Zcash All coins are created equally.Bithumb, one of the world’s biggest exchanges for cryptocurrencies such as Bitcoin and Ethereum, added support for a new cryptocurrency on Tuesday.
Bitcoin and most cryptocurrencies expose your entire payment history to the public. Zcash is the first open, permissionless cryptocurrency that can fully protect the privacy of transactions using zero-knowledge cryptography.
Previously Zcash has been referred to as “Zerocash” or “Zerocoin” and was first launched in October 2016 by founder Zooko Wilcox. ZEC’s market cap is currently at $595,261,984 with a circulating supply of 2.31 million coins.
Though this cryptocurrency is inspired by Bitcoin, adds an element of privacy through zkSNARKS, the cryptographic tool underlying Zcash, that Bitcoin, an open financial software system, does not provide.
What is Zcash? What’s so special about it?
Zcash, one such Bitcoin alternative, grew out of the Zerocoin project. While Bitcoin is based on the decentralized blockchain, you can follow someone’s bitcoin address and see their transactions and the movement of money. With Zcash, this information is encrypted, and users get a promise of a deeper sense of security. On a side note, Monero is another privacy-focused, popular bitcoin alternative.
The scientists, advisors and engineers of ZECC developed and launched the Zcash protocol; this includes all of the authors of the Zerocash protocol, most of the creators of the Zerocoin protocol, and leading researchers of zk-SNARKs themselves.
The backbone of Zcash protocol is zk-SNARK, which is an acronym for “zero-knowledge Succinct Non-interactive ARgument of Knowledge.” In simpler language, zk-SNARK could be seen as a new form of “zero-knowledge cryptography” which ensures that the transactions in Zcash are fully encrypted on the blockchain and confidentiality of transaction metadata is preserved.
zk-SNARK is a “special proof of construction” where one can prove the possession of secret information without revealing that. It also removes the need for any interaction between prover and verifier.
Bithumb now lists nine different cryptocurrencies for people to trade: Bitcoin, Ethereum, Ethereum Classic, Dash, Litecoin, Bitcoin Cash, Monero, and Zcash. Lim noted that the number transactions related to Monero, which Bithumb listed in August, and Zcash are growing rapidly.
Zcash Security and privacy
“Security and privacy are two great goals of the decentralization movement,” explains Richard Ma, CEO Quantstamp, a centralized tokenized security-audit platform that focuses on smart contracts before they are deployed to the blockchain. “We’re happy to see zCash and zkSNARKs gaining worldwide recognition for ultimately improving the security and privacy choices of users.”
How does Zcash differ from other cryptocurrencies?
“ZCash has an unique market position compared to other crypto-currencies — every transaction can have hidden recipient, sender and amount,” said Kamil Pzeorski from Experty.” Zero Cash protocol provides more privacy than Monero. On the other hand it is harder to calculate the ZCash total supply.”
Another important thing to note is that it’s impossible to audit the blockchain so that provides some additional risks to ZCash holders in case of a bug in the codebase.
For more on Zcash, watch the below interview with Nathan Wilcox, project manager at Zerocoin Electric Coin company, makers Zcash, which Bithumb recently posted to its official YouTube channel.
Bitcoin vs Zcash, how do they compare?
Nearly eight years after bitcoin’s genesis block was formed, more than 15.75m BTC have already been mined (representing over 75% of the supply that will ever exist on its blockchain).
Zcash’s developers are now standing by to launch a similar cryptocurrency, albeit with some key differences.
Private: All Bitcoin transactions are visible on the blockchain, and there is a Bitcoin Rich List, so Bitcoin is not private. Bitcoin is pseudononymous, not anonymous. For Bitcoin mixers, you have to trust that they can keep their data safe and are not owned by or cooperating with a government, hackers, or other entities.In July of 2017, the founder of the largest Bitcoin mixing service, BITMIXER.IO, announced that they were closing and gave this as their reason:
“ …Now I grasped that Bitcoin is transparent non-anonymous system by design. Blockchain is a great open book… ”
A few weeks later, after considering the various privacy-centric coins, he said this:
“ After the deep investigation I confirm that MONERO is the best privacy currency. So I strongly recommend MONERO for all people who need extra privacy. ”
Untraceable: Since all Bitcoin transactions are visible on the blockchain, ALL Bitcoin transactions can be traced. A Bitcoin mixer can highly obfuscate transactions, making it much more difficult for someone to trace the Bitcoins, but not impossible. As technology progresses and companies which specialize in tracing Bitcoin transactions become more prevalent, once highly-obfuscated transactions will become relatively easily traceable:
- Law Enforcement Continues to Invest in Bitcoin Tracking Services
- Time.com: Bitcoins Are Easier to Track Than You Think
- Elliptic: A Company Specializing in Tracing Bitcoin for Law Enforcement
A Google search will reveal dozens of articles like the ones above. And remember, any transaction that occurred at any time in the past is on the blockchain and has the potential to be traced, even if a mixing service was used. In fact, the use of a mixing service is likely to draw attention to those transactions.
Secure: Bitcoin transactions are cryptographically secure, but you have to trust the mixing service.
Fungible: Not all Bitcoins are equal and have the same value. Some Bitcoins have been blacklisted and blocked by several entities, making those coins less valuable than the rest. If you receive Bitcoins that were used in the past for illegal purposes, then your Bitcoins could be blacklisted even though you had nothing to do with the illegal activity. Or, say a government, employer, or some other entity decides to blacklist your Bitcoins in the future, much like they do with asset freezing or confiscation. There would be nothing you could do. Since a mixer only makes it more difficult to trace your Bitcoins, this category has been marked as “not fungible.”
- Andreas Antonopoulos, a former Bitcoin Core developer who is well-respected in the Bitcoin and other cryptocurrency communities, acknowledges the Bitcoin fungibility problem in a YouTube video.
- Here’s a service that lists the Bitcoins used in the past for less-than-pure purposes.
- Discussion of the Bitcoin fungibility problem on Bitcointalk.org
Decentralized: Bitcoin itself is decentralized, but mixing services are centralized. This means you need to trust them.
Private: Zcash transactions are visible on their blockchain. They do enable hidden transations, but less than 10% of transactions are hidden, in part due the long period of time and computational effort needed by the user’s computer to produce a hidden transaction. Since hidden transactions are optional and not default (and rarely used), the hidden transactions stand out on their blockchain, drawing attention to themselves.
“ And by the way, I think we can successfully make Zcash too traceable for criminals like WannaCry, but still completely private & fungible. ”
If Zcash can be “too traceable,” then it can’t be completely private or fungible.
Untraceable: Regular transactions are transparent. Hidden transactions use the zk-SNARKS algorithm which is fairly new, and therefore it hasn’t had rigorous academic testing. If the lead developer says that Zcash can be “too traceable,” then Zcash can’t be untraceable.
“ Zerocoin would give you this incredible privacy guarantee, then we could add on some features which let the police, for instance, to be able to track money laundering. A back door. ”
Secure:Transactions are cryptographically secure.
Fungible: Since all transactions are not private, the potential exists for an entity to block or blacklist certain coins, making them less valuable than the others. See the note on the lack of Bitcoin fungibility below since the same principle applies to Zcash.
Decentralized: Zcash is a company and currently it takes 20% of all ZEC mined as a founder’s reward.
- Zcash required a Trusted Setup. This means that you have to trust that the system was set up honestly. If it wasn’t set up honestly, unlimited amounts of ZEC could be created without anyone knowing. This would make the hacker rich and devalue ZEC. There is no way to know if the Trusted Setup was executed honestly. We have to take them at their word. This introduces a human point of failure into the system which is counter to almost every other cryptocurrency. You should only have to trust math and verifiable source code in cryptocurrecies, not humans. As we’ve seen with virtually all large software companies, such as Microsoft, Apple, and even governments, they shouldn’t be trusted.
- Peter Todd, a Bitcoin Core developer who participated in the Zcash Trusted Setup, has called it a “backdoor“.
“Zcash is not unconditionally sound, can’t be with current tech…requires a trusted setup…will need to redo the procedure [Trusted Setup] to upgrade the crypto over time so it’s a vulnerability. ”
– Gregory Maxwell, Bitcoin Core developer and cryptographer, in a presentation to Coinbase (Youtube, time 29:30)
Currencies of money will change in the future so that we do not need cash anymore. We have seen these changes already with BitCoin, a third party digital currency that replaces cash. These currencies have not made it big in current times because we are still psychologically attached to cash, it is safe, secure and reliable. In the next 5-10 years we will see a rise in users of online currency like BitCoin. A single BitCoin was valued at $800.00 at one time in 2014, originally starting at $25.00 per coin. The rise was because users are interested to change and the future.
Lastly the biggest change we will see is the methods of payments, we have already adopted the NFC tap technology. The future is going to be using our wallet AS the wallet not a SUBSTITUTE for the wallet. This technology will go hand in hand in the future of our banking and currency.
Below is a video that was recorded of Bill Gates. With his in depth knowledge of technology it can be said he is well informed about the future of technology. He summarizes the past and future of technology and touches base on the world of money.