Zcash is launched by a group of cryptocurrency experts from the Zerocoin Electric Coin Company (the Zcash Company) in October 2016. Building on the capabilities of Bitcoin, Zcash is geared towards preserving financial privacy. Its potential is acknowledged by famous whistleblower and privacy advocate Edward Snowden, who called Zcash “the most interesting alternative” to Bitcoin. Responding to technologist Mason Borda on Twitter in September 2017, Snowden said that “Zcash is the only altcoin (that i know of) designed and built by professional and academic cryptographers. Hard to ignore.” Furthermore, “Zcash’s privacy tech makes it the most interesting Bitcoin alternative. Bitcoin is great, but “if it’s not private, it’s not safe.'”
Zk-SNARK Cryptographic Technique
The Zcash protocol employed a cryptographic technique called zk-SNARKs (zero knowledge succinct non-interactive argument of knowledge). It allows miners to verify the correctness of transactions and balances on the network, without requiring users to reveal their identities or transaction metadata. This is crucial in offering the highest standard of privacy for users.
On the Zcash network, addresses are classified into two types: public and private. Balances and transaction amounts are revealed by public addresses, but not private addresses. Depending on the types of sending and receiving addresses, it follows that four types of transactions are possible. Full financial privacy is guaranteed in private transactions (from private to private address), as both the balances and transaction amounts are completely shielded.
Partnership with JP Morgan
Zcash received a huge boost in October 2017, when it announced a partnership with J.P. Morgan. The Zero Knowledge Security Layer (ZSL), which is derived from Zcash’s zk-SNARKs technology, was integrated into J.P. Morgan’s enterprise blockchain Quorum. It allows the hiding of transaction details, while giving auditors the ability to trace those transactions. This is a strong testament to the quality and scalability of Zcash in enterprise scale applications.
The investment community is bullish on Zcash’s potential. According to an investment thesis by Grayscale, it is noted that Zcash has the potential to become a “Swiss bank account in your pocket”. Currently, about 8% of the world’s household wealth – or 10% of Gross World Product (GWP) – is held in offshore investment accounts. By Grayscale’s estimates, the market for offshore wealth can reach approximately $10 trillion by 2025. Zcash’s privacy technology makes it well placed to become a digital way to privately store and transact wealth. If Zcash captures just 1 percent of the offshore wealth market, its price could reach $6,300 per token.
Upcoming Upgrades
The Zcash team is planning a series of network upgrades in 2018 – namely “Overwinter” and “Sapling” in June and September 2018 respectively. These upgrades are expected to improve the performance, scalability and security of Zcash. Provided it continues to improve its technology, coupled with its private transaction network and store-of-value properties, Zcash has the potential to become the next generation investable digital assets.
