Zcash is a cryptocurrency and a trading medium that aims to provide complete privacy for all its users. It was introduced in 2013 as ‘Zerocoin’, and has a very interesting selling proposition. It is a highly secure and private trading medium. What it does is that it masks all transaction data; including transaction amount, sender and recipient details.
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Our Take
Zcash is a cryptocurrency and a trading medium that aims to provide complete privacy for all its users. It was introduced in 2013 as ‘Zerocoin’, and has a very interesting selling proposition. It is a highly secure and private trading medium. What it does is that it masks all transaction data; including transaction amount, sender and recipient details. It aims to attain maximum level of privacy when it comes to trading cryptocurrencies. Cryptocurrencies have become a booming market and people are investing in several other cryptocurrencies. .
Each coin has something new to offer. Zcash offers complete privacy during transactions. Buyers and sellers in a tranasction can deliberately hold back information for anonymity purposes. Zcash and its blockchain technology ensures that both ends of the bargain are held by the parties involved in the transaction. The exchange of assets can be done confidently without knowing who your buyer or seller is.
However, the market is overflowing with several newer cryptocurrencies. And many of these coins offer tech and features that make them good investment prospects. People may assume that Zcash is one of the many newer alternative cryptocurrencies; making big promises and setting big goals. Zcash is however, different in its principle attributes. It is not an open-source community. It is a company that has entered the market to make substantial profits. They are profit oriented and they are business focused. Ever since the development stage in 2014–2015, they had been pre-mining the currency. This was done to ensure value hike down the line.
The preliminary stages before the ICO of a coin are essential. The company, community or DAO [Decentralized Autonomous Organisation] has to push the coin to the investors. After pushing the coin, they have to start informing the public about its applications, technology and development work. This is a crucial step to ensure investor interest. This process is initiated to procure potential investors and convert them. Acquiring capital or investments is only the first among several stages of starting to actually trade the cryptocurrency that the DAO/community is trying to introduce.
Once the initial funding round is completed, a coin has to initiate its program on a blockchain. Many new coins fail to surpass the initial rounds and are not initiated. They fail due to slow development in tech or failure to complete commitments. Zcash has successfully crossed the stages of initial funding rounds. Its blockchain has been initiated. Zcash started trading in exchanges across the globe in early April 2017. This means Zcash is an actual coin that is available in trading pairs on exchanges and e-wallets.
Many investors are reluctant to purchase units of newer coins. This is mainly because of the fear induced by several ICO scams in the past. Zcash offers high level of investor confidence, because you can purchase it from any exchange and store it in a wallet. It is not an investment scheme but an actual currency that is trading in realtime. Zcash uses zero knowledge proof system to protect/hide user details and transaction records. It executes p2p (peer to peer) transactions to ensure clarity on both ends of every transaction. Since there is a strict privacy policy to protect information on both ends, the p2p system ensures that the transaction is executed as agreed upon by both parties. So now that we know it isn’t yet another ponzi crypto scheme, lets dig a little deeper into the Zcash ecosystem.
History and Development
Zcash (ZEC) was introduced in 2013 as Zerocoin under Zerocoin Electric Coin Company. It aimed to become the most convenient privacy oriented coin on the market. Zooko Wilcox founded Zcash to provide a solution to the lack of anonymity in the world of cryptocurrency trading. He was inspired by Bitcoin’s model from the time that it was introduced. He liked the supply model of Bitcoin and wanted to create a coin that had a similar distribution structure. However, he did not like the fact that the biggest cryptocurrency was traded so openly. When such big amounts of capital is traded via Bitcoin, all the transaction data is easily available to the public as it is based on an open-source blockchain.
Being an open-source platform subjects Bitcoin and its transactions to a degree of risk. Transaction records are all stored in one place. Several programmers, miners and even block coders have access to your records and can look up details of your entire transaction, including the transaction amount.
Along with the help of Eli-Ben Sasson from Technion University at Israel, Alessandro Chiesa at UC Berkeley and Christina Garmian and Matt Green from John Hopkins University; Wilcox was able to fabricate Zcash into what it is today. The major highlight in the development stages of Zcash was when zero knowledge of cryptography was used. The developers and founders were able to successfully encrypt all transactions that happened or were happening on the Zcash blockchain. Due to the Proof of Work (PoW) model, per second activities are recorded and accepted as proof to initiate a transaction. This prevents secondary activity to influence blocks.
The proof of construction of the Zcash blockchain allows it to carry out transactions without requesting for complete data. Due to this, Zcash is an extremely good investment option. Investors in most cases want to make legitimate transactions, but require anonymity and privacy to engage in business. Zcash opens up the cryptocurrency market for such investors.
Zcash uses a zk-snark construction to avoid the loop that asks for trader information. Zcash blockchain isolates the transaction blocks from the loop that requests access to information.
Since Zcash is inspired from Bitcoin, it is bound to share some attributes with it. Primarily, the distribution system is very similar. Like Bitcoin, Zcash also has 21 million coins in circulation. The difference is that 10% of the total number of distributed tokens (roughly 2.1 million) have been reserved for the founding members of Zcash. The holders of these tokens earn a 4x value hike on each block. This privilege is reserved for founding members. It has been made clear by the board that miners would not get a reward system on each block. However, a 5% token release has been planned for miners, about 3-5 years down the line.
ZEC acquired its first funding under the Zerocoin Electric Coin Company. In the first funding round they successfully acquired $1 million and around $2 million in the second. The initial funding sold more than 10% of the company stakes. Whereas the second funding round sold a little over 6% stakes for double the value of the first acquisition. This is proof of investor confidence in ZEC. Due to having such promising funding rounds, ZEC actually initiated trading in 2017. Now it can be bought or sold in several exchanges across the world. ZEC can also be stored in several private or public wallets. The support for this coin is extraordinary due to its long awaited private infrastructure.
Being a more private Bitcoin is what Zcash aimed at, but it has started an unforeseen revolution. Privatized transactions are a boon to have if you’re investing in cryptos. More and more cryptocurrencies are shifting toward privatization, especially after Zcash. People are making money at a fast pace and want some amount of security when it comes to storing those assets. More coins will be transacted on private blockchains in the future. ZEC provides a much higher level of security even when you’re merely holding assets too. The zero knowledge cryptography is not limited to transactions. There are likely to be more applications on that front as the coin develops and grows in the future.
Even though the company backing ZEC is private, they do not possess any control over the blockchain of the coin. This means that the value of Zcash cannot be controlled by secondary activity on the blockchain. This factor makes this coin a truly decentralized one. The company can only provide updates to the blockchain infrastructure; and they have some interesting ideas too.
Things to keep in mind
1. Price Fluctuations – Zcash has risen and dropped in value overnight. It is a very volatile investment, like all cryptocurrencies. However, ZEC has seen a gradually increasing trend so far. Lots of people have made money off of instantaneous rises in ZEC price. People who could predict a bullish trend traded their assets accordingly. Many people missed out on this opportunity and lost a lot of money. If you’re holding ZEC for a shorter term, it is more risky than it is fruitful. As with the advantages of long term investments in any assets – holding onto ZEC for a short time period might make you money quickly, but holding onto your ZEC tokens for the longer run WILL make you money.
2. Penalty to Miners – Zcash has mainly gained pace due to mining and not ICOs. Miners do have a say in the holdings unlike community owned cryptos. Zcash has planned distribution of tokens especially for miners. But keep in mind that they also held back from giving miners the 20% growth due to the mining block system. This might be demotivating for miners who helped initiate the blockchain for ZEC. A blockchain cannot function without miners. If miners resist from mining for Zcash due to the 20% trader’s fee charged to them, ZEC will start dipping in value.
3. Private Transactions – So we already know that Zcash allows buyers and sellers to mask information during transactions. However, with the evolution of blockchain technology, the world is overflowing with hackers, block programmers and miners. A private subnet mask of operating transactions is definitely a potential window for illegal activities. However, the Zcash ecosystem requires 2 seperate keys to store your assets in a wallet. And along with the keys, their needs to be a zero knowledge protocol check; making this a difficult infrastructure to trespass.
Should you Invest in ZEC?
Now that we know about the history and technology surrounding Zcash, we can discuss why it is a good investment prospect. It has brought about a privacy revolution in trading of cryptocurrencies. Let’s look at a few reasons why you should invest in ZEC.
1# Price hikes
October 28, 2016 was the first day that Zcash was traded. The value was roughly $18.50. The hype along with the private zero knowledge cryptography technology that powers Zcash pushed the value through the roof. The same day of its release, Zcash traded as high as $3300 per token. Several investors made substantial gains. This coin has a very volatile chart throughout its trading history.
Market timing is an essential factor for making money in relatively shorter time periods (less than a year). Long term investments are better for new investors who do not have experience in crypto-trading. The future of Zcash looks very bright, and predictions claim that its value will rise by a great extent in the coming decade or two. Only time can tell.
#2 Upgraded Network
The company behind Zcash has planned to execute a hard fork for the Zcash ecosystem in a few months. Sapling network upgrade is going to be integrated into the Zcash blockchain. Mining, trading and transactions are going to be more efficient than ever. The project is known as ‘Sprouts’. It optimizes the speed of transactions but also upgrades security. The security update ensures higher degree of shielding in transactions. This coin has really taken security initiatives and trading privacy to another level. It has become a benchmark for privacy oriented coins like Monero and Dash.
#3 Future Value
The predictions for Zcash remain strong as ever. And this coin has a vibrant past to back it up with. Several experts predict that the value of this coin will rise by at least 270% by the year 2025. After looking at their future prospects and the coin’s current trading pattern; some experts have even gone as far as to state that the value of ZEC will hit the $62000 mark in the next 7 years.
These predictions are not based on observations surrounding the development of the coin. This coin has been trading for more than one and a half years and it has a bullish pattern of gradual increase. The Zcash ecosystem might just become popular due to its unique privacy solutions. Things look optimistic down the lane in about 7-8 years. People who want to hold assets for a longer term should get a good e-wallet before they store on an exchange. And remember to store your keys; in a secure ecosystem like this, if you do not hold your wallet keys, you do not own the assets any longer.
#4 Founder Benefits
So we discussed about the founders having benefits. And we discussed about the potential of rise in value of Zcash in the coming few years. Zcash has reserved 10% of its total tokens to be distributed to founding investors in about 4 years. 2.1 million tokens will be rewarded to these investors from the private company that owns Zcash. This promotes confidence in investors who are reluctant to get in early on this coin. Having tokens assured to be distributed back to you in the future makes sure you do not lose all your capital on a volatile investment. Even the miners of this ecosystem get a 5% distribution in about 5 years. This ecosystem rewards miners with the confidence of getting 2x benefits on each block that is mounted on the chain.
#5 Being practical
The hype has got people all excited about ZEC. The fact is that it is indeed powered by a strong concept of private trading. Anonymity in transactions is a very unique selling proposition in this market for traders. This is the next step of decentralizing world economies.
The infrastructure of ZEC is also based on the most successful cryptocurrency on the planet – Bitcoin. However, it all boils down to numbers and Zcash performs well on that front. Even though its value had risen to $3300 and fallen to $48 on its first trading day; its value stands strong at $316 as of May 4, 2018. And the market cap of Zcash had exceeded the $1 billion mark a while back. This coin has been trading successfully for some time now. What remains to be seen however is how well it can actually perform under the correct market timings and shifts. Considering its security upgrades, gradual rise in value and efficient privacy solutions; Zcash is bound to succeed in 2018 – and beyond!
Competitors of ZEC
1. Dash – Dash is another digital cryptocurrency based on Bitcoin. It offers privacy solutions for cryptocurrency storing and trading. Its current value is just below the $500 mark and it holds a substantial market cap that exceeds $4 billion. It also has its own e-wallet infrastructure. It operates on its independent blockchain. It also allows direct conversion of fiat currencies to cryptocurrencies. It charges a minimal fee for conversion when compared to Bitcoin.
This coin holds great future potential and currently trades at a higher value than Ethereum – the 2nd largest cryptocurrency in the world. But that is merely face value – its market cap is not nearly as big as Ethereum, this coin seems promising.
Monero – Monero is a privacy oriented coin that was launched back in 2014. Using generated stealth addresses, Monero masks the transactions it conducts on its infrastructure. Each stealth address is only created one time, specifically for each transaction. Monero token holders also get a view key for keeping an eye on transaction details. But the details are only available to the holder of the key. Even a person who has this key cannot trade your assets on your behalf. Think of it like an additional safety clause on top of all the privacy features Monero offers. Like Zcash, Monero uses Proof of Work (PoW) system to increase availability to individual miners.