Privacy is one of the fundamental aspects of cryptocurrency that make it so attractive. To many, it is seen as an anonymous and secretive world where people can hide behind usernames and numbers. It may come as a surprise, though, that cryptocurrency isn’t quite as private as a lot of people might think it is.
There are coins that excel in this and there are other coins which are seen as a much more open platform. Bitcoin, for example, is perceived to be anonymous and untraceable, but anyone who has used it knows that it’s not strictly true. On the Bitcoin blockchain, for example, there is a record of all the transactions made, and the ledger can show a lot of information to those looking for it.
However, this article is about another coin - Zcash, the 21st biggest cryptocurrency by market cap with the ZEC to USD value of $209.3 (as of July 30). Although these stats might seem impressive bearing in mind that there are almost 1700 different cryptos in the market, Zcash still has a long way to go before it can draw in more users. So, what’s the trick with Zcash?
Why is privacy valued?
Despite Bitcoin not being perfect in terms of anonymity, it is still a lot more anonymous than any other form of currency that we use today. Obviously, with debit and credit cards you are using a piece of plastic that has all your information on it and, if stolen, could be used to make purchases in your name.
Even cash has its drawbacks as most people either have to put this in a bank or store a vulnerable material in somewhere that isn’t safe. Meanwhile, a bank will hold all of your personal data and we have seen how institutions have abused this data while they also use the money that they have, your money, to lend to other people and make a profit.
There are plenty of people who don’t want anyone to know their business. This is not just those who are looking to partake in criminal activity, but also those who simply believe that it’s their right to not have anyone else snooping in on their business. It’s part of the reason why these currencies are so popular. There are people, though, who want that extra level of security with their coins, a level that goes beyond what the likes of Bitcoin can offer, and these are called privacy coins.
These coins can be a little controversial due to their association with criminal activity, but they are the most private way for anyone to make a transaction. Their details won’t be stored anywhere and coins will have specific functions which will boost their security.
What makes Zcash so private?
Zcash is a coin that came from Bitcoin with the intention of having more privacy features, with its main one being something called ‘zero-knowledge succinct non-interactive argument of knowledge proofs’, which is thankfully shortened to zk-SNARKs. This approach is Zcash’s way of ensuring safety and privacy.
What zk-SNARKs do is encrypt all of the data that they have received from transactions being made over the network. It can ensure that all of the data that is being exchanged is correct but can do so without compromising its privacy and without revealing any transaction details. If you want to be more open and honest, then Zcash also offers its users the option of not using this service.
Its ledger will only show a time that the transaction happened, and its privacy is one of the most respected on the market with the famous Edward Snowden saying in a tweet that “Zcash’s privacy tech makes it the most interesting Bitcoin alternative.” Zcash wants to offer its users an alternative, and it does it very well.
Will the coin succeed?
It is, of course, not the only privacy coin on the market and it has many challengers. Monero and Dash already have a higher market cap, and then there are the likes of DeepOnion, Enigma, CloakCoin, NavCoin and PIVX who are all looking to make their mark in the privacy coin sector.
That is a lot of competition and it already has ground to make up on the likes of Dash and Monero, which are two currencies with a lot of potential. With its zk-SNARKs though, Zcash does offer something different for those looking for privacy, but one of the problems it has is who is looking for that level of privacy?
There aren’t many valid reasons why someone would want more privacy than what Bitcoin can achieve. If you think about credit card and online banking today, it’s shocking sometimes how comfortable people are with giving away their data. For those looking to invest into cryptocurrency, they are likely to be used to that level of data and content with the level of privacy that most digital currencies from behind.
So what is the future of Zcash?
The future isn’t one of doom and gloom for Zcash, far from it. They offer something different, and people will always be looking for something different.
As the mainstream currencies develop, they will likely increase their privacy, which will further push away the likes of Zcash, unless they can offer something else as well. Monero and Dash are great coins which equally want to be the biggest privacy coins on the market. It will be fascinating to see how the market develops and there could even be a new privacy coin developed with a lot of other features, too.
The long-term future of privacy coins might not be great unless they offer something on top. Dash, for example, can boast about its fast transaction speeds and low fees. It is giving people a reason to invest in their coin beyond just the privacy aspect.
Zcash is a great coin, and if you’re searching for anonymity, then it could well be the one that you want. There probably won’t be enough people searching for it so that it could thrive, but it will always have its place in the cryptocurrency market. Whether it can become the best anonymous coin remains to be seen, but it has a long way to go before it can claim to be bigger than its competitors.