What Is ZCash? (and why do many see this cryptocurrency as the prefect substitue for Bitcoin)
Users, investors and even Edward Snowden, all seem excited about a new cryptocurrency that was born this week, but that has been causing a stir in the network for months. It is called Zcash, and promises to be an alternative to Bitcoin that takes care of the privacy of users while offering a real business for investors.
Zcash was born from the project Zerocoin that evolved from being a layer of cryptographic anonymity for Bitcoin to becoming its own independent cryptocurrency. As expectations are high, we’ll tell you what exactly Zcash is and what are the fundamental differences are with Bitcoin.
What makes the Zcash so attractive?
Much has been said about the privacy and pseudo-anonymity behind Bitcoin’s technology. Unlike the mythic cryptocurrency, Zcash automatically conceals the identities of issuers and receivers, as well as the amount of all the transactions that we carry out in its blockchain. Only those who have a display key will be able to see the content of the operations.
This is possible thanks to an algorithm called zero-knowledge proofs. This algorithm allows the creator of the transaction to include in it a valid test without having to transmit any information, other than the fact that the transaction is true. Therefore, no information is transmitted that anyone can read.
These features have made voices as prominent in the privacy world as Edward Snowden speak well of the project, referring to it as a solution to the risks of surveillance of public transaction records in Bitcoin.
Another of the fundamental differences between the majority of the cryptocurrencies and Zcash is the way in which it is organized. Like Bitcoin and all based on it, its code is open, although it is not managed like a community like most. Rather, Zcash is a company. That makes the product attractive to investors.
The development of the project has also been in reverse; since instead of launching the coin and then looking for funding, Zcash creators have sought investors to create the currency before launching. They also promise to reward these investors and workers with a tax they call “Founders reward”, described on their website:
“The monetary base of Zcash will be the same as that of Bitcoin – 21 million units of Zcash (ZEC or ⓩ) will be mined. 10% of the profits will be distributed among the shareholders – founders, investors, employees and advisers.”
This has made the currency grow exponentially before being released. On September 15 the value was $ 18 or 0.027 BTC, but two days ago had already risen to 260 dollars or 0.379 BTC, marking a growth of about 1.300%. Moreover, some market analysts believe that the price of a ZEC will surpass that of a bitcoin by the end of the year, as investors do not want to miss this opportunity.
Therefore, we have a cryptocurrency that does not try to go against the system, but rather, is based on its classic methods of funding to offer a free alternative, anonymous and promises to put the privacy of its users above all else. And more importantly, investors do not want to let the next Bitcoin go, which is driving its initial growth very strongly.
Adventure is not without risks
But like all new technologies, there is nothing that can guarantee assured success, and there is always a risk factor to take into account. Experts in Bitcoin have described the Zcash as an interesting and novel proposal, but that their high privacy is not without its technological challenges.
The developer and operator of Bitcoins BTCDrak has referred to currency as the ultimate cryptography, but says there is a lot of evidence that they will need a large amount of CPU to sign transactions. In fact, almost all detractors are concerned about the demands and scalability of the block chain.
In addition, those who have long wanted to regulate the market for cryptocurrencies may not be very happy, as well as those who see it as a vehicle to commit more crimes in the network. The creators defend themselves from the latter by asserting that this is like blaming the Internet for the crimes of a few, and that most of the operations that will be carried out with their currency will be legitimate.