Zcash Review: A Guide to the Crypto for Private Transactions(5 min read)

Zcash is a privacy-focused blockchain and cryptocurrency developed to expand upon bitcoin by providing users with an option to conceal transaction data and enhance both financial security and privacy. This article takes a deeper look at Zcash’s history, use cases, and market performance. 

Zcash: A brief history

Zcash was conceived in 2013 by Matthew Green, a professor at Johns Hopkins University who designed the cryptocurrency in league with a few of his graduate students. 

Known back then as Zerocash, the coin aimed to tackle one of bitcoin’s biggest shortfalls: it’s lack of privacy. To do so, Green and his team devised the zero-knowledge protocol, a method of proving data exists without exposing said data. 

The final stages of development was led by security specialist and cypherpunk Zooko Wilcox-O’Hearn, who managed to secure $3 million from several Silicon Valley venture capitals and get Zcash over the finish line. 

Use Cases

Zcash looks to improve on the security features of current cryptocurrencies and protect consumer data by giving users the option of keeping transaction details private. Users can opt to either show data on the public blockchain, or hide it as a private transaction. 

Why would users opt to make certain transactions transparent? Because making the data public on the blockchain enables third parties to audit transactions and allows a scope for regulatory compliance that other privacy coins omit. 

Opting to hide payment information ensures that all transactions are completely anonymous, allowing for enhanced financial privacy—something that may be crucial for those living under despotic regimes. 

While privacy coins often get lumped in with criminal activity, it’s important to remember that the blockchain is essentially a public ledger, free and open for all to see. In the same way you wouldn’t want someone snooping through your bank statements, not everyone wants their transaction data exposed. 

By default, Zcash does not reveal the amount sent, or the sending and receiving addresses. Again, this permission is up to the user, so the government can’t forcibly audit and track payments and only if the person agrees to it beforehand.

Security & wallet support

The Zcash network is secured by the proof-of-work SHA-256, the same algorithm found in Bitcoin. The underlying technology that powers its selective disclosure procedure is known as the zero-knowledge proof.

In its purest form, zero-knowledge proofs are a trustless, automated system that authenticates without disclosing private information. In other words, the protocol allows one party to verify data to another party without revealing any information other than the party’s ability to verify the data.

Zcash has two kinds of addresses used to send either transparent or anonymous transactions.  

The z-addr is a fully private address that employs the zero-knowledge proving system to shield a transaction and balance privacy. Meanwhile, the t-addr, or “transparent address,” works in the same way as a typical BTC address. 

It’s important to note that only a handful of web-based wallets support these shielded addresses including ZecWallet, Nighthawk Wallet, and Unstoppable. Nevertheless, users who forgo the additional privacy feature can still store Zcash in a host of other wallets including Trust Wallet, Jaxx, Trezor and Ledger.

Market performance 

Zcash holds a market capitalisation of approximately $1.1 billion with over 11 million tokens in circulation, and a total supply of 21 million. 

Its all-time high trading price stands at $5,941, attained upon Zcash’s launch in October 2016. While its all-time low was $19, reached in March 2020. 

After trading at nearly $6,000 at launch in 2016, the price plummeted, ranging between $40-$300 until hitting $863 in 2018. As of writing, ZEC trades around $108, a 58% year to date increase. 

ZEC/USD. Source: Tradingview

Zcash Review: Conclusion

Despite its fairly lacklustre market performance, Zcash’s unique approach in giving users the option of financial confidentiality enables a level of transparency that some other privacy coins fail to provide. 

However, being so tightly tied to bitcoin’s codebase, Zcash shares similar scaling issues, namely transaction throughput. ZEC can only manage 27 transactions per second (TPS). While this beats bitcoin by around 20 TPS its a figure far lower than it’s crypto contemporaries.  

Additionally, many privacy coins have faced delisting as exchanges attempt to comply with know-your-customer (KYC) and anti-money laundering (AML) regulations.  With the regulatory grip tightening around the world, all privacy coins (not just Zcash) face an existential crisis.

Nevertheless, Zcash has affirmed that the token is fully compliant. Whether policymakers and virtual asset service providers agree is another matter entirely. 

About Evai:

Evai aims to establish the world’s first independent ratings service for evaluating the true worth of cryptocurrencies. The platform combines economic research, machine learning, and AI to pioneer a new approach to crypto ratings and analytics. 

Pre-registrations for Evai’s upcoming rating and analytics MVP platform are now open. Sign-up today at evai.io for a free 60-day trial when the platform launches later this year.

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