Financial regulators have taken a close look at the cryptocurrency industry recently. On the one hand, it is good since the legal framework and clear rules will attract many institutional and private investors to the market. On the other hand, it will toughen the laws and deprive the market of anonymity.
Nowadays, there is only a few cryptocurrencies that can guarantee 100% anonymity to their users. One of these projects is Zcash, so let’s discuss it in this article.
More about Zcash
The project began its work on October 28, 2016. Four groups of scientists developed the Zerocash protocol. They come from:
- Johns Hopkins University.
- Institute of Technology in Massachusetts.
- Israel Institute of Technology.
- Tel Aviv University.
Zcash is an open-source for anyone to read. The cryptocurrency provides confidentiality and selective transparency of transactions. That is, during the transaction, the user decides whether to make it public or confidential.
Key Features of the Zcash Network
- Low transaction fees (0.0001 Zec);
- Privacy of addresses and transactions;
- Encrypted fields for notes;
- View keys for voluntary disclosure of payment information;
- The fixed expiration date of unprocessed transactions (20 blocks);
- The ability to apply multi-signature.
If the transaction is not confirmed within an hour, it becomes invalid, and the funds return to the sender.
Differences between Z and T Addresses
- Z-addresses are encrypted, always starting with the letter “z”;
- T-addresses are open. They begin with “t” only.
Information about the transfer between wallets Z and the amount of the commission is available on the public blockchain, but there are no addresses or the amount of the transaction. The wallet owner can provide the z-address and transaction details to a third party like regulators for auditing and enforcing local legal requirements using the browse key if necessary.
Transactions between two t-addresses are transparent, and all information about them is publicly available, just like on the Bitcoin network. Public and private addresses easily interact with each other, and there are no problems with transactions Z to T or vice versa.
Transactions in the Zcash cryptocurrency ecosystem are divided into four types:
- Public: t-address/t-address;
- Protected: t-address/z-address;
- Unmasking: z-address/t-address;
- Confidential: z-address/z-address
When registering a secure transaction, the sender can transmit the necessary information to the recipient in encrypted form using a memo field for notes. At the same time, the owner of the z-address can provide the auditors with the details of the transaction performed and the entire content of the memo field for compliance with regulatory standards. When using t-addresses, it is possible to execute a transaction with a multi-signature.
Where Can I Trade ZEC?
As of this writing, ZEC is ranked 50th in the global cryptocurrency rankings. It is a relatively liquid asset with a daily trading volume of more than $2.4 billion; the bulk trades on the Binance exchange.
To gain access to the full functionality of the Binance platform (and almost all other centralized exchanges), you must pass the KYC procedure. Why an anonymous cryptocurrency if your passport data is stored on the exchange server?
You can buy and sell cryptocurrencies anonymously on the Godex decentralized exchange. To exchange Zcash to Bitcoin, use the ZEC to BTC converter. Its interface is as simple and straightforward as possible, even for new users. On the Godex exchange, you don’t need to enter any data about yourself (including email). Registration of swapping requests takes a couple of minutes.
Progress and Future of Zcash
Zcash cryptocurrency is open source, developed by a computer security specialist team. It has passed an independent audit.
In the spring of 2020, under the auspices of the Electric Coin Company (ECC), the ZCash Developers Alliance (ZDA) was created. A team of specialists is working on implementing privacy options in the Lightning Network system and blockchains of Ethereum, Cosmos, and some other projects.
- Bolt Labs;
Interoperability of Zcash with the Ethereum and Cosmos cryptosystem protocols is a top priority for the alliance. The Ethereum Foundation team is exploring options for implementing anonymous transactions in Ethereum 2.0, and the Bolt Lab staff are working to improve the privacy of the Lightning Network protocol. The head of Bolt Labs, Ayo Akinyele, states that the alliance specialists are looking for a single solution adjusted to any ecosystem.
Bolt Labs has already launched a testnet for anonymous Bitcoin transactions called zkChannels. ZDA is also working to provide access to the Zcash protocol to companies that do not use the ZEC cryptocurrency but are interested in ensuring anonymity.
Fundamentally, the Zcash project has every chance of becoming the future of the cryptocurrency industry. The further fate of the project will depend on the success of the development team and the performance of interaction between blockchains.
However, no one knows the future, so there is no correct answer to this question so far. We can only analyze the data array we have and conclude. If you want to succeed in the cryptocurrency market, it’s best to research on your own. This is the only way you can be sure of the accuracy of the information.
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