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ZCash (ZEC) Logo
$ 538.09 M
ZEC 1.32 M
~ 21.00 M
Total Coins Mined
~ 9.56 M
*General last updated 07/09/20 6:01:30 PM
Zcash started out as a way to use cryptography to enhance user privacy when conducting transactions more so than other leading coins like Bitcoin or Ethereum do. What started out as the Zerocoin protocol eventually developed into the Zerocoin system before the eventual release of Zcash in 2016. It is built on a public blockchain, with the option of adding a secondary privacy layer where users can hide the recipient, sender, or amount of the transaction. Zcash has been in the news as of late with Ethereum co-founder Vitalik Buterin stating that its pioneering work using zk-SNARKs (a zero-proof cryptography) could be used to help Ethereum scale ‘by a huge amount.’ The token for Zcash is ZEC.
Zcash (ZEC) has a current circulating supply of around 4,800,000 tokens, and although it started as a code-fork of Bitcoin, meaning it kept the initial 21,000,000 supply schedule some things remain different. For example, Zcash used 2.5 minute blocks, and 20% of newly issued coins mined during the first 850,000 blocks are tallied as ‘founder rewards.’ At block 851,000, all rewards go to miners with the eventual ‘founder rewards’ totaling only 10% of the total supply.
The founders wanted to create a coin that was scalable and met the needs of a digital financial system. The main focus was on privacy, in order to ensure the token is fungible across the network while still protecting user privacy. Specifically, for enterprise users like larger corporations presumably using Zcash in their supply chain payments scheme for example. These users require the necessary opacity offered through zero-knowledge proof cryptography, which is not offered through say, a public blockchain. According to their website, the team believes that ‘personal privacy is necessary for core human values like dignity, intimacy, and mortality.’
Zcash was founded by Zooko Wilcox-O’Hearn, Matthew D. Green, and Roger Ver (led the Bitcoin Cash fork, aliases include Bitcoin Jesus), who came on as an initial investor. All development and protocol implementation is led by the Zerocoin Electric Coin Company, or Zcash company. Because Zcash is an open-source protocol, the development team does not have full control but rather relies on a community of developers to suggest improvements and work on existing projects. Zcash launched the Zcash Foundation in March of 2017.
The main feature of the Zcash protocol is the ‘selective transparency’ it offers. Transactions are sent through a public blockchain, with both sender/recipient, and the amount transacted kept private. The underlying protocol is based on Bitcoin-Core, with the addition of the privacy features. The basis of this privacy layer lies in the zero-knowledge proof (zk-SNARKs).
zk-SNARK stands for Zero-Knowledge Succinct Non-Interactive Argument of Knowledge. One party can prove that a given statement is true to another party without revealing any information beyond the statement itself (convincing secondary user that a given hash value exists without revealing the value itself).
In Zcash, the networks consensus rules are encoded directly into the proofs themselves:
i.e.: Computation → Arithmetic Circuit → R1CS → QAP → zk-SNARK
Step 1: transaction validity functions are broken down into arithmetic circuits (smallest possible operations and discrete single steps utilizing AND/NOT.
Step 2: Rank 1 Constraint System (R1CS) is built to ensure the transactions are travelling correctly.
Step 3: There are many constraints for the representation in Step 2, so bundling the constraints into a Quadratic Arithmetic Program (QAP) is necessary. This makes it easier to check a single constrain between polynomials rather than between all the numbers.
Step 4: To acquire the zero-knowledge portion of the proof, a user need only provide ‘random shifts’ of the original polynomials listed in step 3 to satiate the required identity (get the full zk in zk-SNARKs).
Zcash, and more specifically the zero-knowledge proofs behind the technology already have wide-spread appeal within the financial services sector. Public blockchains are great for transacting, but enterprise users would view the complete transparency (especially when sensitive information is at play) as a non-starter. For this reason, pioneering work in the tech behind the Zcash and other zero-knowledge protocols will shape the way enterprise users enter and operate within the blockchain ecosystem at large. On the other hand, as data and privacy become more valuable, the ability to shield oneself from the intrusive reach of targeted advertising, and maintain personal integrity will provide avenues for protocols like Zcash to flourish in the private market as well.
In 2017, Zcash partnered with JP Morgan Chase to encode new privacy layers into the bank’s enterprise-level blockchain. The zero-knowledge security layer was added to Quorum, the Ethereum-based trading platform operated by the institution.
In May 2018, amid a mixed-bag of reviews for the previous year, Zcash announced a partnership with another cryptography project called StarkWare, who plans on implementing the zk-SNARKs protocol into their existing infrastructure and build on it.