Zcash is the newest cryptocurrency, launched on October 28, 2016. It is based on Bitcoin with one significant difference – completely private transact
Zcash is the newest cryptocurrency, launched on October 28, 2016. It is based on Bitcoin with one significant difference – completely private transactions. The largest innovation applied by Zcash is the technology zero-knowledge proofs. Wikipedia gives the following definition of it: “in cryptography, a zero-knowledge proof or zero-knowledge protocol is a method by which one party (the prover) can prove to another party (the verifier) that a given statement is true, without conveying any information apart from the fact that the statement is indeed true.”
Using this technology private transactions in a public Zcash blockchain are already possible by obscuring the addresses of the recipient and and sender as well as the value of the transaction. The only information that other participants on the blockchain can get is that something occurs at a given point in time. Besides users transfering Zcash use pseudynomuos, what makes them even more anonymous.
And the lists of reasons why a person wants to stay in a financial privacy is long. Here are some of the most common reasons:
- Protection from competitors
- Fear of discrimination
- Fear of revealing your personal live (for example – you pay a divorce lawer)
- Fear of misappropriations
As regards blockchain and transactions size does matter. Let’s imagine that we have 2000 transactions, half a MB each. The calculation is easy. For a couple of hours only we will have transactions which take up a GB of the space. After 100 transaction the blockhain wouldn’t be usable any more. The Zcash team has come up with a solution of this problem. They reduced the size of private transaction to 1500 bytes. Thereby the time needed for cryptographic shielding computation dropped to one minute.
Zcash started with 0 mined coins, that means there were no “pre-mined” coins. For 24 hours only 4 Zcoins had been mined out of 21 million Zcash coins. This determined also the high price at the beginning, around $ 500 000 for the very first coin. Then the price dropped to $ 1,000. Ant the high inflation led to price instability.
The innovations introduced by Zcash team could be applied to the Ethereum systems. For example, Eteherum can integrate blockchains through the ZRelay-system. Thereby the public transaction on the Zcash blockchain would be verified by smart contracts. As a result Ethereum DApps can use the benefits provided by Zcash for value transfers. Zcash has the real potential to solve the privacy issue and a partnership with it could be benefitial for Ethereum.