What is Zcash (ZEC)?
Comprehensive guide to Zcash - the privacy-focused cryptocurrency with optional shielded transactions.
Introduction
Zcash (ZEC) is a cryptocurrency focused on providing users with optional privacy protection. It was launched in 2016 by Zooko Wilcox and the Electric Coin Company. Technologically, Zcash is based on Bitcoin's blockchain code but brings a unique feature: the ability to send both public and fully shielded transactions.
In public transfers, information is visible like in Bitcoin, while in shielded transfers, the sender's, recipient's, and amount information remain encrypted. Zcash belongs to the so-called privacy cryptocurrencies, meaning currencies where user anonymity is strengthened through technical means.
Alongside Monero, it is one of the most well-known privacy-focused crypto projects. In 2025, Zcash has regained significant popularity in the crypto markets and has become one of the leading privacy cryptos by market cap.
Zcash History
Zcash's roots extend to 2013 when a group of cryptography experts developed the Zerocoin protocol at Johns Hopkins University. The original idea was to add an extension to Bitcoin that would enable completely anonymous transactions. However, it soon became clear that this protocol would be too difficult to integrate directly into Bitcoin's existing system.
The solution was to create an entirely new cryptocurrency: the project was first named Zerocash, which eventually became Zcash. The cryptocurrency was officially launched in October 2016.
Trusted Setup
In a so-called trusted setup ceremony before the launch, several different parties together created the initial keys for the Zcash protocol and destroyed them to ensure that no single party could maintain a backdoor to the system.
Later, well-known security expert Edward Snowden revealed that he participated in this ceremony under a pseudonym, emphasizing its importance for privacy.
Technology and Privacy Features
Zcash's core technology allows users to choose the visibility level of their transactions. Each user has two alternative address types:
Address Types
Transparent Address (t-addr)
Transparent addresses and transfers work like in Bitcoin - all transaction records are visible on the blockchain. The parties and amounts of the transaction are visible to anyone following the network.
Shielded Address (z-addr)
Shielded addresses utilize advanced cryptography to hide transaction information. Transfers between these addresses do not reveal the sender's, recipient's, or transfer amount information publicly on the blockchain.
zk-SNARK Technology
This is made possible by zero-knowledge proof technology, specifically cryptographic proofs called zk-SNARKs. In a zero-knowledge proof, the network can mathematically verify that a transfer is valid (for example, that the sender has the necessary balance and no coins are created from nothing) without revealing any actual information about the transfer itself.
In practice, Zcash's blockchain is an encrypted ledger: outsiders can see that a certain number of transfers have occurred on the blockchain, but if the transfers are made in a shielded manner, they cannot see between whom or in what amounts.
Optional Privacy
It's important to note that Zcash gives freedom to choose the level of privacy. Not all users use shielded features by default, and in the early years, the majority of ZEC transfers remained public.
Over time, the use of shielded transactions has increased, and according to estimates, about 20% of all Zcash coins are now in shielded addresses. This means Zcash's offered anonymity is realized best when users actively utilize shielded addresses.
Mining and Consensus Mechanism
Zcash is technically very similar to Bitcoin in network maintenance as well. Its consensus mechanism is Proof of Work (PoW), meaning a mining-based consensus algorithm. This means that the distributed network's miners compete with each other to solve complex mathematical tasks to add a new block to the blockchain.
Equihash Algorithm
Zcash uses a hashing algorithm called Equihash for mining. Equihash was originally designed so that efficient graphics cards were better suited for mining than in Bitcoin's SHA-256 algorithm.
The goal was to prevent the dominance of large ASIC mining devices and keep network maintenance more decentralized. However, over the years, specialized devices for Zcash mining have also been developed.
Blockchain Parameters
- Block Time: ~75 seconds (1.25 minutes)
- Maximum Supply: 21 million ZEC
- Halving: Approximately every 4 years
- Developer Share: 20% of block rewards
Zcash's monetary policy follows Bitcoin's scarcity model: the maximum number of coins is limited to 21 million ZEC, and this amount can never be exceeded through mining.
Where to Buy Zcash
Zcash (ZEC) can be purchased on various cryptocurrency exchanges. Like other privacy coins, availability may vary depending on regional regulations.
Investment Considerations
As an investment, Zcash offers an interesting combination of Bitcoin-like scarcity with optional privacy features. The project has strong academic backing and continuous development.
Investors should consider regulatory developments, as privacy coins face varying levels of acceptance across jurisdictions. The balance between optional and mandatory privacy features may influence future adoption.
Learn more about cryptocurrency investing in our crypto investing basics guide.
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