Monero vs Zcash

Monero vs Zcash is an interesting question because these more recent coins offer something that the older ones don’t—privacy. Privacy when transferring money between parties is one of the key requirements of any cryptocurrency, but some coins like Litecoin (LTC) and Bitcoin (BTC) aren’t as secure you might think. Public transaction information and transparent addresses can help a determined investigator snoop on user identities while the intrinsic vulnerabilities of these coins can also allow dubious individuals to exploit them.

This is why privacy coins were created and why the Monero vs Zcash question needs to be addressed. These coins meld blockchain technology with privacy technologies to eliminate security concerns. Monero (XMR) and Zcash (ZEC ) each use different approaches to handling privacy and resisting the ever-present problem of centralization (or monopolies) in ASIC mining, but they both still rely on traditional proof-of-work approaches to validation.

  • ZEC’s Privacy Features
  • XMR’s Privacy Features
  • Their Own Proof-of-Work (PoW) Algorithms
  • Cryptonight
  • Equihash
  • Allocation of Coins
  • ZEC Allocation
  • XMR Allocation
  • Price Analysis
  • Performance

ZEC’s Privacy Features

Zcash dates back to 2016 and uses Dr. Matthew Green’s Zerocash protocol, which includes non-interactive zero-knowledge proofs (zk-SNARKs). These permit transactions to work between shielded addresses, but the protocol doesn’t grant privacy by default because it also permits transactions between transparent addresses.

These are like BTC public addresses, so they don’t encrypt data when they broadcast it, meaning that anyone can see the amount of each transaction. Shielded addresses encrypt this data, so senders and recipients stay untraceable. In the Monero vs Zcash debate, this is a definite disadvantage for Zcash.

XMR’s Privacy Features

XMR came out in 2014. Monero keeps transaction information private thanks to 4 features:

  • Ring Signatures—these encrypt where the transaction originated to hide the sender’s identity.

  • Ring Confidential Transactions (RingCTs)—encrypt how much the transaction is for. It works a bit like zk-SNARKs although they’re designed differently.

  • Kovri—hides senders’ and recipients’ IP addresses for more privacy. Both Kovri and Ring Signatures use two blockchain-based privacy technologies.

  • Stealth addresses—these work alongside Ring Signatures to use blockchain-based privacy technologies for recipient location encryption.

Sending and receiving of ZEC can be done using shielded or transparent addresses, whichever the user prefers, but this means their privacy is down to them. In contrast, XMR doesn’t offer users any choices, because it’s automatically always private, so in terms of Monero vs Zcash, Monero has the advantage of greater safety here.

Their Own Proof-of-Work (PoW) Algorithms

A consensus algorithm uses a two-stage process to confirm transactions in blockchains:

    1. An algorithm must be solved by a particular type of node or network user.

    2. Other network nodes must agree amongst themselves that this was satisfactorily achieved.

With the proof-of-work approach, miners are competing amongst themselves to solve the algorithm before everyone else, and once they succeed this connects a series of transactions into one block, which gets added to the blockchain as soon as the other nodes confirm the answer to the algorithm. Now the wining miner gets the reward.

Different cryptocurrencies use different algorithms for this process.; Bitcoin uses SHA-256, Litecoin uses Scrypt, XMR uses Cryptonight and ZEC uses Equihash.

Cryptonight

Cryptonight was created by Bytecoin along with the CryptoNote development team to resist the rise of ASIC (Application-Specific Integrated Circuit) cryptocurrency mining chips used by wealthy mining pool operators. PoW protocols that are ASIC resistant are meant to level the playing field so that no one with special equipment can get any kind of advantage in mining. One of the problems with crypto mining has been that people with ordinary home GPS and CPUs can’t compete with the richer operators.

Equality may have been the theory, but the reality has proved to be a little different. On February 7, 2019, someone called MoneroCrusher wrote a piece on Medium looking at the hash rate of XMR. It revealed that ASIC machines account for more than 85% of Monero mining. Consequently, a hard fork for XMR was announced on March 9 in the hope of stifling this practice. Hard forks are controversial, and it isn’t yet known if this proposed solution to the ASIC resistance problem will be welcomed by the community.

All of this weighs against Monero in the Monero vs Zcash debate.

Equihash

Equihash was released by the University of Luxembourg on Feb 22, 2016, at the Network Distributed System Security Symposium. ZEC was the first major implementation of Equihash, and Bitcoin Gold (BTG) and Bitcoin Private (BTP) have since made use of it.

Equihash was also designed to be ASIC resistant, but an ASIC ZEC mining machine was introduced by Bitmain in May 2018. BTG and other Equihash currencies have also been mined using ASICs.

Members of the Zcash Foundation subsequently voted to de-prioritize ASIC resistance during the Community Governance Panel Election in 2018 by 45 votes to 19, which levels things up in the question of which is best between Monero vs Zcash.

Allocation of Coins

ZEC has a fixed supply of coins and a ‘tax’ system called the Founder’s Reward, which says that a proportion of all coins produced must go to the initial investors. XMR does not specify a coin limit and it does not place any kind of levy on production as ZEC does (one up for XMR in the Monero vs Zcash contest).

ZEC Allocation

Investors including Roger Ver, Erik Voorhees, Barry Silbert, Naval Ravikant, and others initially pumped $1 million into ZEC, and as we’ve said, the Founder’s Reward was the means by which they would receive a return on their investment. The rule is that up until ZEC’s first halving, which will probably take place on April 18, 2020, 20% of all ZEC mined will be handed out among investors, founders, advisors, and employees of the company. This will be worth something like 2.1 million ZEC or 10% of the 21 million total. Mining will carry on after this event until at least 2032, with all rewards going to the miners.

Some people (and Edward Snowden is among them) consider the Founder’s Reward to be a cryptocurrency tax. They support it because they think it helps the ZEC Foundation stop attacks from happening, although this is a matter of opinion, so perhaps this doesn’t necessarily help ZEC’s case in the question of Monero vs Zcash.

XMR Allocation

18.4 million XMR were initially mined but there isn’t a fixed supply. Mining is only projected to continue until May 31, 2022, and after that, 0.3 XMR will be created every minute, perhaps carrying on forever!

Price Analysis

On Feb 13, 2019, XMR held the position of the 13th highest market capitalization of $843,987,889 and a Monero coin was worth $50.27. In contrast, ZEC’s market cap was $312,597,871 which put it in 20th position, but one Zcash coin was worth $53.10.

Performance

XMR’s opening price when it went live in 2014 was $3 and it dropped quite a lot during the following few months. On October 5 it was worth less than $1, in early 2015 it was only worth $0.25. But then the climb back came, which saw it surpass the dollar in June 2016 and reach a high of $470 by Jan 2018. It’s been a downward trend since then though.

ZEC opened at almost $4300 on Oct 29, 2016, and then dropped to near $30 by late February 2017. It was back up to $400 by June 20, but then down below $200 in mid-July. It breached $800 in early Jan 2018 but like many other cryptocurrencies has spiraled down ever since.

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