Zcash is a digital currency founded by cryptographers and scientists in 2016. This cryptocurrency stands out by offering complete anonymity to investors. Transactions are shielded, and your information is protected.
Before you start investing in Zcash, be sure you fully understand the technology. This article will explain the history of Zcash, how it’s governed, and how you can acquire it.
What Is Zcash?
Zcash is a digital currency that was built on the original Bitcoin code base. Zcash considers itself as a fair and open currency. Anyone can spend, send, or receive Zcash, and everyone has equal access regardless of demographics.
Zcash differs from other cryptocurrencies because of its shielded transactions, allowing individuals to maintain complete privacy. Zcash is also decentralized across a wide network, making it more secure and accessible.
To send or receive cryptocurrencies you need an address from or to which the transaction is directed. And the privacy for Zcash depends on your address.
There can still be transparent transactions with Zcash, and it all comes down to the address in question. Some addresses start with a “t” — those are transparent addresses and aren’t shielded. Addresses that start with a “z” are shielded. The shielded addresses allow for transactions that help preserve privacy, while transparent addresses operate more similarly to Bitcoin, as they expose addresses and balances.
The groundwork for Zcash was laid several years before the coin became available. In 2013, several scientists from John Hopkins University designed the protocol that would later become Zcash. Several years later in 2015, the Zcash cash company was founded to help bring the protocol to fruition. Company founder and security expert Zooko Wilcox-O’Hearn led the company as it put out the first blocks of Zcash in 2016. The Zcash company subsequently rebranded as the Electric Coin Company in 2019.
Today Zcash is governed by Electric Coin and the Zcash Foundation, a public charity that builds financial privacy infrastructure. Zcash also relies heavily on input from the Zcash community.
Special Features of Zcash
The most important feature that sets Zcash apart from other cryptocurrencies is its privacy feature. Zcash allows for fully shielded transactions, meaning the sender, recipient, and amount are encrypted. This feature is quite a deviation from the transparency that is a central part of many other cryptocurrencies.
There are other cryptocurrencies that claim to have shielded transactions. But according to Zcash, those transactions can still be traced, while Zcash offers the only truly private cryptocurrency.
|Inception||October 28, 2016|
|Already Mined/ Total Supply (as of June 24, 2021)||12,060,688 ZEC/ 21 million ZEC|
|Special Feature||Shielded Transactions|
How to Mine Zcash
Like most cryptocurrencies, Zcash is a mineable coin. In other words, the market is entirely reliant on miners introducing new Zcash by mining them.
Zcash uses a proof-of-work mining algorithm, which requires miners to compete against each other to produce a new block by completing difficult math problems. The first miner to complete the proper computation using processing power gets the block reward and any transaction fees they add.
While individuals can mine Zcash on their own, the company recommends joining a mining pool, where multiple miners work together to mine the coins.
Zcash must be mined using hardware known as ASIC, which stands for application-specific integrated circuit.
Total Supply of Zcash
Zcash has a maximum supply of 21 million. There are currently about 12.06 million Zcash in circulation, which is roughly 57% of the maximum supply. Once there are 21 million Zcash in circulation, no more can be mined, and you’ll only be able to acquire them by purchasing them on an exchange or from an individual.
New blocks of Zcash are created for mining roughly every 75 seconds, meaning every 1.25 minutes. Zcash’s mining time is eight times faster than Bitcoin.
Rewards for Mining and Halving History
When you mine Zcash, you’ll be rewarded with newly minted coins. Zcash’s block reward halves every four years. The reward started at 12.5 Zcash, then reduced to 6.25 Zcash, and now sits at 3.125 Zcash. In November 2024, the reward will be reduced to 1.5625 Zcash.
How to Buy Zcash
If mining your own Zcash isn’t an option for you, you can easily purchase it on a cryptocurrency exchange using a bank transfer, credit card, or another cryptocurrency. Zcash recommends the exchange Gemini because it’s easy to use and allows for shielded transactions. Other exchanges that allow for shielded Zcash transactions are The Rock Trading and SideShift AI.
You can also buy Zcash on popular platforms like Binance, Coinbase, and Kraken. But keep in mind that these exchanges don’t allow for shielded transactions and your activity will be fully transparent.
Like other types of money, you’ll need a wallet to access your cryptocurrency, including Zcash. A crypto wallet stores the encryption keys required to access your coins. Wallets can be either digital apps or physical hard drives.
One of Zcash’s unique features is privacy, meaning your transactions and information are kept private. But that’s only true if you use a crypto wallet that allows for this privacy. The wallets Zcash recommends for this purpose are ZecWallet Lite, Nighthawk Wallet, and Unstoppable.
If you don’t mind having your transactions be transparent like other cryptocurrencies, then you have plenty more wallets to choose from, including:
- Atomic Wallet
Finally, experienced cryptocurrency traders who plan to mine their own coins may want a more advanced wallet. In that case, you can look at ECC Zcashd or Zecwallet.
Each cryptocurrency has different transaction times depending on the number of confirmations needed to process it. Zcash requires 24 confirmations.
The amount of time your transaction will take to complete will also depend partially on the trading platform where you purchase your Zcash. Some trading platforms publish their transaction times so you know what to expect.
For example, according to Kraken’s website, a Zcash transaction will take about 60 minutes to confirm and process. Gemini’s website, on the other hand, states your transaction will take anywhere from 30 to 60 minutes.
Fees and Expenses
When you purchase your Zcash, you may be subject to a transaction fee. The amount you’ll pay depends on the cryptocurrency exchange where you make your purchase. Some platforms publish their trading fees transparently on their websites, and they typically depend on the value of the transaction.
Other Ways to Invest in Zcash
Another way to invest in Zcash is through a Grayscale Zcash Trust, which combines traditional investing with cryptocurrency. The trust itself is a traditional investment vehicle that holds Zcash shares in your name. It allows you to have Zcash in your portfolio without having to buy and store it yourself. You can even hold shares of Grayscale Zcash Trust in a tax-advantaged account like an individual retirement account (IRA) or even a Roth IRA.
The Grayscale Zcash Trust isn’t the most affordable or accessible investment. There’s a minimum investment requirement of $25,000 and an annual sponsor’s fee of 2.5%.
The Balance does not provide tax, investment, or financial services and advice. The information is being presented without consideration of the investment objectives, risk tolerance, or financial circumstances of any specific investor and might not be suitable for all investors. Past performance is not indicative of future results. Investing involves risk including the possible loss of principal.