Zcash is a public encrypted blockchain and a scientific breakthrough in the cryptography with the use of a zero-knowledge cryptography known as the zk-SNARKS. The framework allows its users to leverage two addresses where one fully private and the other is transparent which is similar to Bitcoin.
These two customizable modes, shielded and transparent, allow the users transaction to be completely anonymous and publicly viewable.
As the cryptocurrencies are gaining a wider acceptance and the world tends to be more decentralized, and the individual’s privacy gets more compromised. This happens mainly because the way most of these cryptocurrencies are designed in first place.
The issue is, the blockchain acts as an open ledger where each and every transaction that a user conducts can be tracked in. While this does solve the purpose of corruption and reduces malicious practices but it completely compromises on once privacy.
Is it really necessary for the users to show each and every part of their activities to the entire world? Is it something wrong to ask for a little bit of privacy?
To answer these, many coins did come up with a solution which offers its users a complete privacy. The flag bearers of this privacy coin genre are the ZCash, Monero, and the Dash.
Zcash is also a decentralized peer-to-peer networked cryptocurrency which was created as a fork of Bitcoin and quite similar to Litecoin. Zcash also has a hard limit of only 21 million coins. But that is the only comparison between the two. Unlike Litecoin, Zcash offers a complete and total privacy to its users with the help of some ingenious cryptography.
Origin of Zcash
As mentioned earlier, Zcash started as a fork of the Litecoin blockchain on October 28, 2016. Earlier it was called as Zerocoin protocol before it got transformed to the Zerocash system and then finally to Zcash.
Zcash as a cryptocurrency, offers significantly an improved privacy to its users when compared to the counterparts.
It was actually developed from the scientific Zerocoin protocol, which was later enhanced to form the Zerocash system. This protocol which was subsequently developed into the Zcash cryptocurrency by the Zerocoin Electric Coin Company, is referred to as the Zcash Company has developed and improved the protocol and also its reference implementation.
Zooko Wilcox-O’Hearn who is the founder of the Zcash Company is also the CEO. Cryptographer Matthew D. Green from Johns Hopkins University played an integral role and was part of the founding team and Roger Ver is one of the company’s initial investor.
Benefits of Zcash
The Zcash coin which is a decentralized and an open source cryptocurrency, provides and offers its users with selective transparency to their transactions.
The cryptographic research of peer to peer network on which the Zcash technology is based on is developed from a battle-tested Bitcoin’s Core code base and it was developed by a team which specialized in security engineering.
Zcash actually uses a cryptographic concept known as the zero-knowledge proofs, something similar to prrof of work, which guarantees the validity of transaction but without actually revealing the information regarding the sender, receiver or at least the value of the transaction.
This zero-knowledge proofs used by Zcash is known as zk-SNARKs where Zk-SNARK stands for “Zero-Knowledge Succinct Non-Interactive Argument of Knowledge,” that is basically a form of proof construction to prove the possession of certain information like the secret key without actual interaction between the person who proves and verifies.
How Does Zcash Work?
Zcash is largely a significant one because it provides a secured transportation layer of the user’s data which is ultimately their identity. It is the real HTTP of money.
For example, imagine an armored car containing the data in a box. The security available in the vehicle protects data from others viewing the contents of the box as well as it provides a safe passage to the data.
But with the Bitcoin, a clear and glass car transports the users data, allowing everyone to see the contents of it. Then it can make the observers, thieves, or the other bad actors provide the ability to see what they have in the vehicle, whether it is the amount of the funds or where they are being moved to.
Zk-SNARKs are a scientific breakthrough in cryptography that allows you to prove an action without having to reveal all the details of the particular action. Before zk-SNARKs, someone would have to re-create and re-test the inputs you used.
Zcash is cryptographic and blockchain money similar to others which permits the private exchanges in an open blockchain.
This indirectly permits the organizations, buyers, and the new applications to control and gets the chance to see the points of interest of the user’s exchanges, even whien utilizing the worldwide authorization and less blockchain.
How does the normal Litecoin transaction take place?
Suppose, A wants to send B 1 BTC, She will send 1 BTC to B’s public address. The miners will then put the transaction details within the blocks and the transaction is then deemed to be complete.
But if suppose A wants to send 1 Zec to B. (Zec = Zcash) and If B is ok with keeping the transaction a transparent and open one for the world to see, then she can send him the Zec to his transparent address called as t-addr.
But, if B wants some privacy and does not want the transaction details to be open in public, he can then simply ask A to send the money to his shielded address also called “z-addr”.
If both A and B use their shielded addresses to interact with each other, then all the details of this transaction will be private and not visible to anyone This includes A’s identity, B’s identity and only the details of their transaction.
This is the reason why Z-Cash achieves such a high level of privacy is due to the utilization of zk-SNARKS or Zero-Knowledge Succinct Non-Interactive Arguments of Knowledge.
Before proceeding to the most critical part we need to understand what Zero-knowledge proofs and zk-Snarks are exactly.
What are Zero-Knowledge Proofs?
Zero Knowledge proofs actually came about in the 1980’s and thanks to the work of the MIT researchers Silvio Micali, Shafi Goldwasser and Charles Rackoff who were actually working on the problems related to the interactive proof systems.
This person who exchanges the messages with the Verifier to convince them that they have a knowledge with a certain proof but without declaring what that knowledge is exactly.
Before this landmark discovery was made, most of the proof systems were based on “soundness” properties of the proof system. It was assumed that the “prover” could be a malicious one in any kind of scenario where in they will try and fool the verifier.
These 3 researchers flipped this idea on the head by questioning the morality of the verifier rather than the prover.
The question they raised was how anyone can for sure know that the verifier will not leak the knowledge and there was also another concern raised as to the amount of knowledge the prover has and the verifier will get to know during this process of verification.
Properties of A Zero Knowledge Proof
For the Zero Knowledge Proof to work properly it needs to satisfy few parameters:
- Completeness:If the statement seems to be true then an honest verifier can be convinced with the answer by an honest prover.
- Soundness:If the prover sounds dishonest, they cannot convince the verifier of the soundness with the statement by lying.
- Zero-Knowledge:If the statement seems to be true, then the verifier will have no clue on what the statement is actually.
Purpose of Zk-Snarks
Zk-Snarks which stands for, “Zero-Knowledge Succinct Non-Interactive Argument of Knowledge” uses a modern blockchain technology in immense.
To understand the application, it is very important to know on how a smart contract really works. A smart contract is basically an escrow of the funds which gets activated when a particular function is done.
For example; A puts 100 ETH in a smart contract that she gets into with B. B has to do a particular task and on the completion of the task; B will get the 100 ETH from the smart contract.
This Zero-knowledge Succinct Non-interactive Arguments of Knowledge called as zk-SNARKs are the mathematical proof constructs which ensures all the information from sender, receiver, and their amount is encrypted along with preventing the double-spending which is a critical element to the successful cryptocurrency architecture.
The transactions have a memo field that can be used to send additional transaction data which is viewable only to the recipients. They could set up this memo in any customized way as required by the industry, a regulatory compliance, or any other legal authorities.
There are many real-world consequences of this conundrum and one of the most famous one which has to do is with the password protection. Suppose if the user wants to login to a website using a password.
The standard protocol is that the user will write their password and then send it to the server, the server then hash the password and equates it to the hash that which is stored in their system. If the value matches up, then he can enter the system.
But a huge flaw can be seen in this system. The server has a plaintext version of the user’s password, and his privacy is at the mercy of the server who is the verifier in this scenario.
If the server gets compromised or gets attacked, then the password will be in the hands of a malicious party and the consequences will be dire. In order to counter such scenarios, the zero knowledge proofs are absolutely an essential and path breaking ones in every sense.
As stated above, there are two parties when it comes to a zero knowledge proof that is the prover and the verifier. Zero knowledge states that the prover can prove to its verifier that they possess a certain amount of knowledge without actually telling them what that knowledge is.
For example, the user can share that they have at least a million dollars in their account without revealing the actual total account balance. The user can also prove that they possess a wallet’s private keys, and in effect its ability to spend something similar to a controller.
One of the odd negative outcomes of Bitcoin’s transparency is that its savvy criminals can gain some anonymity while the average users get no privacy from it.
As the anonymity is not a built-in, most of the users do not change its default settings. But this transparency creates vulnerabilities and the attackers can cherry pick the highest value of victims by seeing who owns the most money in their wallets.
Also on the enterprise side, a business needs to protect the confidential information from its competitors, customers, and even the suppliers.
The Employers might want the payroll to be kept secret from the other employees or their rivals. These trade secrets are not meant to be insignificant, and it should not be underestimated to the utility of protecting them.
The Zcash team is a mix and match of various scientists, engineers, designers, and business pros from worldwide and their resumes include Johns Hopkins, MIT and Tel Aviv University.
The Zcash Founder and CEO Zilko Wilcox puts it as;
It is the first protocol which is one of its kinds and is the product of years of scientific research, advanced engineering, and diligent security work.
We at Zcash encourage the community to experiment with us, to mine, to run a node, and to join the friendly and growing community.
Zcash is a community network, developer-supported and a consensual cryptocurrency, the active participation of the users makes the network stronger.
There is no crowd sale or ICO for the Zcash but rather a private investments from its renowned individuals like the Naval Ravikant, Roger Ver , Erik Voorhees , Barry Silber and Fred Ehrsam.
The Zcash team is working on the second and third versions of Sapling release. Sapling is something which is focused on the improvements for shielded transactions like better performance, the decoupling of the zero-knowledge proof hardware from its transaction signature hardware, and the enhanced shielded keys.
Competition to Zcash
The cryptocurrency market at present is filled with many private coins. However, biggest competitor of Zcash is Monero. Monero utilizes the RingCT and the Ring Signature to provide its users with anonymity.
Other popular private cryptocurrencies include the Dash, PIVX, and ZCoin. Each coin approaches its private transactions in their own unique way and methods.
Trading with Zcash
For a long time, the ZEC price has followed the overall market trends. It had a nice race in 2017 from about a $30 to an all-time high of about $866 till the beginning of January 2018. But ZEC was actually declining in its BTC value. Though it reached an all-time BTC high of about 0.1683 BTC in the June but it fell drastically later.
Zcash seems to be unaffected by most of the coin-specific news. But one of the only exceptions which occurred in May 2018 when its price jumped over 40% in less than a day was on news that the Gemini would soon list its coin.
Other than this market turnaround, there is really one thing that will move the needle for the Zcash price and its adoption.
The project has got the support from many of the top names in blockchain and technology, just be aware of any payment software integrations which may be on the horizon.
Zcash Buying and Storing
A user can purchase ZEC on most of the major exchanges. Binance lists ZEC as a trading pair with BTC and ETH. Bithumb also has ZEC available for the KRW. And the Coinbase, Kraken, Gemini, and Bittrex also accept USD for ZEC.
The Zcash Foundation has released the desktop wallet for Windows, Linux and Mac operating systems. Adding to this Jaxx and Exodus also support ZEC.
Google and Facebook have crafted very profitable businesses from the Zcash data. Max Schrems, who is a privacy activist, requested the information which was available on Facebook for a thesis paper and has received a 1,200-page character profile across many categories.
There is a whole data world available out there and most of the people are unaware on how it works or how it is being used.
The Zero-knowledge proofs and the projects like Zcash protect them from the purview of the age-old institutions which paradoxically offer compliance with the rules and regulations imposed by the same authorities at present
The promise of the privacy-focused cryptocurrencies and the new security layers like the Zcash and zk-SNARKS are the refreshing reminders of an important, and also often overlooked, needs in this increasingly centralized and the data-driven world.