• Fri. Jun 21st, 2024

Everything You Need to Know about Zcash and How It Works

Louise Villalobos

ByLouise Villalobos

May 27, 2024
Everything You Need to Know about Zcash and How It Works

Cryptocurrencies are known for their transparency, allowing anyone to track transactions. However, there are a few crypto assets that offer much-need privacy to users. One of them is Zcash. This article explores Zcash. Read on to learn more about this digital currency.

Zcash Defined

Zcash (ZEC) is a privacy digital coin developed using Bitcoin’s code but adopts its own hashing algorithm. Initially trading as Zerocoin, Zcash comes with “shielded addresses” that allow users to transact anonymously. It is worth mentioning that Zcash users have the option to make their transactions traceable.


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Since Zcash uses Bitcoin’s code, it is safe to call it a Bitcoin fork. However, the coin differs from BTC due to its unique privacy features built using zk-SNARKs technology.

Understanding the History of Zcash

Zcash co-founders Eli Ben-Sasson and Matthew Green published their project’s white paper in 2013. Within a few months, several cryptographers offered to help build Zcash as they believed that Bitcoin did not provide sufficient privacy. In 2015, Electric Coin Company CEO Zooko Wilcox announced that his developers would help develop Zcash. In October of the following year, the privacy coin went live.

Zcash’s Key Features

Being a Bitcoin’s fork, Zcash shares a few features with BTC. For instance, new Zcash tokens are minted through the proof-of-work consensus mechanism. Also, Zcash’s total token supply is set at 21 million.

Shielded addresses separate Zcash from Bitcoin. While Bitcoin transactions are pseudonymous, Zcash’s, on the other hand, are anonymous, meaning they are not recorded on the blockchain and can’t be viewed by other crypto users, thanks to shielded addresses.

The Zcash ceremony is another standout feature of the privacy coin. The event happened during the creation of the Zcash blockchain, where a trusted group of entities created a master key for the network and destroyed it when Zcash went live to shield the blockchain from manipulation risks in the future.

Role of Zk-SNARKs and Zero-Knowledge Proofs in Zcash

ZK or zero-knowledge proofs allow crypto users to prove the validity of their transactions without revealing personal information or transaction amounts. Zero-Knowledge Succient Non-interactive Argument of Knowledge (ZK-SNARKs), on the other hand, retains Zcash users’ anonymity by ensuring shielded transactions are encrypted on the blockchain.

How Zcash Works

As mentioned, Zcash transactions can be transparent or shielded. When two Zcash users transact using z-addresses, their transaction is untraceable. Meanwhile, if a user uses a transparent address to send Zcash tokens to a shielded address, the source of the transaction will be visible.

Although Zcash and Bitcoin use the same consensus mechanism, the former’s Equihash hashing algorithm facilitates faster transactions than the latter.

Zcash Developments and Upgrades

Zcash developers have continued to introduce more upgrades to their project since its launch. In 2019, an update dubbed Halo was launched with the intention of addressing scalability issues. More components were added to Halo in 2022. That year, Zcash rolled out its shielded crypto wallet that now allows miners to use shielded addresses to get mining rewards.

In 2020, Zcash developers introduced the Canopy update, which eliminated the controversial “Founder Rewards” and created a development fund.

How to Purchase Zcash

Zcash, currently ranked at 161, with a market cap of $447 million, is listed on numerous reliable crypto exchanges, such as Binance, Kraken, Gate.io, Coinbase, and Kucoin. To buy the privacy coin from any of these platforms, you must first create and verify an account. After that, fund the account with USDT. You can buy USDT tokens using the supported payment methods like debit cards or bank transfers.

Once you have USDT in your exchange account, go to the spot market and swap it for Zcash. Since it’s not advisable to keep your Zcash in an exchange account, you can transfer the coins to a compatible non-custodial wallet like Trust Wallet and Atomic Wallet.

Controversies Around Zcash

Several exchanges have delisted Zcash in recent months following claims from US regulators that the privacy coin facilitates illegal transactions by hiding the crypto addresses of criminals.

Louise Villalobos

Louise Villalobos

Louise Villalobos is an adept writer, renowned for her compelling articles that illuminate and engage. Her prowess in breaking down intricate subjects provides readers with clarity and nuance. With a vast and varied portfolio, Louise has solidified her standing as a distinguished voice in contemporary journalism.