Introduction

Zcash is a cryptocurrency that uses advanced applied cryptography to provide enhanced privacy via shielded addresses. Zcash is the first practical application of zk-SNARKs, a specific type of zero-knowledge proof.

Zcash Features

Addresses: Zcash has two types of addresses: private (z-addresses) and transparent (t-addresses). Z-addresses start with a “z,” and t-addresses start with a “t.” The two Zcash address types are interoperable. Funds can be transferred between z-addresses and t-addresses. There are privacy implications of shielding or deshielding information through these transactions. Today, most wallets and exchanges exclusively support t-addresses, although support for shielded addresses is available for mobile and desktop wallets.

Transactions: Transactions between two transparent addresses (t-addresses) work just like Bitcoin: the sender, receiver and transaction value are publicly visible. Transactions involving shielded addresses include shielded (z-to-z), shielding (t-to-z), and deshielding (z-to-t), with the z-address getting privacy protections. The most secure transaction is a shielded (z-to-z) one, which encrypts the sender and receiver addresses and transaction amount. However, all transactions appear on the public blockchain, so a transaction is known to have occured and what fees were paid.

Viewing keys: The owner of a z-address can share its transaction details with trusted third parties via a view key–a key that grants read access but not spend authority over the address. This allows for “selective disclosure”, where transactions are auditable but disclosure is under the participant’s control. This allows compliance with payment for auditing, tax regulations, or anti-money laundering rules.

Supporting features:

• Like Bitcoin, Zcash has a fixed total supply of 21 million units.

• Low-fee transactions of .0001 ZEC; default for all transactions, but configurable.

• Encrypted memos to pass along messages or other useful data.

• Transaction expiration to reduce mempool bloat; default expiry is 40 blocks (50 min).

• Multisignature transactions; currently only available for public transactions.

About Zcash

Units and divisibility: The unit of account of the Zcash system is a ZEC. The ticker symbol used to represent Zcash is also “ZEC”. As a nod to Bitcoin’s creator, a zatoshi is the smallest amount within Zcash representing 0.00000001 ZEC, one hundred millionth of a ZEC.

Funding Structure: Zcash pays out a portion of each block reward to fund protocol development and (for the first year) to pay back investors. During the first four years of Zcash, 10% of the block reward was transferred to the Founders Reward fund and distributed to the Electric Coin Co., Zcash Foundation and initial investors. After network upgrade 4, 8% of the block reward will be transferred to the Dev Fund and managed by a Major Grants Review Committee.

Mining: Originally Zcash could be mined at home, using CPU or GPU machines. As mining hardware evolved, ASIC machines became the preferred mining machine for professional cryptocurrency miners and mining pools. ASICs can be customized for a particular use (such as mining Zcash) and therefore outperformed previous mining hardware such as CPUs and GPUs. Zcash community members voted against ASIC-resistant protocol updates in mid-2018 citing security concerns. The top mining pools for Zcash include Flypool, Nanopool and Slushpool. The next network upgrade, Heartwood includes ZIP 213, which would allow miners to mine directly to a shielded coinbase.

Scalability: Scalability work is in progress. There are several approaches to making blockchains scalable, both at the protocol layer (layer 1) and at the application layer (layer 2). In September 2019, Sean Bowe, researcher at Electric Coin Co., proposed Halo, a novel technique for practical recursive zero-knowledge proofs. ECC researcher Daira Hopwood presented a research proposal for sharding architecture. This proposal calls for the use of sharding, a technique that partitions a database into sections or “shards” to improve the throughput limit, in order to scale to high transaction volumes.

When did Zcash launch?

The Zcash block chain launched on October 28, 2016, bringing into existence the first Zcash monetary units. This software release and the initial phase of the blockchain is called 'Sprout' to emphasize that it is a young, budding blockchain with great potential to grow.

Where can I use my Zcash?

Zcash is supported at top cryptocurrency payment providers, including Flexa and Gemini Pay. Today, Zcash can be used at more than 39,000 major retail locations, coffee shops, movie theaters and more. Privacy is necessary for both a medium of exchange and store of value and they are working with partners to support new use cases for Zcash. Hundreds of merchants and nonprofit organizations already accept Zcash.

How do I install a Zcash wallet?

There are a variety of third-party wallets for storing and sending ZEC, in addition to the officially supported core client, zcashd. When choosing a wallet, you have several options in terms of custody (custodial vs non-custodial), operating system (desktop, iOS, Android) and shielded support. You can also browse options available on third-party sites such as Zcash community site.

Joining a mining pool

Joining a pool: They highly recommend joining a mining pool rather than mining solo. It provides a more steady income stream based on the hash rate contributed, rather than only getting paid when your ASIC mines a block. In choosing a mining pool, you can consider the size of the pool, payout methods (PPS vs PPLNS), pool fee, geographic location of the pool, ping time to the server, user interface, statistics / data, and customer support. Ultimately you want to find a pool that can be trusted, has high payouts and a great user experience. A list of pools can be found here.

Completing Configuration: Once you have created a user account with a chosen mining pool, you will need to complete the setup process at the specific mining pool so that the ASIC is registered as a mining participant in the mining pool. They recommend that you contact the chosen mining pool directly with any assistance.

Monitoring Results: Each mining pool will have a different monitoring dashboard. Once set up, you should be able to see how much you are contributing to the mining pool, the status of the ASIC miner, and the estimated payout for the work.