Zcash is a peer to peer (P2P) cryptocurrency like Bitcoin. But unlike Bitcoin, its sole priority is to focus on private, anonymous, and fungible transactions that Bitcoin can’t-do. Zcash was forked out of Bitcoin and launched in October 2016, and it was previously known as Zerocoin. It is based on a special cryptographic protocol that shields a sender’s information, a receiver’s information, and the amount transacted between the two parties. Zcash’s open cryptocurrency project uses a zk-SNARK protocol. This is a new cryptographic zero-knowledge proof protocol that ensures privacy, anonymity, and fungibility of Zcash coins. However, privacy and anonymity are not implemented by default in Zcash, as it also has a transparent transaction functionality like Bitcoin. So Zcash, by design, has optional anonymity and privacy features for users who want to use them.
How Does Zcash Work?
Zcash works on a zk-SNARK protocol. To understand this protocol more This protocol was developed in 2014 by scientists and research cryptographers at Johns Hopkins University, Massachusetts Institute of Technology (MIT), Technion-Israel Institute of Technology, and Tel Aviv University.
Zcash Coin Supply And Distribution
Zcash (ZEC) has a total maximum supply of 21 million coins, like Bitcoin, and is mined through a POW Equihash algorithm. All 21 million are expected to be mined by 2032, and just like Bitcoin, the Zcash block mining reward is cut in half every four years. Zcash was not pre-mined or ICO-funded like many other crypto projects; instead, it follows a unique funding and distribution approach. Zcash started with a closed investor’s group who funded the company with $1 million to kick off its development and operations. In return, these investors are promised a 10% reward of the total supply in an incremental way over the first 4 year period. Some the popular investors from this closed group are Barry Silbert, Erik Voorhees, Roger Ver, and Naval Ravikant.
This 10% reward of investors is called a “Founders’ Reward” which basically means that whatever amount of Zcash is mined for the first 4 years, 10% of Zcash will be incrementally distributed among these investors. This comes down to 2.1 million being distributed to investors in the first 4 years, which can represent a kind of tax on mining. After 4 years, the total mining reward goes to miners like in a typical proof-of-work system.