The Beginner’s Guide to Zcash

The Beginner’s Guide to Zcash

Zcash is a cryptocurrency that offers anonymity by shielding sender and recipient addresses and transacted amounts. Shielded transactions are possible thanks to the power of innovative zero-knowledge cryptography, namely zk-SNARKs

What is Zcash?

Zcash (ZEC) is a peer-to-peer digital currency that offers an option of anonymous shielded transactions. It leverages recent advancements in cryptography to bring a privacy-centric alternative to Bitcoin.

At the core of Zcash is the Zerocash protocol which improves on the Zerocoin protocol proposed by Matthew D. Green back in the 1980s. Zerocoin employed a sophisticated mathematical technique called zero-knowledge proofs. Zerocash builds on its predecessor and introduces a new form of zero-knowledge cryptography called zk-snarks.

Zcash was launched on October 28, 2016. Its founder is an American computer security expert Zooko Wilcox-O’Hearn. Before launching Zcash, Zooko was a fan of Bitcoin but wished it offered a higher degree of privacy. He took the bitcoin code and integrated it with the Zerocash protocol developed by the Zerocoin team.

zk-SNARK

Zero-knowledge cryptography enables the prover to prove to the verifier the knowledge of certain information without disclosing it. In other words, you can prove to someone the fact you know a secret without actually telling it. To understand the intuition behind zero-knowledge cryptography, we will draw an analogy.

Imagine, you have a superpower that allows you to instantly know the number of leaves on a tree. Your friend does not believe you and you want to prove it to him without telling him the number of leaves. Besides, telling him the number of leaves will not do much, since your friend will have no way of verifying it other than counting the leaves himself.

You and your friend come up to a tree. You quickly count the number of leaves and close your eyes. Then you give your friend a choice of pulling a leaf off the tree. When you open your eyes, you count the leaves again and if there is one missing, you tell your friend that you know he did pull a leaf. Your friend says that there was a 50% chance that you simply guessed it. So you do it again. Now the chance was only 25%. You can repeat the procedure as many times as it takes to convince your friend. In the end, you prove to your friend that you do in fact have the superpower without telling him the number of leaves or how your superpower works. This, in principle, is how zero-knowledge proofs work. If you want a more thorough analogy, read How to Explain Zero-Knowledge Protocols to Your Children.

The acronym zk-SNARK stands for zero-knowledge succinct non-interactive argument of knowledge and is a variant of zero-knowledge cryptography. The zk-snark protocol does not need the prover and the verifier to interact, hence non-interactive. The word ‘succinct’ indicates that the process is fairly easy and short to perform.

The Ceremony

To ensure the security of the Zcash network and prevent the creation of counterfeit ZEC, the Zcash team held the Ceremony of generating zk-snark public parameters (essentially ‘randomness’), which is similar to generating a public-private key pair. During the Ceremony, six trusted persons, including founder Zooko, each generated a piece of the key-pair. Then the pieces were assembled into the public key which enabled the secure operation of the Zcash network, while the pieces of the private key were destroyed.

Along with the multi-party generation of the pieces, the participants took a number of other precautions such as the use of air-gap computers, i.e. computers that were never connected to the Internet. The necessary data was passed to these computers by burning it to DVD discs from separate computers receiving the data over the Internet.

This was only the initial ceremony and, to reinforce the integrity of the network, subsequent ceremonies will include hundreds of participants.

Zcash transactions

Transactions in Zcash work much like they do in Bitcoin where one has to use their entire balance as an input of a transaction. So, making a transaction in ZEC means:

  • referencing all past transaction outputs associated with the sender’s address;
  • using them as an input of a new transaction;
  • specifying the recipient’s address and the amount to be sent;

The rest of the balance then returns back to the sender as the second output. It is, however, advisable to use a new address, otherwise it would make easier for someone to build an identity behind the address by analysing transaction patterns.

There are two types of addresses in Zcash. Z-addresses (z-addrs) are private and start with a ‘z’, t-addresses (t-addrs) are transparent (public) and start with a ‘t’. Both address types are interoperable, meaning funds can be moved around between z-addrs and t-addrs. This means that there can be four types of transactions:

A Z-to-Z transaction appears on the blockchain but no one besides the transacting parties can read the transaction details such as the sender address, the recipient address, the amount sent or the memo field. The owner of the z-addr can disclose the transaction details, if they wish so.

Mining Zcash

Unlike Bitcoin that uses SHA-256 which can only be brute-forced, Zcash uses Equihash, a proof-of-work mining algorithm based on the Generalized Birthday Problem. One of Equihash’s distinctive features is that it is not as computation-intensive as SHA-256 but it is quite demanding in terms of RAM. Designed to be ASIC-resistant and to democratize mining, Equihash was eventually cracked. Today Equihash ASICs are manufactured by Bitmain.

It is worth noting that 20% of all miner rewards are allocated to the Founders Reward as a way of supporting the ongoing development of Zcash. Starting from October 2020 the Founders Reward will be removed, and miners will be receiving 100% rewards. Block rewards are halved every four years, the current block reward is 12.5 ZEC with the average block time of 2.5 minutes. The total supply of ZEC is capped at 21 million coins.

Links

Official website

Github

Zcash Company twitter

Zcash documentation

Zcash subreddit

Help

Zcash protocol specification

What are zk-SNARKs?

Reddit FAQ thread

the Ceremony

Wikipedia page

Explorer

Why Equihash?

Forum

ZCash

ZEC
Price
85.65 USD 0.97%
0.00977600 BTC 13.48%
Volume, 24h
360,893,850 USD
0.00%
Marketcap
563,431,290 USD
0.21%
Emission

Related news

Canadian Company Commissions 3 Bitcoin Mining Units to Restart Oil Well

A nascent industry utilizing flared gas to power bitcoin mining units has been developing over the past year or so, in symbiosis with the oil and gas industry in North America. Companies providing services in this promising niche continue to install mobile datacenters at oil wells in the U.S. and Canada, helping producers to save on costs and optimize operations while minting digital coins. Also read: China Removes Bitcoin Mining From Unwanted Industries List Crypto Mining Provides Alternative to Gas Flaring Natural gas obtained during oil extraction is a byproduct well operators working at remote sites have to get rid of at their own expense. It is often burned into the atmosphere as its transportation to remote consumers isn’t cost-effective, if possible at all. Direct venting is not always possible or is limited as the raw gas consists of many harmful compounds and producers have to comply with strict environmental regulations. Several companies are now offering solutions to oil and gas producers in the United States and its northern neighbor that solve the problem with associated gas in an elegant way, thanks to Bitcoin. They install mobile units equipped with gas-electric generators at oil wells. The excess fuel is used to produce electricity to power the cryptocurrency mining hardware typically installed in modified shipping containers that are easily transported. Upstream Data, a Canadian company we told you about this summer, is one of the pioneers in the market. It allows oil companies to buy or rent modular datacenters that can be installed at production facilities venting or flaring natural gas. Its Ohmm units are assembled with varying capacities in terms of mining power but they all utilize gas in a very efficient way. Using the free energy to mint digital coins ensures drilling companies receive much higher income from the gas than any market price would return. Last time, we spoke with Upstream Data founder and CEO Stephen Barbour right after he announced the commissioning of a new Ohmm datacenter in the U.S. state of Texas. He was pretty excited with the expansion of his company’s services. This past Friday Upstream Data tweeted that three of its new Ohmm Mini, 50 kW bitcoin mining datacenters had been recently commissioned in the Canadian province of Alberta: These beauties conserve the natural gas that would have otherwise been vented, which allowed the producer to turn on the well and increase oil production. Helping the Oil Industry Meet Gas Venting Regulations Upstream Data has been developing its creative solutions since 2017, providing an answer to persistent economic and environmental problems that have been dogging the oil industry for decades. Its datacenters need very little infrastructure to utilize the stranded gas; basically only a fuel source and internet connection. They are designed to scale to the available quantity of natural gas and can be operated remotely. Upstream’s projects prove that energy, which would otherwise be wasted, can be harnessed to mine bitcoin. Ohmm datacenter in Alberta. The flare stack in the background was decommissioned after the waste gas was conserved. Stephen Barbour told news.Bitcoin.com that the Alberta producer who installed the Ohmm Mini units had a multi-well production facility closed in due to high venting. Regulations in the province do not allow oil companies to continue production if the vented natural gas volume exceeds a certain limit of 500 m3/day. As a result, the well pad was shut in for approximately a year as the operator had no other way to conserve the vent gas. Building a pipeline network would be too expensive, while flaring is not an option in this case because of the facility’s proximity to local residents, the CEO explained. The company supplied the three Ohmm Minis powered by gas gensets as part of its “Conservation as a Service” offer to oil and gas businesses. The bitcoin mining datacenters reduced the total vent rate to less than 500 m3/day, allowing the producer to start up the well and begin extraction again. Each Mini is rated for 50 kW, which is enough load to conserve 450 to 500 cubic meters or 18,000 cubic feet of stranded gas daily and is equipped with Antminer S9 mining rigs. The modular units can be easily redeployed to other sites where gas rates are depleting. Besides the savings and profits from their main activity, oil producers can also earn some additional income in the form of digital cash. Due to this year’s crypto market recovery, bitcoin mining has returned to profitability. What’s more, anyone can start mining, even without having the necessary equipment at their disposal, thanks to services offered by platforms like the Bitcoin.com Pool. Do you expect bitcoin mining at oil wells to continue to grow as an industry providing a solution to the gas venting problem? Share your thoughts in the comments section below. Images courtesy of Shutterstock, Upstream Data. Did you know you can earn BTC and BCH through Bitcoin Mining? If you already own hardware, connect it to our powerful Bitcoin mining pool. If not, you can easily get started through one of our flexible Bitcoin cloud mining contracts. The post Canadian Company Commissions 3 Bitcoin Mining Units to Restart Oil Well appeared first on Bitcoin News.
Bitcoin News

Late Nights in The Mine - Watch What Your Forking Mining

💰Sign-up now! ★ https://yen.io // GET THE APPS 💰 Social Exchange - http://yen.io 📚 Free Email Course - http://10daysofbitcoin.com // GET STARTED 💻 Join us at the PUB! - http://thebitcoin.pub 💰Get a Coinbase Wallet! - http://dctv.co/dctv-coinbase - Sign up! // WE DO SOCIAL 🔑 Decentralized Newsletter - https://dctv.co/dctv-news 📔 Twitter - https://dctv.co/dctv-twitter ✏️ LinkedIn - https://dctv.co/dctv-linkedin Note: This is not financial advice as all investing is speculative. Have fun and good luck!
Decentralized TV

What Powers China’s Crypto Mining Industry, and Is It Sustainable?

What Powers China’s Crypto Mining Industry, and Is It Sustainable? The cryptocurrency mining industry continues to grow daily, supported by a continuous stream of new and more efficient hardware. China is at the forefront of the industry, but as environmental concerns loom, the sustainability of their success is coming into question. Mining chip manufacturers, the […] Cet article What Powers China’s Crypto Mining Industry, and Is It Sustainable? est apparu en premier sur Bitcoin Central.
Bitcoin Central

Hot news

By continuing to browse, you agree to the use of cookies. Read Privacy Policy to know more or withdraw your consent.