While Bitcoin was innovative because it created a practically uncrackable public ledger (the blockchain), Zcash improves upon the Bitcoin blockchain by securing the privacy of each transaction. The two cryptocurrencies are often compared to the “http” and “https” internet protocols where Zcash and https are related as the more secure choice whereas Bitcoin is compared to http as the “standard” option.
The team of developers at the Zcash company led by founder Zooko Wilcox-O'Hearn wanted to create a cryptocurrency that will be useful in real-world situations, and for that, they deemed privacy was a key part. Thus, protecting details about payments on the blockchain is at the core of Zcash’s value.
The total number of Zcash coins that will ever be mined is the same as for Bitcoin - 21 million. Zcash uses a different mining algorithm, though, namely Equihash.
On the Bitcoin blockchain, details for every transaction such as the participants and the amount of money (coins) they exchanged are stored and distributed to every user of the blockchain. Although Bitcoin users are not usually registered with their real names, there is a possibility that their usernames could still be traced back to them.
With Zcash that is not the case. The Zcash blockchain, only shows that a transaction has occurred but no amount or the participants involved are revealed or saved on the public ledger.
The fact that Zcash attempts to solve the problem of privacy in cryptocurrency transactions is a clear advantage for this relatively newer digital coin. It’s basically the same as Bitcoin only with an edge. And, certainly, the privacy aspect has been a concern among Bitcoin users for some time.
Zcash is structured based on the zero-knowledge proof methodology which enables transactions on the blockchain to be verified without revealing all of the details about it.
Not everything is perfect in the world of cryptocurrencies, and so is the case with Zcash.
A lot of crypto enthusiasts are not ready to put their money in Zcash primarily for one reason – its questionable decentralization.
Although Zcash is intended as a decentralized digital currency, much like Bitcoin, the fact is that it was founded by and is run by a company based in the US, as we noted earlier, the Zcash company. The team of developers is also closely tied to the company.
There are also concerns about the security of the Zcash network in case of a cyberattack. Specifically, Zcash uses something called the “master private key” also often referred to as “toxic waste”. The main concert in this regard is that if this master private key gets into the wrong hands those individuals could create an unlimited amount of Zcash coins and destroy the whole system.
Related education and FX know-how:
Trusted FX brokers
Haven't found what you're looking for? Contact us!
Forex Education - Basics:
Free Forex eBooks:
Forex Education - FX Brokers:
Forex Education - Technical Analysis:
Forex Education - Money Management: