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Zcash LaunchFor a few months now there has been a lot of hype regarding the release of Zcash – ZEC. Now that the release is here, many are looking to invest in this cryptocurrency. Zcash does have many attractive characteristics that could make it a very successful cryptocurrency. It is basically an iteration of bitcoin, with several improvements that allow it to bestow upon its users advantages that bitcoin cannot. Nevertheless some of its characteristics are not new. Zcash will have to compete for prominence, and it has some tools to do so, which is precisely what makes it one of the most intriguing cryptocurrency launches in the last few months.

Basic Zcash Principles

Although Zcash is based on the same principles bitcoin is based on, Zcash is attempting to give users what bitcoin couldn’t: anonymity. To do this developers worked on a very sophisticated system that not only encrypts transactions to protect them, but also uses encryption to protect the identity of the sender, the receiver and the amount transferred. The public will be thus able to see transactions on its blockchain, but will not be able to identify the details of those transactions unless the parties involved agree to disclose their privacy keys.

The following is a short list of Zcash characteristics every potential user should know:

  • Zk-SNARK encryption allows the network to maintain a secure ledger of transactions without disclosing the parties to those transactions.
  • Zcash developers developed zk-SNARK.
  • Investors have so far paid for the development of ZEC features.
  • There will be no Zcash IPO, which means that this cryptocurrency is not pre-mined.
  • Investors will be repaid by capturing 10% of the coins mined. This is called the “Founders Reward”. This scheme prevents pump and dump strategies.
  • Zcash emulates bitcoin. The network will reach a maximum supply of 21 million coins.
  • Unlike bitcoin, the provisions of the network make it difficult for anyone to mine using ASIC equipment.
  • ZEC is designed for CPU and GPU mining, tackling the issue of centralization.

Anonymity before Zcash

Other cryptocurrencies have already introduced many of these characteristics to the markets. Currencies like Monero and Shadowcash also have systems in place to keep their users anonymous. Zcash nevertheless is a somewhat different currency than Monero and Shadowcash, especially when it comes to its public image. Monero is known as the newly crowned king of underground and dark web transactions that hides the transaction as well as the identity of the parties involved. Shadowcash on the other hand is an inflationary coin. Both Shadowcash and Monero use a sort of automated mixing mechanism to hide transactions and protect anonymity. In the case of Shadowcash the coin mixing mechanism effectively destroys coins to provide anonymity and erase traceability.

 

Monero Price

All time price chart showing the value of Monero in terms of USD. In terms of market cap, Monero is the 6th biggest cryptocurrency right now. This clearly shows there is a market for cryptocurrencies that protect user anonymity like Zcash. Screen shot courtesy of coinmarketcap.com.

 

Shadowcash Price

All time price chart showing the value of Shadowcash in terms of USD. In terms of market cap, Shadowcash is the 23rd biggest cryptocurrency right now. It might not be as popular as Monero because it is an inflationary coin. Zcash which is deflationary, might be able to overtake Shadowcash in terms of market cap over the short term. Screen shot courtesy of coinmarketcap.com.

 

Advantages of Zcash

As a result, Zcash may have more potential to capture mainstream usage than Monero and Shadowcash. ZEC anonymity is purely based on encryption, while both Monero and Shadowcash have conceptually more complex mechanisms in place to achieve the same goal. Simplicity, albeit conceptually, is another trait that may serve to attract more mainstream use.

Acquiring Zcash

The principles that underpin Zcash, make it more desirable also for well-established cryptocurrency exchanges to participate in the launch. Sites such as Kraken, Poloniex, Bittrex and Shapeshift are some of the prominent platforms offering ZEC trading. Initially the supply of coins on these platforms will be restricted, since mining has to start producing a significant amount to be sold. The amount of ZEC that these platforms will have for their customers will largely depend on the miners’ willingness to sell. Reluctance to sell should not be surprising. After many miners who mined bitcoin at the very beginning with their CPU or GPU sold their coins way too early, it would only be natural for ZEC miners to try to avoid the same mistake. Many will wait for the ‘right time’ – high enough prices – to sell.

Early Zcash Market Dynamics will determine its Success

Miners’ willingness to sell is only one component that will determine the success of this cryptocurrency. After all if the project succeeds in remaining CPU/GPU dominant in terms of its mining, then more people will be able to participate in obtaining ZEC rewards instead of buying the coins. Nevertheless that is just one critical component out of many that will determine the success of Zcash. Users will be probing ZEC for the quality of its development in terms of security and technical features. Markets will determine if the attributes of this cryptocurrency can beat those of Monero and Shadowcash in terms of anonymity. Everyone will be keeping an eye on the ability that Zcash has to become a currency with a high enough adoption rate.

Click here to access the official Zcash website.

Steven Gleiser

Analyst and Content Manager at Bitcoin Chaser. Steven has been an avid consumer of any kind of information related to bitcoin, blockchain technology and cryptocurrencies since 2013.

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