This gem of a privacy-focused project is likely on its way to higher efficiency by migrating to a Proof of Stake consensus algorithm.
“Arguing that you don’t care about the right to privacy because you have nothing to hide is no different than saying you don’t care about free speech because you have nothing to say.” ― Edward Snowden
ZCash (ZEC) was originally developed in 2013 by Johns Hopkins professor Matthew Green and a handful of his graduate students, leading to a completed product via Zooko Wilcox, a computer security specialist & cypherpunk (cryptography advocate), who led the Zcash Company to generate $3,000,000 USD in revenue to fund the project from Silicon Valley VC’s (Venture Capitalists).
ZCash is heavily focused on privacy while remaining open-source under MIT software licensing, a challenging concept that took some excellent and heavily devoted cryptographers to achieve. One of the project’s later cryptographers was in fact, Edward Snowden, the highly renowned technologist aka US gov. whistleblower, who used the alias “John Dobbertin,” to be among five other cryptographers to help aid in what is known as the ZCash Ceremony.
The Zcash Ceremony, known within the ZEC community as “The Ceremony,” was a sophisticated technique for generating the ZCash private key in a way where no person or system could hold or regenerate it after its fruition. The process took two days by the six aforementioned cryptographers in a short-time global tandem without knowing who else was involved, and required the computers used by each founding cryptographer to be destroyed immediately afterward.
The project currently runs on a Proof of Work consensus algorithm, like Bitcoin (BTC), and Ethereum (ETH) which are known for good security but at the price of high power consumption via mining, higher fees, and slow tx’s (transactions). On the developer and management side of things, the ZCash company came out as “Zerocoin Electric Coin Company, LLC,” also known as the ECC. ZEC is technically a Bitcoin fork in its current form.
The ECC has since launched a non-profit organization by the name of “The Bootstrap Project,” which is focused on donating 100% of the company from a for-profit to a non-profit organization, which is a clear demonstration of devotion and good faith by those who created and rooted this project into existence, which became official in October of 2020, rendering ECC a legal subsidiary of The Bootstrap Project.
Snowden has kept his role in promoting ZEC to a minimum, only to focus on the advanced cryptography principles that drive his ethics into what may become a truly secure and optionally anonymous currency. Wilcox has expressed interest in keeping the currency “too traceable for criminals like WannaCry, but still completely private and fungible.”
As time progressed, like all other Proof of Work currencies, the faults of the algorithm became more and more apparent, which drives us to more recent news in that ZEC is aiming to migrate to Proof of Stake consensus, which would make this already exciting project far more efficient. Why should privacy come at the price of slow transactions and high power consumption, after all?
It’s important to note there are two types of ZEC transactions, which are optional and also controversial among ZCash advocates. There are transparent transactions under the t-addr or transparent addresses or shielded transactions under the z-addr addresses. The shielded transactions operate on a zero-knowledge proof known as zk-SNARKS. Despite this, most tx’s are transparent, with only 4% of ZEC tx’s being shielded as of December 2017.
The shielded tx proof method allows total anonymity to the user, while transparent tx’s are pseudo-anonymous with some enhancements compared to a typical Bitcoin transaction, such as hiding the number of assets being sent. While any serious privacy advocate will choose the way of shielded transactions, their wallet support is still being implemented into exchanges and crypto wallets. As shielded tx’s become more supported, I expect their rate of use to go up dramatically.
Under scrutiny that ZEC could be used as a criminal tool (as if crypto of all sorts isn’t already), ZEC offers the option of selective disclosure which allows users to prove their payments for tax auditing purposes, and the ECC has held virtual meetings with law enforcement agencies in the United States to prove the currency is not focused on engaging in or hiding criminal activities.
The ECC has expressed the PoS migration to increase security and performance at a lower cost, helping with onboarding new users, increasing demand for privacy and transaction use cases, and giving all ZEC holders a voice in decentralized governance while improving resistance to software vulnerabilities. If the upcoming PoS migration proposal is passed, ZEC will hold its true value in web3.
Next to Stellar Lumens (XLM), this is by far my favorite project to date, and if they soon achieve the migration to PoS (Proof of Stake) consensus, I believe it to be a forever top 10 contender in the cryptocurrency realm.
As always, comments & suggestions are highly encouraged.
Stay smart & Stay safe.
-Thomas Wolf
Pronouns: He/Him/His
DISCLAIMER
I am not a certified financial, tax, or legal advisor, analyst, or planner. The above information should not be considered advice but as an opinion intended to share information and ideas for entertainment and independent research purposes. I am not responsible for any losses or damages incurred due to misinterpreting my personal opinions for professional advice.
Sources:
https://z.cash/press/
https://cointelegraph.com/news/edward-snowden-reveals-he-was-one-of-six-who-helped-launch-zcash
https://z.cash/
https://en.ethereumworldnews.com/zcash-zec-could-transition-to-pos-as-a-means-of-driving-sustainable-growth/#:~:text=Bitcoin%20(BTC)%20News-,ZCash%20(ZEC)%20Could%20Soon%20Transition%20to%20Proof%2Dof%2D,Means%20of%20Driving%20Sustainable%20Growth&text=Summary%3A,a%20proof%2Dof%2Dstake.
https://en.wikipedia.org/wiki/Zcash#:~:text=1%20History-,History,computer%20security%20specialist%20and%20cypherpunk.
https://en.wikipedia.org/wiki/Non-interactive_zero-knowledge_proof)