A Beginners Guide Buying, Selling, Using and Mining Zcash
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Blockchain technology is one of the fastest growing segments of one of the fastest growing industries. The incredibly rapid rise in demand for blockchain companies has not only yielded large quantities of ingenious blockchain platforms, but also a wide variety of investable, tradable, and usable cryptocurrencies.
As the prospects for blockchain technology continue to excite, many wonder how long the euphoria will last. As more companies enter the sphere and as more digital coins are produced, it becomes increasingly more difficult to differentiate oneself. One crypto coin, Zcash is well on its way to proving itself a reliable alternative to more mainstream crypto coins.
Like all other cryptocurrencies, Zcash is built on a blockchain—an auditable ledger that keeps a record of the transactions that take place on the ledger. It can also be thought of as a decentralized database that all users have access to. The network has hundreds, if not thousands of users, each with the ability to verify the transactions that take place.
Zcash shares similar attributes with the rest of its cryptocurrency peers—it is auditable, transparent, and decentralized. However, what makes it stand out is the fact that it is untraceable. This means that anyone who makes transactions using the blockchain platform can remain anonymous, protecting their privacy and the privacy of those on the other end of the transaction.
As with other cryptocurrencies, materials about Zcash, its definitions, and its unique capabilities can be found online. Websites like Reddit offer a wide variety of commentary and tips for using Zcash, which can help potential participants better define the unique blockchain.
Zcash can be purchased just like Bitcoin. First, a user must create a wallet—a digital wallet that stores blockchain assets. Zcash has its own official wallet which can be downloaded through its community website.
Next, users must find an exchange that makes a market for Zcash, such as Kraken. After registering an account and linking it to a bank account, participants can sync their wallet with a bank account or credit card. Using cash or credit, users can fund the account and then execute Zcash trades on the exchange.
The process for withdrawing Zcash is essentially the reverse process of purchasing it. After buying Zcash, users can sell it and transfer the funds directly into their wallets. In this case, they still have Zcash as their currency.
Another option is to convert Zcash into another currency, whether fiat or crypto. Some instant exchanges allow users to cash out in cryptocurrencies like Bitcoin, while others let you convert directly to fiat currencies like USD. From there, users can cash out directly and withdraw from an ATM. They must first transfer funds from their account to their bank account, but overall the process is quick and easy.
Zcash is in the process of pioneering zero-knowledge proofs—a method where one party proves to another party that a given statement is true. In zero-knowledge proofs, the prover does not convey to their verifier any information other than the veracity of the statement. The result is that Zcash transactions are completely private and untraceable.
For all of its advantages, one disadvantage of Bitcoin is the fact that users’ payments histories are exposed to the public. In contrast, Zcash allows users to enjoy decentralized transactions without incurring violations to their privacy.
What can users do with this newfound anonymity? First, they can invest and trade Zcash without fear of anyone else knowing their trading history. As market participants move money in and out of their wallets to an exchange, their transaction history remains safe and secure. Thus the value of Zcash not only increases as its price rises, but it also protects investors from outside eyes.
Because Zcash is a decentralized crypto coin, it is free from exchange rate movements and central bank monetary policy that so often manipulate asset prices. Because Zcash’s price moves with supply and demand, investors can take advantage of mispricing or follow a simple buy and hold strategy that has yielded sizable returns for many.
Zcash can also be used to play casino games like poker. Zcash poker is rising in popularity due to the anonymity and privacy it provides. Because the identity of the sender and recipient are hidden, and valuable information is private from the blockchain, gamblers and card players can enjoy their hobby without their private information, winnings, or betting tendencies released to the world.
Zcash mining is the process of verifying transactions that take place on the ledger and adding them to the blockchain. Zcash miners create new blocks of transactions and add them to the database, thereby increasing the coin’s transactional throughput. In doing so, they also smooth out the blockchain and ensure that no double spending or invalid transactions have taken place.
Miners are compensated for their work with Zcash. Some Zcash miners are also paid in Bitcoin, allowing miners the flexibility to participate in the price appreciation of the currency of their choosing. Miners can calculate the profitability of certain jobs by using a mining calculator. These calculators take into account the difficulty and size of a mining block, and compensate accordingly.
Like other crypto coins, Zcash mining is based upon proof of work protocol. The Proof of Work (PoW) (called Equihash for Zcash) is a data segment that is difficult to produce but easy for others on the blockchain to verify. The PoW is also based upon a set of predetermined requirements. These requirements must be met in order for the miner(s) to be compensated.
The first step to mine Zcash is to choose a wallet and a mining pool. Miners can choose to mine solo, offering them higher profitability, or they can mine in groups, which results in a lower profit percentage per miner but comes with increased mining capabilities. Next, a miner must ensure that his or her computer has the processing power to process and verify the transactions. After a block is verified and added to the blockchain, the pool is rewarded with Zcash. As more transactions are added, the more the coin’s market cap increases.
The major hurdle for blockchain currencies is their apparent inability to scale. Attempts to scale blockchains have yielded uncertain results, mainly because time will tell whether or not these attempts have been successful. Aware of this issue, the Zcash team has released a couple of updates to their platform to help it scale. As Zcash’s price chart shows, the cryptocurrency has had its ups and downs, but this shouldn’t prevent investors from investing in the proprietary platform. Coupled with increasing demand, Zcash executives are working hard to scale the blockchain in order to add new users and increase market cap.
Zcash carries many of the same advantages other cryptocurrencies do. But its blockchain platform that processes transactions anonymously truly put it a cut above its peers. Because of the privacy of the crypto coin, Zcash is an excellent choice for those that want to conduct their business in a decentralized manner while removing themselves from the public’s watching eye. Zcash provides all of the benefits of digital currencies while removing its biggest flaw.