Zcash: The First Year

It’s been a little bit over a year since Zcash made its debut in the cryptocurrency scene as an interesting alternative to Bitcoin. In an industry where dozens of virtual currencies are born every month, Zcash quickly differenced itself from the rest with its innovative approach to privacy. While Bitcoin prides itself on being an open pseudo anonymous virtual currency, Zcash provides transactional privacy and increased anonymity.

Users can choose either to send transactions publicly (just like in Bitcoin) or send them anonymously. In the latter, the sender, recipient or amount are cryptographically hidden from the network, making the transaction anonymous. This is done thanks to a technology called zk-Snarks, a way to prove the contents of a transaction without revealing much information about it.

Although many might think that the only reason to use truly anonymous transactions might be with nefarious intents, there is a world of legitimate applications. Think about banks sharing sensitive client information, companies with confidential supply chains or simply your average Joe trying to buy something kinky for a romantic partner.

In order to guarantee maximum privacy, the Zcash network was initialised by a process called “The Ceremony”. The objectives of it were to create the equivalent of a private/public keypair, jump start the network using the public key and destroy the private key to ensure that no one could create counterfeit coins. Sounds crazy? Wait, until you read the rest: the keypairs were not created by one person alone, but rather by six people in different geographical locations. Each one of them created one part of the private/public keys using new computers which had their Wi-Fi, Bluetooth and Radio chips removed, this so as to guarantee that they had never been connected to any network. The information was later burned into six write-only DVDs and the computers, together with their private keys, were later destroyed. The public key was later assembled and used to initialize the network on October 28, 2016. Finally the Zcash network was alive.

On its first trading day Zcash had a wild ride, rising up to a price of over $2,500 USD per coin, revealing a demand in the industry to handle private transactions in public ledgers. In the last couple of months however, the coin has somewhat stabilized at around $250 USD and a market cap of almost $680 Million USD. During the past year,almost 20% of the transactions in the Zcash network have either hidden the sender or recipient while about 8% of the transacted volume has hidden.

One important aspect is that 10% of the coins are reserved for a group called “The Founders”. The funds collected will be used by The Founders for the further development of the protocol. Today, Zcash positions itself in the top 10 virtual currencies regarding their market cap while also being one of the most interesting alternatives to Bitcoin.

Roughly 5 months after the coins launch, The Zcash Foundation was created with the mission of serving the Zcash community and the general public. According to their first statement, this will be done by promoting a healthy and diverse community, direct the network as a source of good and advance the science of privacy preserving virtual currencies while education the public on their benefits. The foundation is the daughter of the Zcash Company, which to date focus on cryptographic research and technology development.

One of the most notable recent advances in the protocol is the update code name Sapling, which will reduce the zk-Snarks proving time from 37 to 7 seconds as well as reduce it´s RAM usage from 3GB to 40MB. This means that proving the content of an anonymous transaction will be 80% faster and the memory required will be reduced 98%.

Zcash has also been getting attention from the big fish in the investment industry. Just recently, Grayscale Investments LLC launched the Zcash Investment Trust for people with a yearly income of at least $200,000 USD and a net worth of at least $1 Million USD. The fund will pool capital from its investors which will then be managed by a professional fund manager. This comes as no surprise, as the network continues to grow and gain key partners, like JP Morgan Chase last May.

Today, the Zcash ecosystem consists of at least 10+ wallets, it can be bought or sold in 30+ exchanges and a thriving developer community that create new applications. Realizing the importance of a growing ecosystem, the Zcash foundation recently offered $80,000 USD in grants for developers who wish to innovate and advance the Zcash ecosystem.

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