What is Zcash (ZEC)?

Zcash (ZEC) is a privacy-protecting, decentralized cryptocurrency. According to the website, Zcash was created as a fork of the Bitcoin codebaseto enable privacy. The Zcash protocol uses zk-SNARKs, zero-knowledge cryptography that ensures the transaction verification doesn’t reveal sensitive information of the transaction. Every transaction gets tracked and managed on a public blockchain, but these public transactions do not reveal user identities. Zcash aims to offer its users the right to privacy while enjoying the benefits of a permissionless digital currency.

Zcash facilitates optional anonymity by offering two types of addresses: transparent address (T-addresses) and private addresses (Z-addresses). Transactions between T-addresses are publicly viewable on the Zcash blockchain. However, Z-addresses are shielded addresses and therefore are not visible. Transactions between shielded addresses do not reveal the transaction address, the amount transferred, or any other sensitive information. T-addresses and Z-addresses are interoperable, and funds can be transferred between the two.

ZEC is the native token of the Zcash platform. The token can be mined using the Equihash proof-of-work algorithm. Proof of work is a transaction verification mechanism that uses hardware’s processing power to produce a new block on the chain. The ZEC token gets used by Z-addresses and T-addresses for transactions. Moreover, the ZEC token is the platform’s cryptocurrency and can be bought on many exchanges like Coinbase.

Shielded transactions of Z-addresses use the zero-knowledge succinct non-interactive argument of knowledge (zk-SNARK) cryptography protocol. There are two parties in the zero-knowledge proof: the prover and the verifier. The protocol states that the prover can prove to the verifier that they possess specific knowledge without actually disclosing what the knowledge is. Therefore, the protocol uses a secret key to confirm the possession of information. For each shielded transaction, the sender uses their key to generate proof that their inputs are valid. Miners check the shielded transaction by verifying the key. This way, Zcash requires more work up front, but it simplifies verifying. 

History of Zcash (ZEC)

Zcash was earlier called the ZeroCoin protocol. The Zcash project got forked from Bitcoin on 28 October 2016. The founder of Zcash is Zooko Wilcox. Wilcox has spent more than 20 years in cryptography and information security and has contributed to projects like DigiCash, Mojo Nation, ZRTP, and many more.

The first whitepaper of ZeroCoin was published on 18 May 2014. An updated whitepaper for Zcash was released on 30 September 2021. 

How Are New Zcash (ZEC) Tokens Created?

Zcash uses a proof-of-work mining algorithm. Miners verify transactions and also secure the network. Zcash has a 2.5-minute block average and offers a block reward that is four times that of Bitcoin. Anyone can join the mining pools that provide steady ZEC rewards based on the hash rate contributed. There are currently eleven active Zcash mining pools with the hash rate ranging from 4 GSols/s to 8 GSols/s. An investor gets the option to choose the pool based on payout method, geographic location, ping time, pool fee, etc. Zcash supports transaction expiration to minimize the impact of a non-mined transaction. A transaction expires and funds remain unencumbered if it is not mined after 50 minutes or 40 blocks.

How Many Zcash (ZEC) Tokens Are There?

The ZEC token has a total supply of 21 million.