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What is ZCash (ZEC)? – Beginner’s Guide

What is ZCash (ZEC)? – Beginner’s Guide

ZCash is a decentralized and anonymous payment system. It is an enhanced, transaction-shielded fork of Bitcoin. Learn more about what is Zcash & Zcash...

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It should come as no surprise that cryptocurrencies that provide users with anonymity continue to be popular despite efforts from regulators and exchanges to restrict their accessibility in a world where our personal information, interests, and activities are being tracked and documented more and more.

When a group of academics decided they wanted to develop a cryptocurrency comparable to Bitcoin but had some extra features, ZCash was born in 2016.  Zcash is a peer-to-peer electronic cash system that works like Bitcoin but has some unique features. By splitting the Bitcoin blockchain, the founders increased user security and anonymity, and Zcash was born. 

What is ZCash (ZEC)?

In 2016, developers were aiming to create a cryptocurrency that had the qualities of Bitcoin but also took its blockchain technology to the next level. They came up with the concept of Zerocoin, which then changed to Zerocash and now as we know it, ZCash. The currency aimed at being similar to Bitcoin but with additional safety features for its users. The developers behind ZCash therefore created a Bitcoin fork with more anonymity and enhanced security. The blockchain now makes use of advanced applied cryptography to provide security to the network. It supports a special technology that allows the nodes to validate the transactions on the network without disclosing their identity. 

How does ZCash Work?

How does ZCash Work
Source: Freepik

The “Zero-Knowledge Succinct Non-Interactive Argument of Knowledge” is a type of zero-knowledge proof that Zcash uses. A bit of a mouthful, yes. Thankfully, the crypto community routinely shorts it as zk-SNARKS.

Without inspecting private or confidential information, zk-SNARKS verifies that the requirements for a legitimate transaction are met. The zk proofs let a user demonstrate that they have the necessary funds and authorization without having to physically present them. 

The sender has two options for completing transactions in Zcash. They have the option of a conventional transparent transaction or a protected private transaction. This contrasts with other privacy coins like Monero, where transactions can be initiated in just one way.

zk-SNARKS shields transactions with the sender, recipient, and amount encrypted. This feature marks a significant departure from other cryptocurrencies, emphasizing transaction openness more than protecting user data.

What are the Features of ZCash?

1.   Addresses

Being a private cryptocurrency, ZCash offers the users a chance at keeping their address private. Private addresses of the users start with ‘z’ whereas if the users want transparency, their wallets start with a ‘t.’ Both the addresses are interoperable, so the users just need to be aware of this feature provided by the ZCash.

2.   Transaction Types

  •  Public: As the name suggests, the users can transfer funds from one transparent address to another. The transaction is visible to everyone on the blockchain network. It is similar to the transactions that happen on the Bitcoin blockchain.
  • Shielding: Such transactions happen between transparent and private addresses. Whenever a user wants to transfer the assets to an anonymous account, they can use this feature of ZCash chain.
  • Deshielding: Opposite to shielding, here the transaction occurs from the private address to the transparent one.
  • Private: It allows transfer of funds from one private address to another one.

3.   Funding Structure

ZCash mining enables the creation of new coins which then rewards the miners. The funding structure of ZCash is pretty simple. After successful ZCash mining, the block reward is generated and divided amongst the miners and founders. 80 percent of the reward is given to the miners while the other 20 is given to founders like Major grants fund, ECC and ZCash foundation.

4.   Viewing Keys

For all the private address holders, the viewing keys feature acts as a boon for the audit. The address holders can issue a key for particular transactions for another person to see the details. The key provides a read only access to the transaction information.

5.   Other Supporting Features

·         The default transaction fee of ZEC is very low (0.001 ZEC).

·         Messaging in an encrypted manner is also one option.

·         To reduce mempool bloat, the default transaction expiration time is around fifty minutes.

·         Even multi signature transactions are available for public addresses. 

Advantages and Disadvantages of ZCash 

Advantages of ZCash 

ZCash currently has enhanced, optional privacy features not present in Bitcoin or any other cryptocurrencies at the moment. It utilizes zero-knowledge proofs, a top-tier, cutting-edge form of cryptographic privacy technology (ZKPs). ZCash also has a strong, respectable group of advisors, including Vitalik Buterin, Nathan Wilcox, and Zooko Wilcox.

Disadvantages of ZCash 

  • Compared to other projects, high inflation devalues the asset and discourages long-term investors.
  • ZEC is not the only cryptocurrency that can use the zK-SNARK privacy mechanism; other cryptocurrencies can, too (like Ethereum).
  • Users can choose privacy as a necessity via mixing services on Bitcoin or privacy-focused Ethereum solutions like and Aztec, or they can choose privacy by default from Monero (XMR).

How is ZCash Different From Bitcoin?

ZCash was originally built to have similar features as Bitcoin, just with enhanced levels of security and anonymity. But as the network kept upgrading there have been several differences between the two networks. Some of the basic differences between Bitcoin and ZCash are:

1.   ZCash is a private cryptocurrency unlike Bitcoin, and therefore makes use of the zk-SNARKs (Zero-Knowledge Succinct Non-Interactive Argument of Knowledge) privacy protocol.

2.   Being a private currency, ZCash does not disclose the information about the transactions to other users. It means neither the sender, nor the receiver, nor the amount transacted is visible to anyone out of the transaction.

3.   As compared to ten minutes on Bitcoin, ZCash has a block time of about seventy five seconds. 

The Zcash Blockchain Privacy

Starting with the Bitcoin source code, ZEC included privacy-enhancing capabilities that allow users to control the level of secrecy in each transaction (shielded addresses). 

Other cryptocurrencies that strongly emphasize privacy, such as Monero, have improved privacy features. Still, they fall short of Zcash’s zk-SNARKs’ guarantee of anonymity and its bulletproof implementation. 

Users of Zcash can transmit “shielded transactions,” which take longer to process than regular transactions since proof for the zk-SNARK must be built. Equihash, an impressive hashing algorithm used by ZCash, is incompatible with equipment and software for Bitcoin mining. Its larger blocks and longer hashing durations raise the network’s hash rate.

What is Zcash Mining?

Mining is used to validate transactions and create new blocks on the ZCash network. Miners or validators win new ZCash tokens as rewards. If your computer has a graphics card that can mine, you can employ an application-specific integrated circuit (ASIC) miner. ZCash is compatible with Mac, Debian/Ubuntu, Docker, and other Linux distributions. However, ZCash advises using an ASIC miner and mining pool because PC mining is no longer profitable due to the network difficulty, which has risen significantly.

Because ZCash mining uses a proof-of-work process, miners must race to solve the hash to create a new block. The block reward is given to the first miner who discovers the answer and opens a new block.

What is Zcash Mining
Source:( Pixabay/ What is Zcash, and how is it different from other crypto assets

How is Zcash Produced?

The Zcash network employs miners, like most cryptocurrencies, to add transactions to the blockchain. The miners do the heavy job of securing the network, while all nodes in the Zcash network contribute to confirming the accuracy of transactions.

To protect the network, Zcash mining employs a proof-of-work technique. With proof-of-work, miners compete with one another for computing power to add a new block to the chain. The network standard block reward and any fees for any transactions added to that block go to the first miner who completes the correct computation for each block.

Zcash Coin Distribution 

Similar to Bitcoin, Zcash mining has a fixed quantity of 21 million Zcash( ZEC). A new block is added to the Zcash network every 75 seconds, and the block reward is 3.125 ZEC. Until all 21 million ZEC are in circulation, the block reward will be lowered by half every four years on average. 

Zcash was never meant to be a part of a large project or to use ICOs to raise money. It is therefore supported by a closed group of investors who made a $1 million investment to ensure its development course. 10% of the entire supply was distributed as the “Founder’s award” to each investment over four years.


The shortcomings of the first-generation blockchain, in this case, Bitcoin, are addressed with Zcash. It guarantees security and privacy. Additionally, it doesn’t take away the privacy right of the users. You always have the option to conduct a transparent transaction as a user or go completely anonymous.

Wilcox-O’Hearn, the founder of Zcash, said that Zcash mining should switch to a more environmentally friendly “proof-of-stake” method from the energy-intensive “proof-of-work” mechanism. Nodes on the network that support “proof-of-stake” can post holdings as collateral that could be forfeited if they behave dishonorably. ZCash has undergone several upgrades, but there’s still time before the transition happens. 

Proof-of-stake can significantly lessen the carbon footprint of the cryptocurrency industry because it is lighter, faster, and more secure at a lower cost. Transparent addresses may make it simpler to figure out information for shielded wallets if too many individuals use them. The most distinctive aspect of Zcash is also one of its privacy-conscious users’ potential hazards. 

Frequently Asked Questions (FAQs)

1.   Is ZEC a Competitor to Bitcoin?

While using the same open source code as Bitcoin, ZEC is in direct competition with Bitcoin. It makes use of similar features as Bitcoin but adds more security and freedom of transactions. The path of development chosen for ZCash is different from Bitcoin.

2.   What is ZCash Used for?

ZCash provides an anonymous platform for the people who do not want their transaction details to be available to anyone. ZCash is therefore majorly used for private transactions. The network provides a shield to the users for their transactions to be carried out smoothly.

3.   Does ZCash have a Future?

Since its launch in 2016, ZCash network has kept adding upgrades to itself for being relevant to the crypto community. In 2020, the network launched their own wallet which provided shielded transactions. They also have HALO, a trustless recursive version of ZKPs. All such upgrades make ZCash relevant and therefore have a good future ahead since decentralization and anonymity is important for people now. 

Disclaimers: Opinions expressed in this publication are those of the author(s). They do not necessarily purport to reflect the opinions or views of Shardeum Foundation.

About the AuthorAnuska is an independent freelance writer freshly exploring web3 and blockchain space. Her articles blend personal exploration with established editorial methods, and she’d love to hear your thoughts in the comments!

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