Zcash (ZEC) is a decentralized cryptocurrency designed with a focus on financial privacy. The project allows users to choose between transparent and shielded transactions and use cryptographic technologies to protect transaction details.
Zcash was built on the open-source Bitcoin codebase and combines the familiar model of a public blockchain with zero-knowledge proof technology.
The history of Zcash
According to the official website, Zcash was officially launched on October 28, 2016. The project was developed by a group of researchers from MIT, Johns Hopkins University, and other academic and research institutions.
The Zcash founder is Zooko Wilcox-O'Hearn, an entrepreneur and specialist in computer security and cryptography.
In 2016, Zooko also founded the Electric Coin Company (ECC), which launched Zcash and works on the project's development and ecosystem.
How does Zcash work?
Zcash uses Proof-of-Work (PoW) to reach consensus and secure its network. The project inherited several principles from Bitcoin, including a maximum supply of 21 million ZEC.
One of the defining features of Zcash crypto is its use of zk-SNARKs, a cryptographic technology based on zero-knowledge proofs.
zk-SNARK stands for Zero-Knowledge Succinct Non-Interactive Argument of Knowledge. This technology makes it possible to prove that a statement is valid without revealing all the information behind it.
In Zcash, zk-SNARKs are used to verify shielded transactions. The network can confirm that a transaction is valid without publicly revealing details such as the sender, recipient, or transaction amount.
This technology forms the foundation of shielded transactions and is one of the defining features of Zcash.
Zcash is often compared with other privacy-focused cryptocurrencies, such as Monero (XMR) and Dash (DASH), but their underlying approaches differ.
Zcash uses zk-SNARKs to enable shielded transactions, while Monero relies on cryptographic mechanisms such as ring signatures and stealth addresses. Dash uses a two-tier network with masternodes that power features such as CoinJoin and InstantSend, combining privacy and fast payments with a dedicated second layer of network services.
Zcash supports two main types of addresses and corresponding transactions:
- Transparent addresses (t-addresses) work in a way similar to Bitcoin. Address information and transaction amounts are recorded on the public blockchain and can be viewed by anyone.
- Shielded addresses (z-addresses) are used for shielded transactions. With the help of zk-SNARKs, transaction details are protected from public view, while the transaction itself remains recorded on the blockchain.
This means Zcash offers optional privacy: users can choose between a transparent and shielded transaction depending on their needs.
- Shielded pools and Sapling
Shielded transactions operate through Zcash's shielded pools. The ecosystem includes Sapling and the more recent Orchard pool.
A shielded pool enables transactions with protection for certain financial information through zero-knowledge proofs.
Orchard represents a later stage in the development of shielded payments and uses a more modern cryptographic architecture.
Unified Addresses were introduced to make it easier to work with different types of Zcash addresses.
Instead of manually choosing between different address formats, users can use a single unified address that combines multiple network capabilities. This simplifies sending and receiving ZEC and lowers the technical barrier for users.
Unified Addresses support interaction with different Zcash pools, including transparent and shielded pools.
In wallets that support autoshielding, incoming funds can be automatically moved from the transparent pool to a shielded pool. This means users do not have to manually make a separate transfer between pools.
It is important to distinguish this wallet feature from the underlying Zcash architecture: Zcash provides optional privacy, while the level of protection for a particular transaction depends on the address type and operation being used.
Another feature of shielded transactions in Zcash is the memo field.
Users can add an encrypted text message associated with a transaction. For example, the memo field can be used to send payment details or other additional information to the recipient.
In certain scenarios, the memo field can also support sharing of transaction-related information.
What is Zcash used for?
ZEC can be used for different types of transfers and payments. Common use cases include:
- 1. Peer-to-peer transfers. ZEC can be sent to other users through either transparent or shielded transactions.
- 2. International transfers. Cryptocurrency transfers can be used to send funds across borders without relying on traditional payment systems.
- 3. Everyday payments. ZEC can be used to pay for goods and services where cryptocurrency is accepted as a payment method.
- 4. Asset storage. Users can hold ZEC in supported wallets and use shielded pools when they want additional protection for their financial information.
- 5. Donations and crowdfunding. ZEC can be used to support organizations, creators, and other projects. For example, the Zcash ecosystem includes Free2z, a platform that allows users to send ZEC to content creators.
- 6. Payments with additional information. Shielded transactions with a memo field allow users to send encrypted messages along with a payment.
Zcash wallets
The official Zcash website highlights several wallets for the Zcash ecosystem. There are different types of Zcash wallets for storing and managing ZEC:
- Zashi is a mobile self-custody wallet designed specifically for Zcash. It focuses on shielded transactions and makes it easier to send, receive, and use ZEC.
- Zingo! is a mobile application for sending and receiving Zcash and managing ZEC.
- Ywallet is a wallet that supports Zcash and Ycash, with a focus on private asset management and additional features.
