What is Zcash for Dummies | Zcash Review

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What is Zcash?

The “Z” in Zcash (ZEC) stands for “zero,” as in “zero-knowledge proof.” This refers to the cryptocurrency's main feature: the ability to prove that a transaction is valid without any information about that transaction actually being revealed. Users can make their transactions virtually untraceable—unlike Bitcoin and other cryptocurrencies, where the history is visible to everyone—or can choose to make them public, perhaps for transparency reasons.

Created by a team of scientists and engineers, this coin is one of the more academically rigorous projects in this space. Its unique blend of privacy and transparency has received notice from financial institutions, governments, and even black markets.

How does Zcash work?

Zcash is based on the original Bitcoin code with a few changes and additions. At their core, both currencies work the same way: all transactions are validated by miners and permanently stored on the blockchain ledger to create a decentralized store of value. The adjustments are mostly for speed--most notably, cutting Bitcoin’s 10-minute wait between blocks down to 2.5 minutes. Each block is also bigger—2mb versus 1mb—meaning that more transactions can be confirmed at one time, making the process of sending and receiving coins much faster.

Where the two cryptocurrencies really start to diverge is with the implementation of “zk-SNARKS,” which are cryptographic strings attached to hidden transactions. Essentially, they are codes that can only be generated by one person’s private key (so the blockchain can keep track of your account without revealing your identity) and which require that the input and output values be equal (to prevent someone from spending the same money twice or engaging in other duplicitous behavior).

Users can choose to conceal their transaction completely, conceal just some aspects of it, or make it completely transparent. It is possible to have the best of both worlds, though: if you want your transactions to be completely hidden from the general public but still need to be able to show a third party your finances, your wallet can generate a transaction view key. Whoever you give it to can see your activity, but has no control over it.

While it is not completely anonymous—it doesn’t necessarily conceal your transactions’ IP addresses or timing—it can be as private as the user makes it. Privacy does have some tradeoffs, though—generating the extra proof requires more computing power and takes longer than an open transaction.

Recent developments

In May 2017, major U.S bank JPMorgan Chase announced that they would be integrating Zcash into their enterprise-focused blockchain platform.

In November 2017, digital currency investment firm Grayscale Trust made ZEC their third supported cryptocurrency (after Bitcoin and Ethereum), allowing investors to buy stocks tied to its value.

The developers recently announced that in 2018 they will be making private transactions faster and less resource-heavy, with the intention of enabling mobile wallets.

How to buy Zcash

Zcash’s coin is mostly bought and sold on Binance. Here is a quick guide on how to buy Zcash starting with fiat to avoid hefty fees:

1. Buy Bitcoin or Ethereum at an exchange that uses your fiat currency on Coinbase.
2. Transfer your BTC or ETH to an exchange that supports Zcash. Currently, Binance is the best choice. (Tip: if you bought BTC/ETH on Coinbase, look into using GDAX to avoid transfer fees)
3. Buy Zcash by trading your BTC/ETH for their coin, and you’re done!

Fun fact

Edward Snowden, an American whistleblower responsible for leaking information about government surveillance programs, has said that this cryptocurrency is “the most interesting alternative” to Bitcoin.

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