Zcash (ZEC) is a digital currency and a blockchain-based decentralised platform focused on privacy and anonymous transactions. Created and launched in 2016, Zcash was one of the first privacy-centric coins to be developed in the market of digital currencies.
Zcash was built and developed based on the Bitcoin framework. However, the currency and its blockchain focus on facilitating private transactions where users can hide information related to on-chain payments.
Zcash developers sourced the idea of building an open financial system from Bitcoin’s infrastructure. Zcash added new features to the framework, facilitating fungibility and privacy. All transactions made with ZEC are available on the Zcash ledger, which was built on the model of Bitcoin’s ledger with a pseudonymous address. Moreover, although transactions are recorded, information about the payment, sender, and receiver is not disclosed to network users. This information is encrypted through zero-knowledge proofs, which means that only authorised users can access transaction information. This cryptographic tool is also known as zk-SNARKs, and it makes transactions untraceable by obfuscating sender and receiver addresses and payment information.
Zk-SNARKs is a novelty of zero-knowledge cryptography, integrated with the Zcash system to shield transactions under the network’s rules. The proof revolves around a process through which users can prove the ownership of private information without revealing that information.
ZEC has a total supply of 21 million coins, just like Bitcoin. However, the block time for ZEC is shorter than Bitcoin’s, set at 75 seconds after the Blossom upgrade.
New Zcash units are generated through the process of mining with a block time of 75 seconds. Following Bitcoin’s framework, ZEC can be mined, and miners are rewarded with ZEC units for their involvement in the network’s essential protocols. Miners compete against each other to solve mathematical problems and verify and validate new transactions in exchange for rewards.
Zcash uses the Proof-of-Work (PoW) protocol for mining. Whenever a miner or a pool of miners solves the mathematical equation, a new block is created, and miners are rewarded with a fixed rate paid out in ZEC. Miners are also rewarded with transaction fees from the transactions they verify. The role of the miners is to protect the network, aid in block generation, and validate transactions.
The form of PoW that Zcash uses for mining is called Equihash. Equihash is a memory-oriented PoW protocol that determines the potential of mining power based on the miner’s RAM potential. Equihash was added to the Zcash infrastructure to prevent ASIC miners from taking over hegemony on the network and democratise mining. ZEC can be mined with the use of a CPU or GPU instead. Like Bitcoin, ZEC mining rewards are halved every four years.