Zcash vs Monero

Zcash vs Monero is a question that many crypto investors are interested in because these days it seems like there’s a hacker around every corner. Bitcoin, Litecoin and some of the other originals may have the biggest market caps but using them potentially exposes users’ information to the world. Would you use cash if spending it could broadcast your name and address to everyone near you? Probably not, and that’s why privacy coins were invented.

Zcash vs Monero is a prominent pair of these newer privacy-oriented coins. They still use the same old blockchain technology as bitcoin, but they also have privacy technologies built-in as well, and we should also mention that they have other features designed to resist ASIC mining, and thus monopolies within the industry.

ZEC’s approach to privacy

Zcash (ZEC) is seven years younger than bitcoin, first appearing in 2016, it featured an innovation called the Zerocash protocol, which includes non-interactive zero-knowledge proofs, or zk-SNARKs. The protocol lets transactions pass between shielded addresses. The only downside is that it doesn’t do this automatically and it can allow transactions to take place between transparent addresses that are unshielded too. From a Zcash vs Monero perspective, it would be better for Zcash users if their transactions were automatically untraceable.

XMR’s approach to privacy

Monero (XMR) appeared two years before that ZEC in 2014, and it conceals personal information using 4 elements:

  • Ring Signatures—hides the identity of the sender through encryption.

  • Ring Confidential Transactions (RingCTs)—encrypts the amount of the transaction.

  • Kovri— conceals both parties’ IP addresses.

  • Stealth addresses— these encrypt the location of the recipient.

As we’ve noted, you can choose whether ZEC is sent via transparent or shielded addresses, but this leaves the door open to human error. XMR closes the door on that because it’s always private. From a Monero vs Zcash, Monero wins on privacy.

Custom Proof-of-Work (PoW) Algorithms

A consensus algorithm confirms transactions and blockchain using a two-stage process:

  1. the algorithm must be resolved by a certain type of node or network user.

  2. other network nodes must confirm that this resolution took place.

Under the proof-of-work approach, mining is a competition where everyone is trying to solve the algorithm first. Whoever succeeds is rewarded and their solution connects a group of transactions in one block. This is then added to the blockchain.

Each cryptic and uses a different algorithm to do this. With Bitcoin, it’s one called SHA-256, while Litecoin it’s Scrypt. XMR uses Cryptonight and ZEC relies on Equihash.

Cryptonight

One of the seemingly unavoidable difficulties that go with crypto mining centralization. This is a process whereby people lots of money to invest create farms of dedicated mining machines that rely on ASIC (Application-Specific Integrated Circuit) chips to beat out the competition from ordinary, cottage industry type minus using off-the-shelf GPUs and CPUs.

Cryptonight was created by Bytecoin along with the CryptoNote development team to level the field by reducing the benefits of ASIC rigs. Unfortunately, a Medium blog post in 2019 detailed how ASIC machines are responsible for over 85% of Monero mining. That’s presumably what led to the announcement of a hard fork for XMR on March 9. It remains to be seen whether this will have any effect on the problem, but what is clear is that it’s a mark against Monero in the Zcash vs Monero question.

Equihash

Equihash is another ASIC resistant protocol, but once again, in 2018 an ASIC ZEC mining machine was unveiled, putting the lie to its effectiveness. The Zcash Foundation de-prioritized ASIC resistance during that same year, which means that in the Monero vs Zcash debate, things are once again even.

Allocating coins

ZEC miners have to pay a kind of tax on what they earn from mining called the Founder’s Reward. An agreed percentage goes towards the initial investors. XMR doesn’t set a coin limit and there’s no similar tax on production, so that’s another point in favor of XMR in the Zcash vs Monero debate.

Allocating ZEC

Investors put up $1 million to get ZEC up and running, and they were the ones who designed in this Founder’s Reward. It’s set up so that they receive 10% from every mining transaction up until ZEC halves for the first time (in mid-2020). Investors, founders, advisors, and employees of the company receive a share of all of that, which could amount to 2.1 million ZEC or 10% of the 21 million ZEC total. Mining is set to carry on up to 2032, and miners will receive all the rewards going forward.

Some fans think that the Founder’s Reward is a great idea because it gives the ZEC Foundation the resources to resist attacks. Miners would probably rather keep all of what they mine, and probably see it as a point against ZEC in the Monero vs Zcash debate.

Allocating XMR

18.4 million XMR were created to start with, but there’s no cap on this. Mining will probably continue until the middle of 2022. After that, 0.3 XMR will be produced every 60 seconds indefinitely.

Pricing

On Feb 13, 2019, XMR was in 13th place with a market cap of $843,987,889. One Monero coin was worth $50.27. ZEC had a market cap of $312,597,871, putting it only in 20th place, although single Zcash coins cost $53.10.

How they’ve performed

XMR’s initial price in 2014 was $3 but it had sunk to $0.25 by early 2015. By Jan 2018 it had reached a startling $470, but it’s been a downward trend ever since.

ZEC was valued at $4300 on Oct 29, 2016, but by late February 2017, it was only worth $30. It clawed its way back to $400 by June 20 but was back down below $200 by mid-July. It breached $800 in early Jan 2018 but it’s been a bearish long haul since.

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