Zcash: Everything you need to know




Tyler and Cameron
Winklevoss, CEO and president of the Gemini crypto exchange, just
added a new coin called zcash.

Jenny
Cheng/Business Insider


  • Forget bitcoin and ethereum, there’s a new
    cryptocurrency in town: zcash.
  • The Winklevoss twin’s cryptocurrency exchange Gemini
    announced on Monday that it would start trading zcash on May
    22.
  • This sent the price spiking up more than 40%.
  • Here’s everything you need to know about
    zcash. 



Z Cash Fast FactsJenny Cheng/Business Insider

In the world of cryptocurrencies, it can often feel like there is
an innumerable amount of coins to invest in. So when major
players in the space double down on one coin in particular, it’s
worth taking notice. 

On Tuesday, the Winklevoss twin’s bitcoin exchange Gemini
announced the addition of trading and custody for a coin called
zcash, starting May 22. The price of zcash quickly shot up
more than 40% on the news, from around $250 a coin to over
$360. 

The US-based Gemini is small compared to other
cryptocurrency exchanges, but it is also fairly selective. The
exchange presently only lets users trade the two most popular
cryptocurrencies, bitcoin and ethereum, so the addition of a new
coin is a sign that it sees a future for zcash.

Zcash is a lot like bitcoin in that it lives on blockchain
technology and is designed to be used as digital money. But it
has one key thing that bitcoin doesn’t: privacy. 

Gemini’s VP of engineering Eric Winer
called it
“a truly innovative privacy coin that offers
confidentiality for peer-to-peer transactions similar to those
afforded” by normal money.

This is because unlike bitcoin, which keeps a permanent
record of every single transaction in meticulous detail, zcash
lets users choose when to hide their identity or the amount of
currency being moved around.

Here’s what you need to know about zcash:

Zcash is run by a venture-backed startup, but it’s open source

Zcash (ZEC) is a decentralized cryptocurrency designed and
maintained by the Zerocoin Electric Coin Company, or Zcash
Company, a venture-backed startup founded by Zooko
Wilcox
(that’s his real name, though the Z in Zcash
apparently stands for zero, not Zooko). 

Zcash Company built the platform and pays a team of engineers to
maintain it, though decisions about how to govern the platform
fall to the Zcash Foundation. 

Because Zcash is open source, anyone with the technical know-how
can make changes to the code and create what’s known in the space
as a “hard fork” — an update which splits the cryptocurrency into
two different coins. But the Foundation makes it so that those
decisions can be made by a somewhat neutral party. 

This is in contrast to a coin like XRP, the cryptocurrency
controlled by the company Ripple. While Ripple has recently taken
actions to decentralize XRP, its corporate origins have given
some people in the crypto community pause and made it unlikely to
trade on exchanges like Coinbase. 

Today, there are around 3.9 million zcash coins in the world.
Like bitcoin, zcash transactions are processed by miners who
volunteer their computer power in exchange for newly generated
coins.

But unlike on bitcoin, when a miner mines zcash, some of the
newly generated coins go to the Zcash Company and
Foundation. The company treats these coins as revenue, and
use them to pay its engineers and leadership team, as well as
investors. 

Zcash is like bitcoin but transactions can be made
privately 



Zcash April May 2018


The price of zcash spiked
on May 14 when Gemini announced its support for the
coin.


CoinMarketCap


Zcash is designed to be more practical than other
cryptocurrencies. 

“It’s similar to bitcoin in most respects,” said Jack Gavigan,
chief operating officer at Zcash Company. “The key difference is
that with bitcoin, all details are transparently visible on the
bitcoin blockchain, and with zcash you have the option of
shielding the coin.”

Shielding the coin means that in any given transaction, the
sender and receiver can hide their identities as well as the
amount of currency being moved. The blockchain will record that a
shielded transaction occurred, but it won’t say what specifically
happened. 

Gavigan believes this makes zcash more friendly to both consumers
and privacy-focused regulations like Europe’s GDPR — two factors
which could increase the chance of the cryptocurrency being used
by businesses or by average people in their day-to-day
lives. 

“Privacy is a common requirement that people want and it’s
mandated by law in certain jurisdictions,” Gavigan said. “Would
you like it if your credit card statements and bank statement
were published on the internet?”

But zcash also lets people leave their transactions public, which
may be useful in some case, such as auditing “how foreign aid is
distributed or paid.” It means a single cryptocurrency can be
used to privately pay rent or receive a salary, as well as
publicly move money across borders. 

It also costs less money to make transactions on the blockchain

One concern that has emerged with bitcoin is that its
price-per-transaction can get so expensive at times that it is
impractical to make small purchases using the cryptocurrency. In
December, for example, when bitcoin was at its peak price, it
cost up to $55 in mining fees to make a single transaction. So if
you bought a $1 item using bitcoin at that time, you paid $55 in
fees on that purchase. 

But this isn’t an issue with zcash since it has larger block
sizes and blocks are created more frequently on zcash than they
are on bitcoin, according to Gavigan. Zcash blocks are mined
every 2.5 minutes, compared to every 10 minutes on
bitcoin.  

But like bitcoin, it could also fork at any time. The code is
open source, and it’s possible that there will be disagreements
in the zcash community which are so disruptive that two separate
coins are created.


You can read more about forks here

This has happened with bitcoin numerous times, which is how we
ended up with both bitcoin and bitcoin cash. And while it could
happen with zcash eventually, Gavigan doesn’t foresee any major
forks in the future.

However, there are still upgrades coming. The zcash crew is
preparing a new edition of zcash called Sapling, which it will
release in September. 

Currently, transactions on zcash take 30 to 40 seconds to process
since the cryptography associated with the coin is so intense.
But Gavigan said the update with drastically reduce this
processing time, “bring more efficient transactions and open up
the usability of zcash a bit more.”



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