ZCash is a cryptocurrency with a decentralized blockchain that seeks to provide anonymity for its users and their transactions.
Like Bitcoin, ZCash also has an including its open-source code, but their major differences lie in the level of privacy and fungibility that each provides.
ZCash was founded by Zooko Wilcox-O’Hearn in October 2016 in response to Internet users’ demands for an open financial system with added privacy features.
ZCash seeks to maintain the same structure as Bitcoin but with privacy and fungibility as added features.
Fungibility refers to the ease with which one commodity can be substituted for another. Money–whether it is gold or a fiat currency like the U.S. dollar–is fungible because you can trade it for anything else.
Because fungible instruments are susceptible to fraud and theft, gold is kept in underground vaults and fiat currencies require constant surveillance by treasuries and central banks.
Bitcoin’s solution to fraud and theft was to make all transactions totally transparent and one hundred percent traceable.
Unfortunately, Bitcoin’s deprecation of privacy is also a flaw that it has sought to solve. Some of Bitcoin’s original users mistakenly believed that because wallet addresses were pseudonymous, that using Bitcoin was anonymous.
However, legal action against darknet sites like the Silk Road proved that all it takes is a small amount of information in order to reveal the true identity behind a Bitcoin wallet.
Zcash innovated by adopting Bitcoin’s open ledger system and encrypting information about the ledger’s users.
This means that even though all ZCash transactions are recorded on a blockchain, the transactions are encrypted and can only be viewed by users that have been given access to them.
ZCash employs a cryptographic tool called zk-SNARKs, which stands for Zero-Knowledge Proofs. This tool allows two users to engage in transactions without either party revealing their payment addresses to each other.
This tool also makes ZCash transactions untraceable on ZCash’s blockchain by obfuscating the payment addresses of both parties and the amount involved in each transaction.
It’s not all peachy, of course.
Like Monero and other highly anonymized cryptocurrencies, ZCash is criticized for potentially providing a secure haven for illegal transactions.
However, there are a number of legitimate reasons why a user would opt for anonymous cryptocurrencies, like purchasing medicine. We need some things to be private. Businesses might want to protect their business secrets.
And if the Zcash’ current value, $237 as of recording, is to go by, I say people appreciate and need that.