Bitcoin is probably the best known of all the cryptocurrencies, because it was the first one to appear in the market, and it was also the one that captured the imagination of investors around the world when stories of its incredible rise in value began to spread. It’s still the market leader, but that doesn’t mean that it’s perfect, and as time has gone on competitors have been quick to develop new cryptos that address some of the shortcomings of Bitcoin.
One of those competitors was the founder and CEO of Zcash Zooko Wilcox-O’Hearn. Along with his team of cryptographers and researchers, he spent three years looking for ways to address one of Bitcoin’s biggest problems—privacy (or rather, the lack thereof).
Even if you think you know cryptocurrencies, it’s worth looking at the differences of Bitcoin vs Zcash. That’s why we’ve prepared this short guide to help you understand the key differences between these coins.
Cryptocurrencies are appreciated for the fact that every transaction in the blockchain as visible. This makes it impossible to double-spend coins. Bitcoin lets you see a coin’s entire history, but where it starts to get a bit dodgy from a privacy point of view is when you realise that you can also see a specific user’s wallet balance. You won’t be able to identify an individual by connecting them with that information directly, but it is possible if you put some time and effort in. The same isn’t true of Zcash, no matter how hard you try and piece the evidence together.
Zcash uses "Ak-SNARKS," which might sound like a sneezing illness, but it’s actually a proof that means that the party on one side of the transaction can prove to the party on the other that a statement is true without giving away any personal information. This stops double-spending and maintains a user’s privacy. Zcash also has additional privacy measures in place which offer even more security.
Right now, Zcash cloud mining pays out the same reward as Bitcoin does. It’s 12.5 ZEC per block, but as with all cryptocurrencies, ZEC’s value compared with Bitcoin is going to vary. For example, at the time of writing, Bitcoin is at $11,503 while ZEC is at $326.10. Both coins are capped at 21 million, but that’s a goal that becomes harder and harder to get to because every four years the reward amount goes down by half (or after around every 840,000 blocks mined.) So at the moment ZEC reward is 12.5, in 2020 it will drop to 6.25, and in 2024 it’ll be cut to 3.125, and so on.
Another difference to factor in with Zcash is the fact that a founder’s award was included as part of the initial design. This means that 10% of each reward goes to Zcash company stakeholders, people like investors, advisors and employees. It cuts into miners’ rewards but this will only last for the first four years, after which, it will all go to the miners.
Bitcoin and Zcash use different proof-of-work algorithms. With Zcash it’s one called Equihash, which means that the kind of high-powered ASIC equipment that Bitcoin miners use won’t give them an advantage over typical computer setups. They can mine with off-the-shelf CPUs and graphics cards that won’t break the bank.
Zcash had a fantastic launch onto the cryptocurrency market. It surged to $4,000 per coin on the first day, because investors could see that it was similar to Bitcoin but with the additional protection of anonymity and extra security.
There’s been talk of adding even more value to Zcash by including the kind of smart contracts functionality that is included with Ethereum. Bitcoin may have gotten to the market first, but it was by no means a finished product. Perhaps as people come to realise that it has shortcomings, they will turn increasingly to coins like Zcash that do more.
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