A primer on the Zerocoin protocol and anonymous coins
IMPORTANT: Please note that since original publication the Zcoin blockchain was hacked and counterfeit coins were minted to such a degree that ~30% of all coins in existence are fake.
The developers chose not to remove the coins since most had already been moved to the exchanges and sold.
Here is a list of forked projects with the same attributes which you may judge to be a more prudent investment opportunity.
Background.
Since 2013 serious crypto traders around the world have been waiting for “Zerocoin” to emerge hoping to buy in early and reap the immense gains promised by zero knowledge proofs replacing Bitcoins pseudonymity with truly anonymous transactions but when that day came most were looking the wrong way.
With it’s huge PR campaign and influential investor portfolio Zcash stole the show as it received more hype than the infamous DAO.
Coindesk did their part (1,2) all but guaranteeing a sea of under informed buyers ready to hand over their money in hopes of becoming rich and it worked.
They totally made up for it a month later though (3).
With that being said Zcash and Monero are great anonymising cryptos and I would use either one with confidence.
What is Zerocoin?
Zerocoin is not a coin at all, it's a technology.
Zerocoin is a protocol just like Bitcoin. There are many versions of Bitcoin (Altcoins) but they are all pretty much set up around a common-ish template, well the Zerocoin protocol is an amendment to this Bitcoin template.
Zcoin makes use of this amendment which allows it to do something special.
Essentially it gives you the ability to send coins to unspendable addresses on the fly and in doing so create a zero knowledge proof (these are your zerocoins) which you can submit to the network later to mint a brand new Zcoin of equal value out of thin air with no transaction history attached, making any ideas about traceability impossible!
What is Zcoin?
Zcoin is the Zerocoin protocol the way it was originally described at Johns Hopkins, the blockchain is transparent thus eliminating any auditing concerns.
Since monetary inflation of any kind would be detected immediately this also mitigates any trust issues during initial setup.
Topological analysis of the transparent blockchain isn’t helpful either since zerocoins can be spent directly to third party addresses.
This means that to an onlooker coins would seemingly come into existence randomly and then then vanish again for an indeterminate period of time.
Zcoins teleport around the network, there are no transactions to analyse.
Watch the promotional video here.
Zcash differences.
Zcoin was launched before Zcash.
Zcash is Zcoin abusing steroids, it too makes use of the Zerocoin protocol and zero knowledge proofs but its resource intensive nature makes it impractical to use due to extensive and unnecessary modifications such as turning the blockchain into a black box which is a hindrance, not a help.
Monero differences.
Monero achieves anonymity through obscurity, it mixes coins in a way that is infeasible to decipher but it’s clear that cryptographically breaking transaction links with zero knowledge proofs and eliminating traceability is the more robust technology.
Summery.
Zcoin offers cutting edge tech which average users can use, however it is constantly confused with Zcash due to their enormous hype campaign and it is for this reason Zcoin may turn out to be the trade of the year.
At the time of writhing (March 2017) coinmarketcap indicates the current value of the three aformentioned cryptos are as follows:
ZEC Zcash: $70
XMR Monero: $7.5
XZC Zcoin: $0.35
According to the website lead developer Poramin earned a masters degree in Information Security from Johns Hopkins University and was the first person to implement stealth addresses in QT-Wallets, improving anonymity.
Once the haze clears it’s reasonable that Zcoin (or some currency based on it) may be recognised as one of the top annon crypto solutions, it also has some interesting milestones coming up on its roadmap such as the Merkle-tree based Proof-of-Work algorithm.
If you trade for profit and are not religious about crypto put some time aside to examine what Zcoin based cryptos have to offer because with 10x your money back at $3.50 it there are worse investments you could make.
If you feel like commenting you can do so on reddit here.
For more information about Zcoin join the friendly community on slack here.