of all transactions in the ZCash network are open. This suggests that users themselves are in no hurry to use the anonymous properties of this currency. Nevertheless, if the desire or need arises, any Zcash coin holder will be able to transfer it to another recipient while preserving privacy.
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