What is ZCash?
Coin of the Week: Zcash [ZEC]
Zcash is a cryptocurrency intended for making payments. Unlike Bitcoin, the parties involved in the transaction and the amount being exchanged are all encrypted. It was released in 2016, created by Zooko Wilcox, and backed by famous Bitcoin contributor Roger Ver. The software is open source, however Zcash was made into a company, rather than remaining a community driven project.
The mining algorithm of this coin is Equihash, which requires very high amounts of RAM, making this coin ASIC-resistant (because RAM is very expensive, and that is assumed to deter ASIC manufacturers). It is best mined with multi-GPU rigs. Like Bitcoin, it also has a 21-million-coin emission that halves every 4 years, with a 131-year mining lifespan.
During the first 4% of mined coins, a 20% share was taken of that emission and given to the Zcash founders, for various uses. That 20% share continued until 10% of the total emission was held by founders, spread over time. This idea was to prevent the founders share from being dumped onto exchanges once the coin is listed, as often happens with other coins who use a “pre-mine” system, giving the founders and early investors their share first, and causing the value of the coin to drop dramatically, right from the start.
Zcash uses a consensus method called zk-snarks, or Proof of Construction. This maintains a private, encrypted ledger that can still be verified by the network nodes, but is impossible to read with the naked eye (unlike Ethereum). How this works is with a lot of complicated math! Don’t try this at home.
Interesting facts:
- During its launch, Zcash was priced at $4,293.37! And that’s was in October of 2016. As you may have expected, within only two months the price crashed by 98.8% to $49. But they did not give up. In the last year, its price shot up by 1,108%. It peaked at $876.31 during the first week of January 2018 but fell nearly 78% from this high as of July 23, 2018.
- Zcash thought the best way to keep everybody happy was not to disclose how the founders’ fees were being split up. Their genuine intention was a complete failure because this caused major controversy, as did the method of obtaining the tokens in the first place.
- Zk-snarks is classified as a ‘zero-knowledge proof’, a concept first introduced in a 1980s graduate paper, called Zerocash, written by Professor Matthew Green.
- Edward Snowden, the famous NSA whistleblower, endorses using Zcash.
- Zcash is one of only seven coins chosen by Circle in their initial round of crypto offerings to accredited US investors and institutional money managers.
- One of the founding fathers of Zcash, cryptographer professor Matthew D. Green also founded the Zerocoin protocol, and Zerocash, which converts Bitcoin to Zerocash, to enable its privacy functions, and then converts the Zerocash back to Bitcoin.