Zcash (ZEC) is a cryptocurrency designed with one goal in mind: increasing personal privacy.
Unlike Ethereum and NEO, the team behind Zcash simply wants to create, a highly-secure, easy to use, and very private means of storing and transmitting funds. That is why they have plans to create what they call a worldwide economic platform, but no planned solutions for business in the form of initial cryptocurrency offerings (ICOs), bitcoin-based documents, or markets.
Despite that Zcash has some similarities to Ethereum or Ether. Like Ethereum and XEM or NEM, Zcash is promoted and maintained by a nonprofit organization called the Zcash Foundation. The Foundation is funded with 1.44% of Zcash’s Total Supply.
The Foundation is associated with the Zcash Company team of scientists and engineers that supports Zcash. Despite its’ name the Zcash company is not a commercial enterprise, but a sort of IT department that maintains Zcash.
So what is Zcash Anyway?
Zcash is a decentralized and open-sourced cryptocurrency that is designed to provide strong privacy protections through better blockchain technology.
Like DASH, Zcash is supposed to be fungible or interchangeable. That means any block of Zcash can be substituted for any other. The hope is that this will cover the trails of financial transactions in the cloud or blockchain and make them hard or impossible to track.
Zcash started as Zerocash a protocol that was designed to make Bitcoin harder to track. The Zerocash protocol was the basis of Zerocoins which ultimately became the cryptocurrency known as Zcash. The description Zero was used because Zcash is supposed to leave Zero Knowledge Proof, or no trail to track.
The ultimate goal was to create a cryptocurrency in which a user’s payment history was not recorded in the blockchain. That way there would be no record for tax collectors or criminals to backtrack to an altcoin’s owner or user. To accomplish this Zcash is designed to hide a payment’s origin but not its destination or amount.
The ultimate goal of Zcash is to guarantee payment without divulging its origin. The hope is that will provide a high-level of privacy and security to Zcash users.
How valuable is Zcash?
The concept behind Zcash is certainly popular with investors; it had a Coin Price of $337.85 on December 3, 2017. That makes it one of the most valuable altcoins around.
The Coin Price led to a Market Capitalization (Market Cap) of $930.786 million and a 24-hour market volume of $71,334 on December 3, 2017. Since this was achieved on a Circulating Supply of 2.755 million ZEC, it indicates a lot of value.
In contrast, Ethereum (ETH) had a Coin Price of $478.76 and a Circulating Supply of 96.11 million on December 3, 2017. That indicates there was a lot more Ether in existence, but not necessarily more market interest in ETH. Ethereum had a 24-hour Market Volume of $818,786 on December 3, 2017.
An interesting possibility is that Zcash’s Circulating Supply, Market Cap, and Market Volume might grow as large as Ethereum’s at some point. That will increase trading in the cryptocurrency, but not necessarily lead to a higher Coin Price for Zcash. Like Ethereum, Zcash has a characteristic that might keep the Coin Price low, a lack of a Total Supply.
Zcash’s Growth Potential is both an Opportunity and a Problem
One reason why investors like Zcash might be that it has a lot of potential for growth. There is no Maximum Supply or limit to the amount of Zcash that can be produced. This means it has unlimited growth potential which can lead to a gigantic circulating supply and a lot of market volume.
That can help traders make a lot of money from Zcash because there might be a lot of volatility in the market. Unfortunately, it can also lead to inflation, because an unlimited inflation of a currency means there is no limit on the potential Market Volume.
Inflation of a cryptocurrency can occur when the Market Volume gets, so high it drives down the Coin Price. This has not yet occurred with altcoins, but it has occurred many times with fiat currencies.
Cryptocurrencies like Bitcoin are designed to be inflation-resistant because they have a Maximum Supply. The Maximum Supply is a limit on the number of altcoins that can be mined. The hope is that artificial limit will keep volume high and lessen the possibility of inflation.
Oddly enough, vulnerability to inflation will attract some traders and speculators because some of them make their money by betting on or against inflation. Many currency traders employ strategies and algorithms designed to anticipate rises or falls in currency prices. That might make Zcash very popular with traders in the future.
Where to Use Zcash
The biggest drawbacks to Zcash are one that it shares with most other altcoins. These limitations are that there are few places to spend the cryptocurrency, and that it can be very hard to convert Zcash into fiat currencies (government paper money) such as U.S. dollars.
These drawbacks can limit Zcash’s value and utility because you cannot spend it at the grocery store or the gas station. To make matters worse, you cannot go down to the ATM or the cash register at Walmart and withdraw funds from your Zcash account in the form of paper cash.
Spending Zcash online can be almost as difficult because most large retailers refuse to take to take it. Amazon, Walmart, and other major sites refuse to accept cryptocurrency payments, while a few other retailers like Overstock.com and Dell will only accept Bitcoin.
A number of companies are trying to solve this problem by offering digital wallets and prepaid debit cards that convert altcoins including Zcash into fiat currencies. The hope that is you will be able to walk into a grocery store or fast food joint and make payments in Zcash with a special Visa or MasterCard. It would also be possible to use such crypto-cards online because most large online retailers including Walmart and Amazon take Visa and MasterCard.
Companies planning Visa or MasterCard crypto-debit cards and digital wallets include: TenX, Centra, and Uquid. Unfortunately, none of those products is currently available in North America because of conflicts with Visa and MasterCard. A TenX Visa that converts Zcash to Euros and dollars is available in Europe, but nowhere else.
Investors should monitor such card plans carefully because the appearance of a widely available Visa or MasterCard crypto-debit card that converts Zcash to fiat currencies might take it mainstream. Until then Zcash is basically just an investment for most people, those who need a cryptocurrency they can convert to fiat currencies fast should look into more widely accepted altcoins such as Litecoin, Bitcoin, and Ethereum.
Another Drawback to Zcash
There is a major technical limitation to Zcash that all investors and users must be aware of. Zcash is not currently officially supported on Windows, Apple iOS, and Android operating systems. Instead, the Zcash Company only works with Linux.
This is potentially a major problem because Windows is the world’s most popular operating system running most of the world’s desktop computers. To make matters worse, most of the world’s smartphones run on Android or Apple iOS.
That means it might not be possible to use Zcash tools or wallets on many phones and computers. To make matters worse, it might create security risks for Zcash users because firewalls, antivirus programs, and other solutions might not protect Zcash on such devices.
The problems might not exist on Android or Google Chrome devices because Android and Chrome are based on Linux. Mac, iOS, and Windows might be another matter. There are third-party developers creating solutions for Mac, iOS, and Windows. Such solutions might not work or have serious flaws, including poor security, because they are not associated with the Zcash Company.
The Zcash Company is committed to Linux, because Linux like Zcash is an open-sourced solution designed for everybody to use. The risk from such open-source solutions is obvious; they are easy for the bad guys to access and find security holes in.
Where to Find and Buy Zcash
There are lots of places to buy Zcash but the best solutions for average people are major exchanges. Several of these including Bitfinex, CEX.IO, Kraken, BitMex, Poloniex, and Shapeshift offer Zcash trading.
The advantage to such exchanges is that they enable purchases of Zcash with MasterCard, Visa, and in some cases bank transfers. A list of such exchanges can be found here.
Shop around by visiting several exchanges, and check the fees charged before signing up. Also, make sure that your method of payment is accepted, there are some exchanges that will not take some payment options from some countries including Canada.
Something to remember is that if you do not buy through an exchange you will probably have to buy Bitcoin or Ethereum and use that altcoin to buy Zcash. Another potential solution might be to use the digital wallets offered by companies like Centra and Tenx to buy Zcash.
Mining the Zcash
Another option for buying Zcash is to mine it that is to harvest new coins from the blockchain. There are a wide variety of Zcash miners out there including the most popular Genesis Mining. Unfortunately, Zcash mining plans are often sold out at Genesis.
There are also a wide variety of Zcash Mining Pools out there. A list of such pools can be found here. Shop around and read the fine print when you look for a miner because some of them do not work with U.S. customers.
Cloud miners like Genesis and mining pools operate large banks of computers that harvest new cryptocurrencies for their customers. Cloud mining can be one of the easiest and cheapest ways for average people with a little extra money to buy Zcash.
An advantage with mining is that you can avoid the fees charged by exchanges and take advantage of growing prices. Be careful because most mining pools charge fees which can multiply fast.
Storing the Zcash
There are a number of Zcash wallets that can let you buy the cryptocurrency available. The advantage to owning a wallet is that it allows you to store Zcash out of an exchange.
Zcash can be stored on most of the popular hardware wallets on the market including the Trezor, the Ledger Nano S, and the Ledger Blue. The big advantage to these solutions is that they cannot be hacked if they are not connected to the internet. The disadvantage is that you will have to connect them if you want to access your Zcash.
There are many desktop wallets that allow you to store Zcash on your computer available. A desktop wallet is a digital account similar to PayPal or an online bank account that lets you store, convert, and spend cryptocurrency. There are also many cloud-based and blockchain based digital wallets that will let you store Zcash.
All such solutions, like miners and exchanges, are vulnerable to tracking and cyberattack. That means you should diversify your holdings by storing your Zcash in a number of places.
A good strategy is to only keep those altcoins you plan to spend or use right away in your digital wallet. Keep everything else offline in your hardware wallet.
We feel that Zcash is a good investment looking at the market cap, the current market trends, and the state of the market as it is right now as of time of writing this.
Zcash is about $350 which is still roughly what it was back in June around 6 months ago. Considering other factors such as the very small circulating supply (meaning the price can rise very fast at any given moment), and the overall strong marketing presence of the team, and the fact that privacy coins such as Monero popular with a rising price trend, and with the concerns about government tracking of crypto, then we would say investing in privacy coins like ZCash is probably a good future investment.
Privacy coins will likely be a popular investment coin over the next few years, appealing both to the dark web as a means of hiding identities and for regular people who want to use crypto for anonymous transactions.
Note that there are other privacy coins such as Zencash, CloakCoin, and Zcoin which are similar to Zcash in many ways but with a much lower market cap. You may also want to consider these coins for investment, if you wish to invest in privacy coins as the returns may be higher.
And of course, you’ll also want to compare ZCash with Monero. So far, Monero is a more popular coin than Zcash and has more direct real usage than ZCash by people. Monero is arguably more secure as well.
A Long-Term Threat to Zcash
The biggest threat to Zcash’s future might be politicians. Some political leaders and economists would like to get rid of all privacy cryptocurrencies for several reasons.
Many politicians fear that privacy cryptocurrencies like Zcash would make tax evasion easier. That might lead to less tax revenue and less money for politicians to spend. Others are afraid that privacy cryptocurrencies might be used by criminals or terrorists.
Efforts to ban or restrict privacy cryptocurrency might be further along than you think. The United States Senate’s Committee on the Judiciary held a hearing on a piece of legislation called S1241 on November 28, 2017.
Critics charged that S1241 would make it illegal for Americans to possess any cryptocurrency that did not comply with anti-money-laundering laws (AML), Cyrptocoins News reported. AML laws require that banks not accept deposits or transfers from any source that is not fully identified.
The fear is that legislation like S1241 would make it illegal for U.S. banks to accept transfers or deposits of funds from privacy cryptocurrencies like Zcash. That would make it almost impossible for Americans to use funds from Zcash and ban any digital wallet or debit card that converted Zcash to dollars.
Obviously, the price of Zcash would plummet if such laws were to pass in major countries like the USA, the United Kingdom, or India because the cryptocurrency might become useless. This means it might be a good idea to make large investments in privacy altcoins such as Zcash and DASH until the political debate over laws like S1241 has been settled.
Zcash is an interesting cryptocurrency, but it might not be a good long-term investment because its future is uncertain. Most people would be better off owning Ethereum or Bitcoin right now.
A good strategy for an average person to take at this time would be to buy Zcash only if crypto-debit cards that convert it become widely available. Until then most people should stay far away from Zcash because there is no guarantee this altcoin will ever become widely accepted or used.