Zcash (ZEC) is currently 19th on the BNC market cap table, just below two other two privacy-oriented coins Monero (XMR) and Dash (DASH). The market cap currently stands at US$594 million with US$97.5 million in trading volume over the past 24 hours.
ZEC is the most recent iteration of the Zerocoin protocol, developed in 2013. The protocol was transformed into Zerocash and then ZEC in 2016. The ZEC blockchain currently targets a 2.5 minute block time, has a difficulty adjustment algorithm adopted from DigiShield v3, a block size limit of 2MB, and a total supply of 21 million units. 10% of the total supply will be distributed to stakeholders of the Zcash Company in the form of a founder’s reward. The founder and CEO of Zcash Company is Zooko Wilcox-O’Hearn. Notable advisors include Bitcoin (available on Coinbase) developer Gavin Andresen, Ethereum (available on Coinbase) founder Vitalik Buterin, and Tezos’ Arthur Breitman.
The founders’ reward is a stark contrast to the ICO model, which often raises money before a project is out of beta. The ongoing incentive was designed to encourage lasting development over many years with a dedicated team. Although critics of ZEC have described the founders reward as a measure of centralization, Arjun Balaji argues that “the difference between ZEC and other crypto-asset projects is that ZEC is operating at the cutting-edge of cryptography, requiring and producing novel research across zk-SNARKs/STARKs/etc., which is then freely shared with the rest of the ecosystem, including competitors.”
zk-SNARKs, or Zero-Knowledge Succinct Non-Interactive Argument of Knowledge, are an optional privacy feature based on zero knowledge proofs. ZEC addresses that start with a “t” are transparent, and addresses that start with a “z” include privacy enhancements and are referred to these as “shielded addresses.”
Since both types of addresses occur on the same chain, it is possible to send ZEC between both address types. In December 2017, programmer jeffq discovered that private transactions on ZEC are able to be linked to non-private transactions unless both the sender and receiver are part of the “shielded pool” of anonymous transactions. Only 3.5% of the available coins met the criteria at that time.
The most recent protocol upgrade to the ZEC protocol was a hard fork dubbed “Overwinter,” which went live on June 26th. The fork enhances transaction efficiency and scalability for shielded addresses. Before the hard fork occurred, the sole maintainer of the Windows ZEC wallet, David Mercer, issued a statement in a plea for funding to the Zcash company and threatened to contentiously fork ZEC and start a separate project if he was not adequately paid. The Zcash company obliged and a crisis was averted. The next upgrade, “Sapling,” will increase scalability and privacy and is set for release in October.
On the network side, transactions have been steadily declining over the past month and average transactions fees have spiked several times over the course of the year. ZEC has fewer transactions than both XMR and DASH, and cheaper fees. ZEC’s shielded transactions currently account for