In brief
Created in response to Bitcoin’s perceived limitations, Zcash offers privacy with zk-SNARK tech.
Like Bitcoin, Zcash employs a proof-of-work consensus algorithm, but allows transactions to be either transparent or shielded.
A decade on from its creation, Zcash is one of the privacy coins fighting for private, and decentralized payments.
For many years, Bitcoin was used to buy drugs online because it was believed to be anonymous. Turns out, it’s surprisingly easy to track Bitcoin transactions. Zcash, on the other hand, is a cryptocurrency that promised something Bitcoin couldn’t deliver: privacy.How Zcash worksZcash is designed to hide key transaction details, such as the sender, recipient, and amount. By using cryptographic techniques, transfers can be made that can’t easily be traced on a public ledger while remaining verifiable by the network.Zcash allows transactions to be either transparent, like Bitcoin, or private using zero-knowledge proofs known as zk-SNARKs. This cryptography verifies that a transaction is valid without exposing the sender, recipient, or amount. It is a fungible cryptocurrency when coins are fully shielded, meaning tokens in the private pool are not linked to transaction history. However, most Zcash coins exist in the transparent pool, which, like Bitcoin, maintains a visible history.The network maintains two pools of addresses: transparent (t-addrs) and shielded (z-addrs). Wallets such as ECC’s Zashi now default to shielding funds, encouraging greater privacy.Who invented Zcash?Zcash launched in October 2016 as a privacy-focused cryptocurrency developed by the Electric Coin Company (ECC), led by Zooko Wilcox-O’Hearn, drawing on research from Johns Hopkins, MIT, Tel Aviv University, and other institutions. Like Bitcoin, Zcash (ZEC) has a maximum supply of 21 million coins and block reward halvings every four years.While ECC initiated Zcash, it does not own or control the blockchain. All upgrades require community approval, keeping development decentralized and open rather than directed by a single entity.Did you know?At its launch, Zcash relied on a “trusted setup ceremony” in which six participants each generated and destroyed a portion of a private key. This prevented anyone from being able to counterfeit ZEC.In April 2022, Edward Snowden was revealed as one of the participants in the ceremony. "He did it as a service, as a public good, and believing in privacy," Josh Swihart, former CEO of the Electric Coin Company, told Decrypt.Key dates
