Zcash (ZEC) is an altcoin that has made its way through the countless cryptocurrencies on the market thanks to two main features: security and anonymity, characteristics that today are also shared with Monero (XMR).
Zcash: what it is and how it works
Zcash was created with the aim of improving privacy in the cryptocurrency world. Anonymity is guaranteed by the fact that this cryptocurrency does not publish in clear text all the details of transactions within the blockchain, thanks to the use of two stratagems:
- Blurring of sender and recipient;
- Blurring the transaction.
The operation is guaranteed by the Zero Knowledge Proof algorithm.
This algorithm ensures that a variety of sensitive information is not revealed, something that happens with bitcoin for example.
Zcash’s founder and CEO, Wilcox O’Hearn, describes Zcash’s difference with bitcoin through an iconic phrase:
“If bitcoin is like HTTP for money, Zcash is HTTPS.”
Zcash: the Zero Knowledge Proof algorithm
ZEC is able to encrypt what is contained within a transaction.
This means that all payment information is protected and the protocol guaranteeing these characteristics uses a cryptographic system to validate the identity.
Zero Knowledge Proof technology uses Zk-Snark, an acronym for Zero-Knowledge Succinct Non-Interactive Argument of Knowledge. This complex system refers to a set of tests in which a user can demonstrate the possession of certain sensitive information (e.g. secret key) without revealing its actual content.
Users can decide whether to send public (transparent) or private payments.
Payments that will be sent through a protected address to one that is transparent, allow the value to be seen. However, if a payment is sent from a transparent address to one that is protected, the value received will be anonymous.
Zcash: an incentive for illegal activities?
By using Zcash it is possible to achieve maximum confidentiality, while also enjoying the security of a decentralised blockchain.
Unfortunately, these characteristics have favoured the spread of this altcoin in the illegal sphere. In fact, according to some studies, ZEC would have a strong use in the illicit market of drugs, weapons and prostitution.
However, the CEO and programmers who have been working on the development of Zcash for years say that they created this cryptocurrency not to facilitate illegal activities, but to provide a level of privacy for people who do not want to make their financial transactions visible to the world.