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Zcash (ZEC-USD) is a so-called currency for privacy. The objective of this cryptocurrency is to protect users who are monitored by providing bitcoin-like features (BTC-USD) (COIN) (OTCQX: GBTC). Zcash was recently added to Coinbase (COINB) through their pro platform, with the expectation of being added to the sales site soon after.
Purpose and classification
If you have a little time, you can take a look at Radiolab's The Ceremony, which deals with creating this coin from within.
Source: Radiolab
I thought it was a great episode, it's worth listening to it. Radiolab explains the process so that everyone can understand: the best sponsored journalism that can be found on the subject.
An important thing to note about Zcash is that the privacy part is optional. If you choose to "protect" the transaction, it will be sent in such a way as to be difficult to trace. However, this mode is not active by default and there are some limitations for the launch of Coinbase.
Initially, we will support deposits from both transparent and screened addresses, but we will only support withdrawals at transparent addresses. In the future, we will explore support for withdrawals to secure addresses in locations where it complies with local laws. For more information on ZEC specific privacy considerations, visit the official Zcash support page. – Coinbase Blog.
This is similar to what Dash does (DASH-USD), allowing private transactions on demand. However, Monero (XMR-USD) provides shielding at all times, without the possibility of disabling this function.
Taxonomy: private currency
Age, History, Current State
Zcash started trading just before Halloween in 2016. His release was very exciting and in short a single Zcash was traded for more than 7 BTC each!
Zcash has a circulating supply of only 5.36 million at the time I am writing this (1 December 2018).
At the start of this year, ASIC machines were built to excavate Zcash. This caused a sensation in the community because it was (or was) believed that the ASIC machines would centralize the mining power of the network. However, some have said that this was inevitable (included Zooko Wilcox, the founder of the project and CEO of the company Zcash). In the end, the decision was that ASIC resistance was not a priority.
Software development
Since Zcash has a foundation, a company and a community, I expected to see a little more activity.
Source: Github.com
However, the Zcash team is responsible for many advances in cryptography. One of these is zkSNARK, which will probably be coded in other cryptocurrencies, such as Ethereum (ETH-USD).
The term zkSNARK stands for "non-interactive and concise knowledge topics with zero knowledge". Basically it's a simple way to test something without having to reveal anything on your own.
One way to think about this problem is as follows: Imagine entering a bar. The bartender asks for your ID. Why are you asking? Well, you can not serve alcohol to anyone under the age of 21. But what other information is revealed when you give someone your driving license? Well, what's your height, weight, address, eye color, driving license number and what else?
The only information the barman needed was proof that you were at least 21 years old. But in the end it got much more than necessary. If there was a zkSNARK for this situation, the bartender would get the proof he needs to cover his back, while you do not have to reveal anything more. This is the basic concept. Oh, and it's much faster.
Market capitalization
Zcash achieved a good price hike with the Coinbase listing, going from the $ 60 range to last week's $ 80 range. Currently, Zcash is the number 19 in the market capitalization.
Source: coinmarketcap.com
Liquidity exchange
There's something funny about Zcash's trading volume. The first three trading pairs all come from an exchange called LBank, which I have never heard of before. This single trade represents 68.61% of the trading volume and the next exchange has the exclusion star next to its price. This means that something strange is happening, so the price is excluded from the average.
Source: coinmarketcap.com
This smells me of heavy market manipulations. If you wish to exchange Zcash, I recommend using Coinbase Pro (and transferring it to a cold storage device as soon as possible).
Token issue model
Zcash is a working cryptocurrency trial, which means it is extracted. The mining activities were carried out with the GPUs, but now it is all about ASIC. Below you will see a list of the best mining pools.
Source: miningpoolstats.stream
Zcash was actually bifurcated by Bitcoin, but several parameters were changed. One of these parameters was the hash algorithm, which was changed from SHA-256 to Equihash.
However, the most controversial change was the distribution of mining reward. You see, with Bitcoin 100% of the mining reward goes to the miners. With Zcash, 80% of the reward goes to the miners and the remaining 20% goes elsewhere.
Source: chirping
The Zcash foundation gets 3%, the company gets 2.8% and Zooko personally receives about 2,033 new tokens a month. In today's terms, this is a paltry $ 162k a month, down from the $ 1.88 million he had used to return to January this year. Who says you can not have the golden parachutes in a crypt?
Safety
Zcash received the approval mark of Edward Snowden. However, hard core security advocates will draw a firm line, putting Zcash and Dash in a different league than Monero. Monero is the current "gold standard" for privacy in the world of cryptoassets.
Cold rooms
Zcash can be stored in a Nano S ledger or in a Trezor hardware portfolio.
Security is the main theme of the white paper, so let's move on to that section now.
White paper
The White paper it is 62 pages long, so going through it line by line would be an excellent substitute for Ambien or sheep counting. But if you're so inclined, you can do it here.
Some things I noticed during his passage were:
- The documentation and references are very detailed.
- The document is very much based on the Bitcoin white paper, from which the project was bifurcated.
- There are two types of address, screened and transparent. This is apparently for verifiability and control over the information that people might want to hide or reveal.
- Zcash is based on the Zerocash scheme, but is separate and distinct from it.
- Private transactions have an address that starts with a z, while transparent addresses always start with a t.
There is a good amount of discussion in dealing with certain types of attacks and exploits. Overall, I think the paper is well written and does not come off like fluff marketing (which happens too often in this space).
Community
The Zcash Company has 72k followers on Twitter. Dash has a 319k follower, but they're a much older organization.
On Reddit, there are 14k subscribers on / r / zec. For comparison, Monero has 147k.
Zcash also has a popular community forum. According to SimilarWeb, they got about 95,000 visits in October.
Source: SimilarWeb
Google trends tell the story from the perspective of Google's search volume.
Source: Google Trends
Monero is the elephant in the room, but Zcash seems to be standing in front of Dash. It is interesting to note that the gap between private currencies (note that the company Zcash sees the term "private currency" as a diminutive) seems to close during this bear market. It will be interesting to see if there is a shock once the market turns a corner.
criticism
Zcash has criticized branding as focused on privacy and thus making the privacy section optional. Moreover, even the great recognitions of the founder have attracted criticism.
If you've listened to the Radiolab podcast, you know that there's a further threat to Zcash. This threat is that the magic "seed" or secret code used to generate the network initially also acts as a skeleton key. If someone were to get this key, he could spend money from Zcash's blockchain at his leisure. This is a big problem.
Many measures have been taken to ensure that this code has never been discovered, but strange things have happened during the "Ceremony". Some have wondered whether the measures taken were sufficient or not. You will have to make a decision on this front, because the truth is that we do not know for sure.
Conclusion
Despite the risks, I think Zcash is an interesting proposition. The team has demonstrated their acumen both academically and in the business world. I still believe that Monero is an excellent choice for privacy, but getting and keeping Monero is still a chore (but we'll talk about it in another article).
I could take a small position in Zcash in the near future.
Greetings,
Hans
This article was first published in Crypto Blue Chips.
Revelation: We are / are long-term BTC-USD, ETH-USD.
I wrote this article alone, and expresses my opinions. I'm not getting any compensation for this (other than Seeking Alpha). I have no business relationship with any company whose actions are mentioned in this article.
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