A Beginner’s Guide To Zcash

Zcash is a cryptocurrency that focuses on creating a truly private cryptocurrency. They’ve managed to do this by making transactions public on the blockchain while at the same time hiding important information such as the sender, recipient, and amount of money transferred.


The majority of the cryptocurrencies currently in existence are based on blockchain technology. The blockchain provides the  fundamental building block to build trustless cryptocurrencies on top of. These cryptocurrencies are often anonymous while at the same time being totally transparent. So while I might not be able to see that Jack sent Jill $100, the blockchain provides teh opportunity for me to see that address 123456789 sent a payment to 987654321. Some argue that this level of transparency compromises privacy. Others argue that messing with the inner workings of a system built on full transparency and openness compromises the system itself. Changing the nature of the blockchain as we know it has caused controversy in the past, and every community will always have a group of members who are against proposed changes.

Although there are people in every community that resist any kind of change, there are others who ask for it. The one thing that many people wanted to change about blockchain technology had to do with finding creative ways to build more privacy into the technology.

The fact that every transaction made with many popular cryptocurrencies can be tracked and viewed by anyone worries many people, some for personal security reasons, and others for more malicious ones. Therefore, it’s argued that, adding more privacy to the inner-workings of blockchain technology could improve popularity. This was the primary motivation behind the development of Zcash.


Zcash is a cryptocurrency that focuses on solving the privacy problem many other cryptos have. They do this by making the transactions public on the blockchain while hiding important information like the sender, recipient, and amount of money transferred. Zcash gives the option of privacy and selective transparency by incorporating a new proof-of work method called zero knowledge proof-of-work (which inspired the name “Zcash”).

The project started back in 2014, originally named Zerocash. The project began as a collaboration between the Zerocoin developers (an extension of Bitcoin, proposed by Johns Hopkins University professor Matthew D. Green and a group of former students), and an MIT (Massachusetts Institute of Technology) group of cryptographers. The purpose of this project was to improve Zerocoin and turn it into its own cryptocurrency.

These improvements primarily include more privacy built into the system. Zerocoin’s protocol kept private the transaction origin. Zerocash wanted to build on top of this and proposed to hide the receiver and the amount in addition to transaction origin. They also proposed to create a fully independent cryptocurrency like the others, with its very own coin called ZEC. The project was announced in January 2016 by CEO Zooko Wilcox, a computer security specialist part of Zcash’s founding team.

A few refinements were made to the project, like simplifications, improved functionality, and security fixes that would prevent forgery of coins due to a vulnerability in the original Zerocash code. The first Zcash mining happened on October 2016. By April 2017 it had entered the top-10 cryptocurrencies on the Market Cap, a position it has since fallen from.


As we mentioned, Zcash is a cryptocurrency focused primarily on privacy. It works like the majority of the other cryptos and offers the same service, but what makes Zcash unique is the feature which allows users to make private transactions. The lack of privacy on the original system of the blockchain is one of the main reasons people don’t trust and don’t like to use cryptocurrencies, and Zcash exploited this fault to gain popularity by offering what many people were asking for: privacy.

Zcash achieves this by using a different proof-of-work model. A zero-knowledge proof is a method in which one party can prove to the other something, without giving it information about what it is. A good analogy to help you better understand this is proving to someone else that you know a secret, but without telling them what the secret is. Another example would be proving to someone that you know how many toothpicks are in a toothpick holder, without telling them the number.

The method used in Zcash is actually called zk-SNARKs (the acronym for zero-knowledge Succinct Non-interactive ARgument of Knowledge), a variant of the zero-knowledge proof known as the non-interactive no-knowledge proof, in which the two parties don’t have to interact. The miners then verify the zk-SNARKs without knowing anything about the content of the transaction, without interaction between the prover and the verifier (the miner). This method is used on special shielded transactions, in which the sender, the receiver, and the amount of money are protected. Currently, this is as far as privacy on a public blockchain (without changing its nature) can go.

Zcash also enables completely transparent transactions, with no privacy or protection. The argument to implement both private and transparent transactions is that the shielded addresses do not have some features, like multi-signature wallets, as well as the 3GB of RAM needed to make the shielded transactions. So the server provides this type of transactions for users who want to enjoy the features that shielded transactions don’t provide and don’t mind the lack of privacy. For this, the platform offers users two types of accounts: z-addr for fully private addresses, and t-addr for transparent addresses, just like the Bitcoin addresses.

By enabling both transparent and private transactions, the shielded transactions can become transparent. When a transparent address makes a transaction with a shielded address, and then that shielded address sends the same amount to a transparent address, the “private” transaction could be inferred with indirect knowledge, by correlating the transactions. This would take more time to do, and it wouldn’t be directly public, but it must be acknowledged that there is a way to make a shielded transaction become transparent indirectly.

Zcash has its own currency, the ZEC, and it works just like a traditional cryptocurrency. The fixed total supply is 21 million units, just like Bitcoin, and the mining can be done via CPU and GPU. Currently, it is number 17 on the Market Cap, with a $400 million capitalization.


The privacy problem has been a talking point ever since the first implementation of the blockchain for currency. When it comes to people’s money, a very delicate thing to handle, security and privacy are two important things users look for in a cryptocurrency. Many cryptos tackled the issue, Bitcoin’s CoinJoin, Dash’s PrivateSend, and Monero for example. But none of them have taken it as far as Zcash, yet all three of these examples are higher on the Market Cap. The reason for this could be the fact that, yes, people are looking for privacy, but they also look for other things. One of Zcash’s only unique qualities comes from the choice of private addresses. Will this feature be enough to push Zcash back up as a top cryptocurrency? Time will tell.

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