When Bitcoin was first launched, people thought it was completely anonymous. That was often touted as one of the best, or worst (especially for law enforcement), qualities of the most popular digital currency to date.

However, as numerous examples have shown, Bitcoin is anything but private. Every transaction is stored on its blockchain for as long as the coin will exist. Many of a cypherpunk ethos take issue with this. For that reason, developers have tried to create a private digital currency. One such anonymity-focused project is Zcash. It now ranks among top 20 cryptocurrencies with the largest market capitalization ($892,9 million), having the ZEC to USD price of around $200.

What is Zcash

Let’s quickly talk about what Zcash is. It’s a privacy-focused, blockchain-based cryptocurrency that shares a lot of its code base with Bitcoin. There are some important differences, however.

One of these is that Zcash users can make both private and public transfers. All coins are created as non-private. The user can then choose to transact them privately if they want, or can choose a cheaper option and send them like a Bitcoin transaction on the Zcash blockchain.

To achieve its privacy, Zcash uses a system known as zk-SNARKS. Zk-SNARKS allow the network to prove that certain information is correct without revealing that information. This idea was first proposed for an earlier project called Zerocoin. The Zcash team improved on Zerocoin and created a coin that allowed transactions to be verifiable, yet conceal the amount transacted, as well as the sender and receiver.

Zcash is one of many privacy-focused projects in the crypto space. Others include PIVX, Monero, and Verge. Each uses a different method to achieve a similar end. Ultimately, each team would like their coin to become the de facto private coin for making transactions.

Will Zcash Win the Privacy Wars?

To determine whether Zcash will win these privacy wars, it’s important to look at the advantages and disadvantages of Zcash. This should help us decide what the Zcash team’s chances are of achieving dominance within the space.

Pros of Zcash

Selective Transparency

As mentioned, Zcash allows users to make both shielded and transparent transactions. The transparent transactions are largely the same as a regular Bitcoin transaction. The decision to include both private and public transactions in Zcash could help the project in terms of widespread adoption since it is less likely to come under regulatory scrutiny.

Solid Team

The Zcash team is one of the most impressive in the cryptocurrency industry. Led by Zooko Wilcox, it comprises of an international roster of cryptographers and scientists. This bodes well for the Zcash cryptocurrency and its development. The team has stated they are willing to fork the project to help its evolution too.

Encrypted Memo Field

Zcash users can embed messages on the Zcash blockchain. This increases the functionality of the currency. Users can add notes to transactions that are fully encrypted. They may decide to do this when working with auditors, providing receipts, or making invoices. This increased functionality is created using the program called ZMessage.

Incredibly Cheap Transactions

For now, transacting with Zcash is very cheap. If you compare the price of sending Zcash with that of sending Monero, you’ll discover that Zcash is far less expensive. This also bodes well for mass adoption since it means that Zcash can be used for more trivial, day-to-day purchases.

Cons of Zcash

Developer Tax

One of the differences between Bitcoin and Zcash is that the developers behind Zcash decided to tax the mining reward for the first four years of its existence. The idea here is to pay the project’s earliest investors, as well as the developers for continuing to work on Zcash. The total amount paid in this Founder’s Reward, as it is known, is 10% of the 21 million coins ever to be mined.

Many people take issue. For some, there are “perverse incentives” to the Zcash monetary system. This means that a group of around 50 people will have an enormous amount of ZEC coins until 2020. At worst, it has a potential for market manipulation.

Not ASIC Resistant

In May 2018, first ASIC miner was released for Zcash. Since then, the community has largely rejected suggestions that Zcash should be ASIC resistant. At the same time, the Zcash Community Governance Panel did vote on some initiatives that would make mining more efficient going forward. These are believed to be efforts to promote decentralization on the network. However, the ability to mine Zcash using ASICs is certainly a blow to the currency’s decentralization properties.

Known Company Behind Zcash

Zcash is considerably more open about their founders than most privacy coins, or even Bitcoin. This could come back to haunt them if the kind of global adoption occurs. If Zcash starts to threaten the sovereignty of existing national currencies, there are clear and obvious people for the authorities to come down hard upon.

Conclusion

All told, Zcash is a solid project with a lot going for it. However, it does have some disadvantages as mentioned earlier. Other privacy-focused cryptocurrency projects, such as Monero, offer an entirely different set of advantages and disadvantages, and for that reason, it’s much too early in this exciting technology’s lifespan to state categorically which currency will take the position as the best privacy coin.

On top of this, it’s unclear if any privacy-focused coin will ever achieve the kind of global usage all cryptocurrency developers are hoping for. Global regulators aren’t too fond of privacy coins thanks to the nefarious use cases that can arise from such a quality. The likes of Japan have already come down hard on anonymous cryptos. If others follow, it’s difficult to say what the fate of private cryptocurrencies such as Zcash and Monero will be.