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Four years after the fork from Bitcoin, the privacy-focused blockchain network Zcash has completed its first halving.
At 12:37 UTC, Zcash passed the 1,046,400 block height to trigger the event that reduces the miners’ rewards from 6.25 ZEC to 3.125 ZEC.
A miner’s reward reduction or “halving” event occurs when the block subsidy generated by the new mined coins is divided by two. The coded event usually activates every four years at particular block heights depending on the particular chain.
Bitcoin had its third anti-inflation halving in March and generally sees its rise after each subsequent halving event when supply is reduced.
Zcash began its journey as a fork of the Bitcoin blockchain on October 28, 2016. It focuses on providing better privacy for users through zero-knowledge cryptography dubbed zk-SNARKs and is developed by the Electric Coin Company (ECC).
Such privacy features have been a money laundering concern for some regulators and policy makers. Earlier this month, Shapeshift, the Colorado-based cryptocurrency exchange, removed ZEC alongside Monero (XMR) and Dash (DASH) – two other more privacy projects – citing increased regulatory pressure.
However, that’s not a problem for all trading platforms: Gemini, a regulated cryptocurrency exchange in New York, began allowing users to withdraw zcash with its anonymization feature in September.
“Zcash is the Bitcoin of privacy,” said Jehan Chu, co-founder and managing partner of Hong Kong-based blockchain investment and trading firm Kenetic. “The halving is not only a key event, but an opportunity for traders to recoup some volume of market share from privacy challengers like Monero.”
Like Bitcoin, Zcash’s total supply has an upper limit of 21 million coins, a supply limit that is the exact opposite of the recent and unprecedented money printing by the world’s central banks, and as a result is attracting the interest of investors.
“Fixed supply cryptocurrencies like Zcash and Bitcoin are not attractive because their issuance rate halves every four years,” said Ryan Watkins, research analyst at Messari. “They are interesting because their issuance schedule is predictable and deterministic.”
See you at the founder’s reward
“What’s arguably much more interesting for Zcash is the activation of Canopy, the fifth update to the network,” Watkins said. “The title of this update is the end of his Founder’s Reward and the start of his new development fund.”
On January 3, 2019, a community forum member known as mineZcash initiated a year-long discussion that has now led to a brand deal and greater decentralization for Zcash within an entirely new governance model that includes integrated funding. for the development.
Previously, the unpopular Zcash Founder Award meant that miners typically received 80% plus transaction fees for mining blocks. The remaining 20% of the reward was divided between various parts, including 9.85% for the founders of ECC, 2.2% for the Zcash Foundation, 5.75% for the ECC itself and 2.2% for ECC employee compensation. This ended with the introduction of Canopy.
After the update, miners will continue to receive 80% of the block rewards, but the remaining 20% will be split between the new Major Grants Fund (8%), ECC (7%), Zcash Foundation (5%).
According to Zcash’s proposal, the Major Grants Fund will support development through “large-scale long-term projects (administered by the Zcash Foundation, with additional community input and control)”.
Watkins noted that market participants were informed “months ago” of the Zcash network halving and upgrade, it’s hard to see those events driving future increases in the value of the ZEC cryptocurrency.
“Maybe the halving at best can raise Zcash’s awareness, due to the advertising halving usually, but who knows.”
At the time of writing, ZEC was trading at around $ 63, down 3% in 24 hours, according to CoinGecko.
See Also: Spiritual Reflections on Bitcoin Halving
