What is Zcash (ZEC) and How did Zcash coin launch?

What is Zcash? (ZEC)

One of the more well-known privacy cryptocurrencies, Zcash (ZEC) harnesses advances in cryptography to offer users optional anonymity when transacting. 

Before Zcash, cryptocurrencies were mostly designed to be “pseudonymous” like Bitcoin (BTC), meaning data about the amount users exchanged, the addresses they sent funds to and the addresses they received funds from were always recorded on the blockchain for all to see. 

So, while you may hear people tout cryptocurrencies for privacy, this isn’t the case by default. Data can (and sometimes is) linked back to the individuals who made transactions, whether by companies, governments or nefarious actors. 

Launching in 2016, Zcash offered a higher level of privacy by introducing “shielded addresses,” which were designed to encrypt the transaction and address data stored on its blockchain. 

Still, Zcash lets users choose the level of anonymity they’d like, offering two types of addresses: transparent addresses (which appear on blockchain) and shielded addresses (which do not). 

Users can send transactions between the two types of addresses, as well, though this brings additional privacy considerations.

How did Zcash launch?

To enable its cutting-edge cryptography, the Zcash blockchain had to be set up in a way that was unique from other cryptocurrencies. This process (called the “Zcash ceremony” or “Zcash trusted setup”) remains a linchpin of many critiques about the project.

For one, it required Zcash’s creators to trust people from around the world to cooperatively create what was essentially a master public key for its blockchain using shards of a private key. 

Participants were then given instructions to destroy the remaining data to protect it from future manipulation. (More details can be found here.) 

The downside of such an approach is that, while theoretically secure, no one can ever prove that the ceremony was conducted as intended. (Perspectives on this issue remain diverse.) 

As of 2020, the Electric Coin Company, helmed by CEO Zooko Wilcox, employs a large team of cryptographers working to develop the Zcash blockchain. This work is further supported by the non-profit Zcash Foundation. 

Both groups receive part of their funding through the release of new ZEC by the Zcash protocol.

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