What Is ZCash (ZEC)?
Let me tell you about ZCash—it's a blockchain and cryptocurrency that came out in 2016 when some scientists wanted a Bitcoin-like coin but with better features. They forked the Bitcoin blockchain to add stronger user security and anonymity. It started as Zerocoin, then became Zerocash soon after, and finally got renamed to ZCash.
Key Takeaways
ZCash is basically a Bitcoin fork with a different hashing algorithm and security protocols. It began as Zerocash, got improved by the Electric Coin Company, and was rebranded to ZCash. Compared to Bitcoin, ZCash verifies coin ownership and transactions more anonymously, giving users better security. You can mine Zcoin on regular devices and computers, but it's best done on dedicated ASIC systems.
History of ZCash (ZEC)
ZCash comes from the original Bitcoin codebase as a fork. Back in 2014, scientists like Eli Ben-Sasson, Alessandro Chiesa, Christina Garman, Matthew Green, Ian Miers, Eran Tromer, and Madars Virza saw security issues in how Bitcoin tracked transactions on its blockchain. Their whitepaper called it Zerocash. They created Zerocoin through the Electric Coin Company in 2015, and in 2016, it was renamed ZCash by the same company.
ZCash relies on the zk-SNARK security protocol to verify transaction parties without sharing any info with each other or the network. It's an altcoin, meaning any crypto that's not Bitcoin, and many altcoins have unique purposes. With zk-SNARK, ZCash enables fully shielded transactions where sender, recipient, and amount are encrypted— that's a big shift from other cryptos that prioritize transaction transparency while securing user data.
In 2019, the Electric Coin Company passed the ZCash trademark and license to the Zcash Foundation via a bilateral agreement. Then in April 2024, ECC said it would end the agreement and hand over all governance to the Foundation, stepping away from the project entirely.
How Is ZCash Different From Bitcoin?
Bitcoin folks like their transparent transactions with anonymity, but anyone with interest in a transaction can trace the parties. ZCash doesn't wipe out transaction info; it encrypts it so it can't be tracked. The blockchain stays transparent, but zk-SNARK adds extra security and anonymity for users.
Bitcoin uses SHA-256 for hashing, while ZCash uses Equihash, which doesn't work with Bitcoin mining hardware or software. ZCash also has larger blocks and longer hashing times, boosting the network's hash rate—that's the miners' processing power, showing how quickly transactions get verified to open new blocks.
Goals of ZCash
ZCash was built to be efficient, safe, and anonymous. The developers pushed for regulatory compliance too. You can choose full transparency with ZCash, and if you do, it's like Bitcoin's transparency during transfers.
How to Mine ZCash
Mining produces new ZCash coins. You can use your computer with systems like Docker, Debian/Ubuntu, Mac, or other Linux versions. But ZCash suggests ASIC miners and joining a mining pool because the network difficulty is so high that PC mining isn't profitable anymore.
It uses proof-of-work, where miners compete to solve cryptographic problems and produce new blocks. The first one to solve it opens the block and gets the reward.
Who Founded ZCash?
A group of scientists founded ZCash, along with Zooko Wilcox O'Hearn, a computer security expert who started the Electric Coin Company.
Is There a Future for ZCash?
Now that ZCash is with the Zcash Foundation, development continues. But predicting its staying power is tough.
What Is the Disadvantage of ZCash?
ZCash's big challenge is being just another crypto in a crowded space. It gives more anonymity than others, but with regulations and probes into anti-money laundering via crypto privacy tools, users face more scrutiny.
The Bottom Line
ZCash forked from Bitcoin to boost user anonymity. It's still traded actively on exchanges, though its user base has dipped since 2018.
Additional Notes
- Joining a mining pool boosts your ZCash mining efficiency and earnings by pooling resources.
- ZCash is an altcoin, distinct from Bitcoin in purpose and use.
- The comments here are for info only—check warranties and disclaimers for more.
Other articles for you
White label products are goods manufactured by one company but branded and sold by another under its own name.
Capitulation in financial markets refers to mass panic selling during downturns, often signaling the end of a decline followed by a rebound.
The Morningstar Sustainability Rating evaluates mutual funds and ETFs on ESG factors using a five-globe scale to help investors assess sustainability risks.
Weighted Average Life (WAL) is a financial metric that calculates the average time for unpaid principal on loans or bonds to be repaid, aiding in credit risk evaluation.
The energy sector includes companies involved in producing and distributing various energy sources to power the economy.
Zacks Investment Research is a company providing independent financial data, analysis, and tools focused on earnings estimates and stock ratings to aid investment decisions.
Defensive stocks offer stable earnings and dividends regardless of market conditions, providing lower risk but potentially smaller gains.
Ordinary and necessary expenses are tax-deductible costs for running a business or trade under IRS rules.
Unlimited risk in trading and investing means potential for unlimited losses, but it can be managed through strategies like hedging and stop losses.
Agency costs are internal expenses arising from conflicts between agents and principals in organizations.