What is Zcash (ZEC)? The Privacy Coin Using Zero-Knowledge Proofs

Zcash (ZEC) is a decentralized cryptocurrency launched in 2016, built upon a codebase derived from Bitcoin. Its fundamental objective is to provide absolute transactional privacy to its users while retaining the ability to selectively disclose information for auditing or regulatory compliance. Zcash is often classified as a ‘privacy coin,’ but its unique technical advantage lies in its implementation of advanced cryptography, specifically Zero-Knowledge Proofs.

### The Role of Zero-Knowledge Proofs (zk-SNARKs)

Zcash pioneered the use of a specific type of zero-knowledge proof known as zk-SNARKs (Zero-Knowledge Succinct Non-Interactive Argument of Knowledge). Traditional public blockchains, like Bitcoin, require all transaction details (sender, receiver, amount) to be visible to the public for verification. This full transparency is detrimental to privacy.

zk-SNARKs solve this paradox by allowing a user to prove that a transaction is valid and that they have sufficient funds, without revealing any sensitive information about the transaction itself. The network confirms the mathematical validity of the encrypted data without ever seeing the inputs, thereby ensuring both security and anonymity.

### Transaction Types: Transparent vs. Shielded

Zcash offers users optional privacy through two distinct types of addresses:

1. **Transparent Addresses (t-addresses):** These function similarly to Bitcoin addresses. Transactions involving only t-addresses are visible on the public blockchain, revealing the sender, recipient, and amount.
2. **Shielded Addresses (z-addresses):** These leverage zk-SNARKs to encrypt transaction details. When transactions occur between two z-addresses, all sensitive data is completely hidden from the public eye. Users can also transact between t-addresses and z-addresses, though privacy is compromised on the transparent side of the transaction.

### Governance and Supply

Zcash has a fixed maximum supply of 21 million coins, mirroring Bitcoin’s cap. It is developed and maintained by the Electric Coin Company (ECC) and overseen by the Zcash Foundation. By offering advanced cryptographic shielding, Zcash established itself as a technological pioneer, demonstrating how sophisticated mathematical tools can deliver robust privacy solutions within a decentralized financial ecosystem.

Source: What is Zcash (ZEC)? The Privacy Coin Using Zero-Knowledge Proofs