Ready to Mine Zcash (ZEC), But Are You Aware of the Initial Block Rewards — Steemit

Ready to Mine Zcash (ZEC), But Are You Aware of the Initial Block Rewards

in zcash •  2 years ago

zcash

At the moment everyone is talking about the upcoming launch of Zcash (ZEC) crypto and there is a lot of hype and interest from users, miners, investors etc. It seems however that many people are still not aware of some of the specifics of Zcash, especially regarding the slow start that is being implemented. The launch of the mainnet of Zcash is planned for tomorrow - October 28th and that goes for mining as well and due to the serious interest the network hashrate of Zcash should be huge right from the start as everyone will be willing to get in early. That however may not be the best thing to do and let me tell you why...

The specifications of Zcash state that the coins will be issued at 12.5 ZEC per block with a block time of 2.5 minutes and rewards will be halving each 4 years or about 840000 blocks. This is pretty much consistent with what is happening with Bitcoin, though with BTC we have started at 50 BTC per block and 10 minutes target block time. With ZEC this translates to pretty much the same amount of coins for the same time period, but achieved with shorter block time and lower block reward, still every 10 minutes there should be 4 blocks totaling 50 ZEC. Because of the difference in specifications the first 4 years will result in 4 times more blocks than what Bitcoin had in the first four years - 840,000 instead of just 210,000.


zcash2
(image source)

Zcash however has implemented what they call a "slow start" and that is the really important thing here for everyone that wants to jump in from the start and begin mining ZEC coins immediately. The first 20,000 blocks that should take about 34 days the mining reward per block will be growing linearly from 0 to the full 12.5 ZEC coins aka the slow start. This specific is set so that people that did not get too early on will still have the chance to get on board before the difficulty skyrockets and it is really hard to mine, or so was the plan probably. With the huge interest and a lot of hype however I expect that people will jump in with a lot of hashrate right from day 1 and the network difficulty will indeed skyrocket and there could be a lot of disappointment from people that missed the read about the slow start.

Another very important thing to consider about Zcash block rewards is the developer's share of all of the blocks that will be mined before the first halving occurs. Each PoW block is being divided 80% for the miners and 20% to the Zcash team until the first halving occurs when 100% of the mined coins will go to the miners. This makes the regular block reward of 12.5 ZEC divided as 10 ZEC per miners and 2.5 ZEC for the Zcash team initially. When you take the slow start with linearly growing block reward this will make the actual block reward going to miners in the first days even smaller...

The first two days and a couple of hours the block reward will barely reach 1 ZEC and with thousands of miners trying to get what little coins will be generated it will really be hard to mine much. There will be literally thousands of Hashes per second of hashrate from cloud mining contracts from Genesis Mining and miners that are leasing their hashrate though services such as NiceHash, not to mention everyone that will be moving their GPU mining rigs to try things out. Even CPU mining might still be a viable option for some, at least initially, though with the small initial block reward it is doubtful. So don't worry that you might not be ready to mine Zcash yet, you will have some time while the block reward grows in the first days and the mined coins per day actually start making some sense.

Because of that design of Zcash at launch and due to the big interest it is possible that the initial price of ZEC will be huge due to the scarcity of the mined coins at the start (that also depends on major crypto exchanges listing Zcash fast). So buying in ZEC early on might not be that good idea, though selling some with big profit and then buying back when things settle down later on might be an option (or directly renting your hashrate). There is no guarantee for that happening for sure though, so does not take this as an actual advice, just something to consider as likely to happen.


If you have a question or want to add something, then please leave a comment below.


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Hahaha "...everything is super intelligent with ZCash" especially how the founders and Angel Investors line there pockets with 20% of all mining rewards going to the investors wizhout ever turning on a single mining rig :-D

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keeps them incentivised to make sure zcash is a success for at least 4 years

I purchased a 10 H/s mining contract from Genesis Mining last night. Highly speculative and risky venture, but I had some extra Bitcoin just sitting around and figured it will be an interesting experiment. Given the recent interest in Monero for similar privacy reasons, the high expectations for Zcash do not surprise me. And with its similar characteristics to Bitcoin regarding coin supply & mining rate, combined with relative scarcity at the start, I agree we can expect a high initial valuation which will probably decrease as sellers gradually bring their coins to the market. But the high price might remain propped up longer than we've seen with recent coin launches since everybody has to mine the supply first.

I've heard that both Kraken and Poloniex will list ZEC from day 1. Which kind of surprises me given it's going to take a long time for any sort of decent depth to build up on the order books. The first few lucky sellers will be able to command ridiculous prices, I'm sure.

If you are mining Zcash, the sensible strategy is to sell as much as you can as fast as you can. And if you are not mining, the best thing to do is sit on your hands and wait for the price to stabilize. Don't buy up the initial thin order book no matter how tempting it may be.

And I actually don't mind the slow mining start. Genesis Mining added a free extra month to their contract to make up for that. And maybe it'll scary away some people after the first few days, leading to hash rate dropping off and a bigger share of the mining pot for dedicated miners in it for the long-term.

I'm going to mine it anyway. I have my gaming PC setup and mining the testnet right now. It will be interesting to see how it goes. It is definitely exciting - just like the old days of mining!

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Hahaha, we need something new to mine from time to time, otherwise it just gets boring :)

Great article, always nice to get a warning in advance.
One thing I've always struggled with, when considering altcoins, is the chance or possibility of a big bitcoin miner pointing their hashing power at the altcoin blockchain for an hour or two, completely messing it up, as a strategic move to kill it as a competitor.
Steem has the proof of stake/witness process, which I understand insulates the steem blockchain from this possibility.
Could zcash theoretically be destroyed like this?

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What do you mean by completely messing it up or destorying it? A huge spike in hashrate can lead to spike in difficulty, but this is not like destroying it, with the more recent difficulty adjustment algorithms used the difficulty is readjusted much more often (up to each block) than it was with Bitcoin and Litecoin for example. Zcash uses such algorithm for difficulty readjustment, though there will be a lot of hashrate right from the start anyway for sure.

As for Steem mining, just take a look at the miner-witness queue at the moment, it has been dominated by two users for a long time and since they are using private GPU miners they are essentially killing the will of anybody else to mine. Fortunately mining does not play a big role in how Steem is secured, but who is to say that somebody with a lot of voting power on Steemit cannot decide to intervene in the top witness list...

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Sorry, I wasn't clear and may be missing something, as I'm not great technically.
I meant a malicious 51% attack.

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With the interest Zcash is getting I highly doubt that any single miner will be able to pull off a 51% attack, that would mean a tremendous hashrate controlled by a single user. If there is such a user he would most likely be willing to mine and profit from it than using it maliciously. I'm actually yet to see a coin being destroyed by a 51% attack and double spending... though some smaller have suffered from loses from such attacks. It is not like you can just point out your Bitcoin mining farm to mine Zcash, because ZEC uses new and different proof of work algorithm and you can only mine it with CPUs and GPUs. Renting all available hashrate from a service such as NiceHash will also not be enough for 51%... and before trying to double spend coins you need to actually have some, so you need to either buy or mine a significant amount first.

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Thanks, that's just the clarification I was hoping for :)

Will be enabled at BitFinex on Friday, October 28th.

Great article :-)

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Well, BitFinex kind of lost its credibility for many user after the hack...

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That's absolutely true! This hack concerned me, I lost about 1000 US$ :-(

MtGox was also a disaster - 4 BTC :-((

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Kraken just announced they will be launching Zcash trading tomorrow with the following trading pairs: ZEC/XBT, ZEC/EUR, ZEC/USD, ZEC/GBP, ZEC/JPY, ZEC/CAD

Great post. I've been interested in Zcash as well, but the same slow start and super hype has me concerned as well. I was tempted to start up a cloud mining account to try it out, but I feel a lot of people are going to be burned on this one either by spending a ton on mining or buying up coins too early before the price reaches some rational equilibrium. The lack of supply in the beginning may support the high initial price, but long term... I dunno. I do think it would be nice to have some Zcash for the features it offers bitcoin currently does not, but I'd also want to know I could transact with it easily as well and right now bitcoin has a huge adoption lead on everything else.

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I guess that a lot of people feel that they missed the Bitcoin train and just jump at every new promising opportunity they get, hoping that this time they will be right to get in from the start... not a bad thing to do, though you should still carefully choose your battles. Zcash does look very promising, but jumping all in without even getting all the details first can be a problem and I'm getting the feeling that many people actually do that. I won't be surprised in seeing a lot of people tomorrow that will just rent enormous hashrate right from the start of the mining from NiceHash and then figure out the hard way about the initial very low rewards.

@cryptos Will you mine it?

BnkToTheFuture is pitching its ZCash Mining Backed Security. What do you think about this option? Is it worth investing in?

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Yep, I will be mining it for sure... As for investing in cloud mining even before launch or into Zcash backed security, or some similar project... I would be careful with these.

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So let me ask you this... Do you think that we are headed towards a "coin" with "one understanding" or rather a new age with multiple meanings?

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It is just really hard to say where were headed nowadays... we have already seen way too many promises going up nowhere...

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I would stay away from the ZMBS. They have offered similar funds in the past which have not performed well. BnkToTheFuture has an agreement with Genesis Mining to use their mining farm for such services. So you're really paying for the underlying Genesis Mining contracts, plus a management fee on top of that to BnkToTheFuture. So you'll get a better deal just purchasing a mining contract directly from Genesis Mining. BnkToTheFuture does offer some interesting and worthwhile investments, so it's a good platform to look at, but do stay away from anything that's described as a Mining Backed Security.

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Thank you for your reply. A sound advice.

Really nice work. Great content, well formatted, tagged in the correct category. Keep it up!

Yea I don't really see how these platforns would ever outperform steemit in anyway, shape, nor form. Not even bitcoin for that matter.. I mean, with steemit everybody gets the best of both worlds! Some learn, some love, some game, some smoke weed, etc...All using their own data and energy to process these "micro-payments." I have many different coins that I have collected and mined along the way, none more valuable than steem. Just my personal opinion, great read though!

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The main focus of Zcash is the payment confidentiality feature and that is precisely why it has recieved a lot of attention, we are going to see how this plays out when it becomes available and even if it offers anoimity, there should still be more to it to continue to be successful after the initial hype at launch... ;)

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Love the anonymity aspect of zcash though all coins virtually set out to do the same when it comes to staying in "ghost mode". I think the main problem still lies with users and not the protocol, but I haven't read to much on this coin. What is their philosophy when securing peoples anonymity ?

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The basic idea is that even though there is a public blockchain the from and to addresses as well as the amount of transactions is actually not directly accessible by just anyone... you need a key to be able to access that data.

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Thanks, I have just been through the ringer as far as coins go so I just like how steemit will be able to interact with any coin or platform in itself.

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I've just made 0.25 btc selling 0.011 zec :D crazy sh*t ;D

Very good post. Thanks for bringing this to my attention. In my opinion blockchain is here to stay. A proper investment for the long term. I was researching a way to do better investment analysis on the current cryptos. Do you know this interesting site? https://www.coincheckup.com They researched and analyzed every tradable coin out there.