How zCash Works

As we mentioned before, zCash is an encrypted digital currency that features shielded transactions (also known as private or confidential money). This article will go into more detail about how this works and what makes it unique.

When you put together all of these characteristics, people start to refer to zCash as “privacy coin” or even better- said, “secure cryptocurrency.” These are great labels because they emphasize just how well protected peoples' information is with this crypto.

However, beyond its protective qualities, another feature of zCash gets special attention: the Zerocash Protocol. We'll get into that in greater depth later in this article!

Intermediate terms: onion routing, stealth addresses, tumblers, and zero knowledge proofs

This article will also include some basic concepts like stealth addresses, tumblers, and proof of work. If you're not quite sure who Clementine Di Lorenzo is yet, feel free to skip those parts until you've got a little bit more background info.

History of Zcash

zcash how it works

Over the past two years, cryptocurrency has become popular as people have increasingly wanted to invest in this new technology. Just like any other form of investing, there are different types of cryptocurrencies. One such type is called “privacy coin” or sometimes referred to as “private currency.” These coins do not publish their transactions for everyone to see, which helps preserve some degree of privacy.

Zclassic was one such private coin that gained notoriety. This happened back in early 2016 when zClassic ran out of money. Many investors thought it was a scam because they could never find information about what exactly caused the coin to crash and burn.

Since then, several other similar coins have emerged. Some are even considered better than zClassic!

What makes Zclassic unique

It took awhile, but we were able to figure out why zClassic crashed. What many people don’t realize is that zClassic used an algorithm that secretly rewards its miners with newly minted coins. The more hashes (work done using cryptography) you perform, the faster your reward is.

This creates an incentive for miners to work harder and thus earn more coins. In fact, most experts agree that mining with this algorithm is too powerful and can hurt the overall health of the network.

That’s where things get interesting.

How does Zcash work?

zcash how it works

The way that it accomplishes this is by creating what they call a “zk-proof” cryptographic system, which means that encryption algorithms are paired with authentication protocols to make sure that only people who have access to the private key can decrypt your messages.

In their design, there is no longer a need for miners to run expensive computers in order to verify transactions. A separate set of nodes makes up what they refer to as the “trustless decentralized network”; these nodes do not require consensus but instead use zk-proof cryptography to validate transactions.

This removes one of the major incentives for mining, because you will never know if your coins have been compromised unless you remain vigilant. Due to its trustlessness, however, there are also some drawbacks such as lower transaction throughput and higher transacting fees due to the additional validation process.

Zcash exchanges

zcash how it works

As mentioned earlier, zcash is an encrypted cryptocurrency that uses something called “zk-snark” to protect your private information. What this means is that instead of using cryptographic algorithms like Bitcoin does where you have to use expensive powerful computers to encrypt and decrypt transactions, zcash trades this security for faster transaction times by creating what are referred to as “secure multisignature wallets.”

These secure multi-signature wallets require at least 2 people in order to unlock the funds. One person can place a lock on the wallet which makes it inaccessible, but they must know a second password or piece of authentication info (like their phone) in order to do so. This way if someone steals both passwords then they would not be able to access the money!

The company that creates these wallets is named Zapchain and they offer free accounts to anyone over the age of 13. You will get 1 GB of privacy per month and you can test out how easy it is to transfer coins with no fees.

Zcash mining

zcash how it works

As we mentioned before, zCash is a decentralized cryptocurrency that uses technology called Zerocoin to facilitate transactions. What this means is that instead of having all transaction information broadcasted and stored online, they are mixed in with other transactions, making it impossible to identify who performed what action or at what time.

By incorporating these features into their design, zCash creates an entirely new layer of protection for your money. Because everytime you perform a transaction, both parties have access to see everything about the transaction, but only their end user interface can be linked to you or your account.

This way, even if someone were to steal all the bitcoins in your wallet, there’s no direct link between them and you!

There are some drawbacks to this system though. Since the coins aren’t minted using energy-efficient ASIC chips, it becomes more difficult to mine as the number of cryptocurrencies rise. This is where poolmining comes in.

Poolmining is when several miners work together to solve a problem faster by dividing up the workload. Miners are paid per solved puzzle, which depends on how close they get to solving the problem and how fast they do so. The person who owns the coin gets penalized because he/she has to wait until everyone else solves theirs first before getting his/her reward!

The pools people use to earn crypto are typically free unless you pay for extra services like speedier payments or higher payout limits.

Zcash wallets

zcash how it works

There are two main ways to hold your zCash coins. You can either store them in a wallet you own, or use an online wallet service. Both of these have their advantages and disadvantages.

With a desktop wallet, you will usually download software that allows you to manage your coins (add new ones, move tokens around, etc.), all from your computer. Advantages include having full control over your money, and being able to access it at any time. The disadvantage is that such apps cannot be trusted; they could potentially leak personal information or go away completely one day.

Online wallets are much more secure than desktop apps because they are hosted by a third party site that we know about, and they are often times free. Some examples of popular online wallets are Coinbase, Cryptocompare, and Advantages include ease of accessibility, but again, not having complete trust in the company running the wallet.

Popular Zcash sites

zcash how it works

Recent developments have led to another cryptocurrency that is growing in popularity due to its privacy features. This new currency was originally called “Zclassic” but has been rebranded as simply “Zcash”. It uses an innovative technology called zk-Snark proof of work (PoW) which helps it achieve very high levels of anonymity.

It is important to note that while some say this feature makes Zcash more secure, others argue that it can make it less secure by making it easier for malicious actors to identify who owns what coins.

Just like Bitcoin, anyone can start mining Zcash using their computer or hardware device through a process known as mining. The only difference is that they cannot use ASICs to do so, instead needing CPU or GPU resources.

Mining for crypto currencies involves solving complex algorithms and equations to verify transactions and add new coins to the blockchain. The amount of money you earn per coin depends on the total number of people that join your side of the equation.

Zcash price

zcash how it works

Since its launch in 2017, ZEC has been one of the top cryptocurrencies to watch. The currency’s creator, Saïd Nasser, calls it “the new gold.” And why not? Just like gold, ZEC is relatively expensive at first, but as time goes by, the price rises.

Zcash hit an all-time high of $841 per coin back in January 2018, which made it one of the most expensive coins ever! But since then, the price has dropped slightly, making it much more affordable.

Right now, you can get yourself a little over 1 zec (0.000001 BTC) for around 120 kyber tokens (KBT). That’s almost half a million dollars for just 0.5% of the total supply!

So if you’re looking to diversify your crypto portfolio, or are simply looking to spend some money, investing in kyber could be your best bet.

Popular Zcash coins

zcash how it works

What is Zcash?

Zcash was originally created in 2016 by some of the original developers of Bitcoin (see what they do for themselves here). The team then took several different approaches to solving the “Trading Problem” that has plagued cryptocurrencies since their inception.

By splitting off from the rest of the cryptocurrency community, the Zclassic team solved this problem through proof-of-stake consensus instead of mining like other currencies.

This means that instead of looking for powerful computers that can solve complex algorithms to mine new coins, people with newer or weaker hardware can use software to contribute towards the network. By doing so, you get paid just as much, if not more than those who actively participate in mining!

Another important component of Zclassic was sharding, which we mentioned earlier. This allows for each individual node within the system to perform separate calculations, making it harder to coordinate an attack.

Since most nodes are open source, anyone can look at how things work to learn more about the technology.

About The Author

Tiara Ogabang
Tiara Joan Ogabang is a talented content writer and marketing expert, currently working for the innovative company With a passion for writing and a keen eye for detail, Tiara has quickly become an integral part of the team, helping to drive engagement and build brand awareness through her creative and engaging content.
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