What is Zcash?
According to the Zcash website, “Zcash is the first open, permissionless cryptocurrency that can fully protect the privacy of transactions using zero-knowledge cryptography.”
There is a common misconception that Bitcoin transactions are anonymous. A history of every transaction is displayed on a public ledger. Sophisticated software can be used to determine who is responsible for a significant number of these transactions. Zcash emerged as a response to this lack of privacy.
Zcash is a hard fork of the Bitcoin protocol. Zcash is different from Bitcoin as it has added a functionality of completely private transactions. In order to allow for completely private transactions, Zcash employs technology from a branch of cryptography and computer science called zero-knowledge proofs.
What is zero-knowledge proof?
In a nutshell, a zero-knowledge proof means you can prove to someone that you’ve done a computation without them having to redo the computation themselves. The result is that one can prove a statement is true without revealing anything about the statement except that it is indeed true.
So, Zcash is completely anonymous?
Yes, but only if you want it to be. Zcash offers its users the choice of ‘shielded’ transactions, which allow for content to be encrypted using the zero-knowledge proof called zk-SNARK. However, Zcash also offers public transactions. A user can share a “view key” with others to allow transaction details to be selectively viewed by certain individuals. Thus, whether a transaction is public or private, depends on the will of the user.
Whereas, Bitcoin is an open and permissionless cryptocurrency, Zcash users can opt-in and out of completely private transactions.