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Zcash is a blockchain and cryptocurrency focused on protecting the privacy of its users.
The Zcash project has made some of the most significant technological breakthroughs in cryptography applied to the blockchain. For example, it is the first blockchain and cryptocurrency to use ZKP (Zero Knowledge Proof). Specifically, it uses zk-SNARKs within its Zerocash protocol. Its long history in the ecosystem, continuous development, and community make Zcash one of the most exciting cryptocurrency projects. Zcash is the second largest privacy cryptocurrency project. The first is Monero.
What is Zcash
The Zcash project began by taking its cue from an idea presented in 2014 by Matthew D. Green, Ian Miers, and Christina Garman of Johns Hopkins University. The three had designed the Zerocoin Protocol. It is a privacy project that sought to expand the capabilities of conducting private transactions in Bitcoin without making considerable changes to the underlying protocol. All this provides the native ability to perform private transactions without using CoinJoin. Currently, the Zerocoin Protocol is still under development. It is a plausible option to implement directly within the Bitcoin protocol, either by being part of the official Bitcoin Core code or for third parties to implement this technology in their developments.
Zooko Wilcox, the brain behind Zcash
Zerocoin could be taken a step further regarding the level of privacy achievable; that is where Zooko Wilcox, a well-known developer from the open-source world, comes in. Wilcox is a computer specialist and cypherpunk who has worked on countless large-scale open-source projects. Wilcox has been involved in crypto projects, Peer-to-Peer (P2P) protocols, and digital money since the 1990s, making him a highly relevant figure in the crypto ecosystem.
For example, Zooko Wilcox worked with David Chaum to develop Digicash, the world’s first digital currency, in 1996. He has also collaborated on projects such as BitTorrent. Wilcox created Mnet, a fork of MojoNation that allows the generation of P2P networks to distribute files freely and also had its marketplace and digital currency. With Phil Zimmerman, another leading figure in the tech and cypherpunk world, known for creating the PGP-Pretty Good Privacy protocol, he collaborates in the Zfone project, a privacy project for VoIP (Voice Over IP). Zooko has also created the BLAKE2 and BLAKE3 hash algorithms, widely used in business and crypto.
With such credentials and expertise, Wilcox designed the Zerocash protocol, a derivative of Zerocoin, which would become the basis for building Zcash. Zerocash takes the Zerocoin protocol further by using ZKP cryptography, significantly improving the security and privacy of the protocol while keeping cryptographic proofs simple and efficiently computable. With these advances, Wilcox officially announced the launch of Zcash and its ZEC token on January 20, 2016, thus beginning the life of this cryptocurrency.
The potential of Zcash
Zcash has some pretty exciting operation capabilities, like generating two types of cryptocurrency addresses with their abilities. First, we have transparent addresses (t-addresses), which start with the letter “t” and allow us to trade Zcash transparently without adding privacy enhancements. It is a very similar use case to what we see in Bitcoin. All t-address transaction information is visible, and someone can easily audit the Zcash blockchain.
Secondly, we have private addresses (z-addresses), which start with the letter “z” and allow us to protect all the transactions’ information so that only the parties involved know what happened. These addresses use all the privacy techniques enabled by the Zerocash protocol. Switching from one address to another is as easy as asking the Zcash wallet to issue an address to use as we wish. In addition, the addresses are interoperable so that you can send value from a t-address to a z-address or vice versa. In any case, the z-address will always maintain the privacy of its side, with the t-side being completely transparent.
It is the user who chooses the way they trade. If you want privacy and transparency, you can choose that option. Should you not worry about how the process occurs or any other additional configuration, as Zcash wallets take care of it entirely transparently for the user? It is important to grasp that this type of option is simple.
Equihash, the algorithm chosen for mining Zcash
An essential point of Zcash is that its blockchain works thanks to a Proof of Work (PoW) consensus protocol. For this, Wilcox and his team have chosen the Equihash mining algorithm, devised by Alex Biryukov and Dmitry Khovratovich. The cryptographic concept known as the Generalized Birthday Problem or the Birthday Paradox is the base for Equihash.
The idea of this problem is simple and based on the following question: What’s the probability that in a group of people, a certain percentage celebrates their birthday on the same day? The approach seems simple, but the resolution of the problem is complex and serves as a basis for generating a PoW test applicable to Zcash. Equihash is an excellent algorithm in its security.
Zcash and privacy
Developers have characterized Zcash since its inception to offer an extra to what Bitcoin offers regarding privacy. Protecting privacy has always been its goal, an issue it has managed to solve excellently. However, Zcash has been a victim of its publicity. At the launch of this cryptocurrency, traders’ expectations raised its price to absurd manipulation quotas, reaching a price of up to $4,000 per ZEC token. It is madness if we consider that initially, Zcash was a “Bitcoin + Zerocash” at a relatively early stage of development, and no one thoroughly explored its possibilities.
The initial momentum quickly collapsed. The value of Zcash as a coin has remained in sharp fluctuation, currently standing at around $40 per ZEC token. This level has been the average value of Zcash throughout its existence. It has yet to reach $4,000. Its highest value, around $750, was acquired in 2018.
A project with a lot to offer
The price of its cryptocurrency means nothing. Zcash delivers what it promises as a project and constantly develops new features for its users. Dealing with the second largest privacy cryptocurrency in the world, Zcash is a highly respected coin as a reliable option for seeking a certain degree of privacy. However, companies such as CipherTrace or Chainalisys can track transactions. It is possible because privacy is optional in the Zcash operation scheme and not by default, meaning you can trace all Zcash coins from origin to destination. And, although z (private) address data is always kept hidden, applying heuristics to discover who might be behind a private address doesn’t cost much. However, there is no 100% guarantee of success.
Zcash always stands out for being a widely accepted option in the crypto world, for having a reasonably solid and active market, and for allowing its users a higher degree of freedom and peace of mind regarding the privacy of their data and transactions on the network. The most outstanding achievement of this crypto is to be the first to make something as complex as ZKP cryptocurrency and zk-SNARKS available to everyone. A Wilcox success that many projects want to replicate.