Nov 6, 2018 at 13:11
Nov 17, 2018 at 19:31 UTC
A Beginner’s Guide to ZCash
Recently in our beginner’s guide to Monero,we discussed how it is a privacy-oriented cryptocurrency that attempts to solve Bitcoin’s public visibility issue and ensures untraceable, private transactions. In this article, we discuss another such privacy coin: known as ZCash. ZCash has been enjoying increasing popularity in the recent years and there is no way crypto enthusiasts can afford to ignore this interesting player in the crypto market.
What is ZCash?
ZCash is an altcoin that has been developed using the codebase of Bitcoin Core and is a peer-to-peer cryptocurrency that seeks to maximize privacy and security of users. It makes use of cryptographic principles to make sure that the transactions are not visible to the public, as is the case with Bitcoin where the public key is visible. Let us have a look at what the ZCash website has to say about this privacy coin:
“Zcash is the first open, permissionless cryptocurrency that can fully protect the privacy of transactions using zero-knowledge cryptography.”
It derives its primary inspiration from Bitcoin but improves upon it. Bitcoin works a cryptocurrency that is open and does not require permission. However, it is often also assumed that Bitcoin provides complete anonymity in transactions. That is far from being true because transactions details and public keys are shared on a public ledger and it is hardly too difficult to find out who the senders and recipients of these transactions. ZCash attempts to handle this issue by adding a privacy functionality to the basic Bitcoin model.
ZCash Security and Fungibility
In ZCash transactions are shielded or covered in such a way that all details are hidden completely. Details of the amount, sender or the recipient remains entirely invisible. It is essentially Bitcoin with an added layer of security in transactions. This quality of ZCash makes it not just private or secure but also fungible. In Bitcoin, the transaction records retain all imprints of the past. This means that if you come upon a Bitcoin that was earlier used for facilitating an illegal weapon sale, there will be no way to remove that information and make that Bitcoin as good as a fresh one. With a fungible coin such as ZCash, where transactions are untraceable, such problems are eliminated. ZCash marries the advantages of older systems of currency (that allowed confidentiality in transactions) with the benefits of blockchain technology. ZCash is also entirely decentralized because no central authority can control the blockchain network underlying the cryptocurrency.
Working of ZCash
ZCash functions by an encryption of the data within shielded transactions. It uses zero knowledge proof technology in the form of zK-SNARK to ensure no theft of data or unauthorized activity has taken place without having to go through the actual data. In ZCash, one can choose whether or not to make the transaction public. If it is not public, it is made private and is shielded completely. Public transaction addresses begin with “t” while private ones begin with “z”. All transactions possible over Bitcoin can also be possible on ZCash.
Although ZCash allows a great degree of security and privacy, it is still important to store your ZCash holdings well. You must know how to secure crypto wallets properly in order to enhance the security functionality of the coin and enhance its privacy features.