Z-Cash

As the online markets expanded, people found limits from the conventional centralized banking system. Thus, the blockchain, a decentralized banking system where everyone could be in charge of their own transactions, was created and people could openly carry out various transactions online. Starting with the Bitcoins, explosive amount of new kinds of cryptocurrency followed, which further expanded the cryptocurrency market. The blockchain and the cryptocurrency have three significant benefits over the centralized banking system: First, it guarantees transparency in each transaction. Second, it provides an accurate authentication through the system of verifiers called the “miners.” Lastly, it provides a safe environment for digital auditing. Despite these advantages, however, some are still critical towards the authenticity and the privacy threat that these cryptocurrency may bring. To enhance both the transparency and the cyber security together, a group of technicians from various universities, including MIT and UC Berkeley, developed a secure cryptocurrency where one could openly execute transactions, but are also completely confidential from the public: the Zcash. The Zcash has its own uniqueness, advantages, and disadvantages over other cryptocurrencies. The analysis of its features with that of Bitcoin provides an accurate prospect of its value in the future.

Uniqueness and Advantages

Bitcoin primarily aims to keep its transactions as transparent as possible, so that it is easier to catch frauds and criminals. However, some innocent users found this transparency distracting, since it is possible for anyone to track one’s payment records if one has, for example, the specific QR code that stores the information of the transactions. To solve this privacy issue and also maintain the independence in transactions, the cryptocurrency technicians have thought of various ways of enhancing the privacy in transactions, which all turned out to be inefficient. For instance, one of the ways was to generate different transaction codes for different transactions, which proved to be unsuccessful since criminals could still analyze the different transactions and create a map of clustered addresses. This is how Zcash developers came up with developing the privacy protecting system. While its fundamental structure is directly derived from Bitcoin’s core software, Zcash’s uniqueness is shown in its own modified program which enhances the user’s privacy. Zcash has two types of addresses: the “t-addr”, where all the transactions are carried out openly just like the Bitcoin, and the “z-addr,” where users decide to process the transactions secretly from the public. In the z-addr, the Zcash blockchain does not record any specific information from the users, neither does it encrypts the transaction records, much like the incognito tabs in Google. Not only does it allow the users to selectively carry out the transactions, it also has algorithms that allow users to ensure that there was no interference in their purchases. Zcash uses a cryptographic functions called the “zk-SNARK.” To be brief, the zk-SNARK function inputs “non-readable” data in a secret transaction and prove certain limited aspects, such as if a new money was created in the private transaction. In other words, since it is unnecessary to obtain all the detailed information from the transaction, the zk-SNARK algorithm only extracts necessary datas, in this case, the verification whether there was a change in the total money in the system. This way, users can verify that there was no interference in their purchases without even deciphering the entire transaction records, which proves its authenticity in transactions. In addition to its augmentations in purchases, its adaptation of Equihash proof-of-work system allows miners to mine the Zcash with more affordable GPU hardware. Equihash proof-of-work system is a memory oriented system, where the amount of mining one can do is determined by the amount of RAM available (Coin Center. (n.d.))

Weaknesses

In spite of the advantages listed above, it is proven that Zcash is not the most ideal form of cryptocurrency in many aspects. Most significantly, the private transactions that Zcash provide are limited in terms of the wallet options for storing and sending Zcash. Some critics also argue that Zcash has not fully adopted the method of decentralization, which is the very key system of blockchain in general. It is reported that 10% of the supply is held privately by team members within the company. (Moar, December 31, 2018). Also, its insecure protocol is very vulnerable to bugs that allow people to generate more Zcash coins than the intended money supply, which will eventually result in a huge inflation. Lastly, the prevalence of privacy coin market, such as Monero and DASH poses a threat to the dominance of Zcash.