Zcash – Should I Trade This Crypto Now?

Cryptocurrencies are very many. In your quest to find one of them to invest in, you may come across all types of advice. You may not even know any currency beyond Bitcoin.

However, there is a new entrant on the scene – Zcash. Despite its short time in the industry, it is shaping up to become a leader in privacy management of user data.

RISK WARNING: YOUR CAPITAL MIGHT BE AT RISK

What is Zcash?

This is an open source ledger/digital currency (similar to Bitcoin), using cryptography technology to regulate their supply and management instead of financial institutions for regulation. The Zcash currency in particular aims to increase privacy for all users, an improvement from other currencies like Bitcoin.

Founded in 2013 by students Aviel D. Rubin, Matthew Green, Ian Miers, and Christina Garman, it initially began as the Zerocoin project. Many people notice that Bitcoin has issues regarding privacy since it guards the user only by using a pseudonym, but Zcash allows full anonymity in all transaction stages.

 

How Zcash works

The system will encrypt the content of transactions. This means that it uses a novel cryptographic method to enhance and confirm valid transactions.

The Zcash platform relies on a zero-knowledge construction, the zk-SNARK. This system bases its operations on new discovery in cryptography. It may work in a similar way to Bitcoin, but the difference lies in the network maintaining a secure record of balances without stating the identity of the parties involved or the transaction amount.

Instead of revealing the user identities, the system encrypts the data and zk-SNARKS come in to prove that there is no fraud involved in the transaction. The currency also allows the user to make payments publicly, so one can use it in both private and public transactions.

When transaction payments from a private address to a public address, the system reveals the transaction balance, while for public to private addresses will prevent revealing of the transaction value.

What makes Zcash different?

Even though the operation of the currency is similar to Bitcoin in some aspects, several features make this currency stand out. These include:

  • The structure of the organization – the setup relates to that of a company, which has led to complaints from many people and users. First, it is not an open source community, which means that user opinions are not factors in making decisions. This can be a bad thing because of lack of user input, but on the other side, it can help the creators to keep the project running despite what some users will say.

  • The ‘Founders reward tax’ – a controversial aspect of Zcash is the manner it taxes miners to reward the founders of the company. The company started with a different approach to most currencies by taking money from investors and using it to make the currency. However, for all units of Z currency that you mine for the first 4%, the company gets 20% in return, making the total amount you get as 10% of the total supply (21 million coins). This is not inherently a bad thing because it allows investment in the currency to soar, but the problem lies in disclosure of where the payments are going, as well as the high tax rates.

Alternative coins to use

Zcash has the potential to succeed among cryptocurrencies, even Bitcoin. However, there are currencies that have bigger potential and work equally as well if not better.

  • ETH (Ethereum) – the main rival to Bitcoin, aside from Ripple. Started in 2013, it allows equalized distribution and running of contracts without third party views. It has a fast rate of processing transactions because it uses programming codes of decentralized applications, unlike Bitcoin and Monero that focus on blockchain technology.

  • XRP (Ripple) – another blockchain user. It is among the largest in the market, and it gives you friction-less, and prompt international payment. The coins do not require mining (only trading) therefore, it reduces computing power. It is also gaining popularity among financial institutions because it allows them to process their customers’ payments immediately.

  • Verge (XVG) – this currency is also a recent one, improving on the Bitcoin and Monero blockchains. Its main aim is to provide both businesses and individuals with a faster and decentralized method of direct transactions while they maintain their privacy. Among its features is an anonymity-centric network including 12P and Tor, and results in transactions becoming untraceable.

  • Dash – markets itself as a “more secretive version” of Bitcoin. It operates on a master network, allowing transactions to be untraceable.

  • XMR (Monero) – 2014 was the launch year for this currency and its development is unique – it uses donations as well as the power of the community to improve its features. It allows for complete privacy as well through a technique called “ring signatures”.

  • Bitcoin – the most famous out of this list, it is a P2P (peer-to-peer) currency, which is also open source. You can operate it on the internet easily without using intermediaries, and transactions cannot reverse once completed (due to their design).

 

Technology behind Zcash

The difference between Zcash and decentralized currencies such as Bitcoin lie in the transactions. Similar to Bitcoin, the users work together to maintain the standard of the currency through confirming the validity of transactions and broadcasting them. The contrast is the manner of handling these transactions, as well as the verification methods.

Zcash expands the blockchain protocol of Bitcoin through the addition of new transaction types, resulting in a separate private-reserve currency. This means it does not show the origin of the transaction, the destination or the amount transacted. The system makes up an anonymous currency together with a non-anonymous base currency (basecoin).

Users can then change the basecoins into Zcash coins, transfer them to other users or split them, as long as the original value remains.

 

Mining Zcash currency

Zcash gives users the opportunity to mine blocks, and the system uses a Proof of Work (PoW), which determines the RAM you own after mining.

The model of supply works in a similar way to Bitcoin, though there are some differences. Among them is the token cap – Zcash puts this at 21 million blocks. The mining reward reduces by half every four years, similar to Bitcoin.

The rewards that the founders get is not in a straightforward manner. The protocol creates 50 ZEC, so the founders will take up to 20% of the blocks while the rest goes to the miners. Every four years, the incentive reduces by half, but within four years, 100% of the reward will go to the miners.

Zcash transactions

There are two types of transactions – pour and mint transactions. Here is a quick breakdown of each.

Pour transactions – these enable users to make private payments through consuming a certain amount of coins. It uses two input and two output coins, assuming that each of the coins appears in another transaction, and the value of inputs is equal to the number of outputs.

Mint transactions – these allow the user to change a specific amount of non-anonymous Bitcoins into the same amount of zerocoins. The transaction has the coin value, the unique serial number and the address of the owner.

Zcash prices and trading history

Since the currency is newer than most, it does not have an extensive record of price changes. Though Zcash has the potential to grow into a leading currency, it is important to remember that all cryptocurrencies are volatile in nature, and price changes may be very significant within short periods.

Several factors contribute to the volatile prices of Zcash. Shortly after its release, it had a strong demand level, resulting in its value shooting up to about $2 million (3,300 BTC). However, the price suddenly fell on the same day to 48 BTC. On 23rd November the currency was at levels of $71.82 (0.097 BTC), which is less than a tenth of a Bitcoin.

The currency has little adoption levels from individuals and platforms, so all of the values were purely speculative. Demand and supply forces will dictate the prices of the currency in future, and many will attempt to invest in Zcash in the hope of getting profits.

Is it worth trading in the coin?

This question has a complicated answer, because some authorities and analysts do not approve of investing in cryptocurrency generally. The reasons they usually give range from the highly volatile nature of these currencies, and the fact that their value is unpredictable. Another issue with Zcash is the current low trading volume, even among individuals.

Zcash has the advantage of improving some aspects of Bitcoin, though the methods it uses leave many people wondering if it is a wise choice to put their money in the currency. However, Zcash is a risk-taking coin – making cryptocurrency attractive while supplementing the coin with features that Bitcoin does not have. Here are some reasons that make it an attractive investment.

  • Has faster processing methods of transactions

  • Privacy is a guarantee when you are working with Zcash. Additionally, it offers you the choice of transparency in your transaction.

  • The advisors working with the team are authorities in their fields.

These benefits do not negate the high risks of investing in cryptocurrencies like Zcash. However, if you can shoulder losses and deal with the high mining taxes, then you can put you money in it.

 

Final thoughts

The rise of Zcash is synonymous with the rise of internet transactions. People want to spend money in privacy; no one wants to reveal their transaction details to third parties. This makes Zcash among the best choices for people who want to maintain secrecy.

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