Introducing Zcoin Cryptocurrency
What is Zcoin?
Introducing Zcoin digital currency: Zcoin is a privacy focused crypto currency that allows people to transact anonymously in a unique and scalable way.
Up until very recently Zcoin utilized the ZeroCoin protocol.
This protocol was originally built as an extension of Bitcoin.
However in July of 2019 they released their Sigma protocol.
This makes use of much more advanced technology in cryptography something I will touch on in a bit.
Of course the privity coin sector is quite saturated at the moment so how can Zcoin really differentiate itself.
Well in order to get a better sense of that we have to take a look into the technology.
As mentioned Zcoin was built on the ZeroCoin protocol which was a pretty unique way to approach privacy.
Previously the ZeroCoin protocol involved destroying your Zcoins to the mint ZeroCoin.
These were coins with no transaction history.
The protocol worked as a sort of coin laundry where you’d exchange your existing Dirty-coins those were the transaction history for new Clean-coins which had no transaction history at all.
Now this process of creating new coins is called minting.
This ZeroCoin protocol was a logic start for Zcoin but it did not come without some baggage.
First of all the zero coin protocol was built on something called a trusted setup.
This is something that is relied on by other cryptocurrencies such as Zcash and can be seen as a single point of failure.
Essentially with the trusted setup you have to have a trust.
And as we know from the Bitcoin mantra don’t trust verify.
Another serious problem with the ZeroCoin protocol is that it had a number of vulnerabilities.
These vulnerabilities allowed an attacker to create forged Zcoins.
This happened on two occasions once in 2017 and then again in 2019.
This led to over 1% of the circulating supply being forged not an insignificant number.
So it was these events that forced the developers to come up with an alternative protocol and hence the release of Sigma.
Sigma has a number of benefits over ZeroCoin but perhaps the most important is that it does not have the trusted setup or the fatal flaws.
This has been running effectively on the main net and the initial results appear to be quite positive.
Anyways let’s move off of the core protocol and on to the other features of the blockchain.
The core protocol of Zcoin
Something else that I liked about Zcoin is that it uses a hybrid consensus mechanism.
It has a proof-of-work component which means that you can mine it.
However it also has a proof of state component which means that you can earn returns by staking your coins.
Essentially if you put up 1,000 Zcoin you’ll be able to run a Zcoin masternode called as Znode.
Znodes are incentivized by receiving 30% of the newly minted Zcoins.
To put that into context at current prices and difficulty its return of about 50.8 percent.
So not too shabby.
On the mining component Zcoin uses the MTP algorithm you can actually still mine Zcoin on a GPU although it is becoming that much more difficult.
Something that you have to be aware of when you mind Zcoin is that they have what is called the founders fund.
Team, Partners & Development
With this a certain percentage of the mining reward will go to the founder investors and Team.
This can seem unfair to some but it’s a system that is used on larger privacy blockchains such as Zcash moreover this will only continue until
September 2020 at which point it will be fully funded.
Moving on though something else that I want to look at is their combination of Tor integration and the Dandelion protocol.
This is something that adds a further layer of privacy to Zcoin transactions.
Essentially with these features the IP address of the sender is masked from the broader network.
This means that not only are your transactions private but no one will be able to see that you have even connected to the Zcoin network.
This is not a feature that is built into many other privacy coins.
Although you have something similar in the Wraiths protocol on verge.
The dandelion protocol further advances this anonymity functionality I won’t go into the mechanics of how it works here but I have linked to an explanatory post.
Now another central piece of the Zcoin network is of course their native coin.
This has the ticker XZC and was released back in 2016 with no premine or ICO.
Given that it’s based on the Bitcoin protocol it has a maximum coin supply of only 21 million ZeroCoins.
The price of this coin has been all over the show.
During the 2017 bull run we saw all-time highs of a hundred and sixty-nine dollars.
However, when the bear market came rolling in prices kept rolling down, not ideal.
Founders of Zcoin
Anyways who is behind this project the team behind Zcoin is quite experienced and the founder Poramin Insom actually proposed the idea in a university thesis back in 2014.
In fact, his professor at the time it was Matthew Green who created the ZeroCoin protocol.
The extended team has experience in blockchain engineering, software development, cryptography, and many other fields.
The developers have also been hard at work;
Something that you can verify yourself by checking out their GitHub repository.
Finally, there are also some high-profile investors behind the project.
The most prominent of these has to be Roger Ver who invested in the project in its early stages.
Now let’s quickly take a look at the Zcoin market.
Trading & Wallets
Zcoin is listed on a number of exchanges including MXC, Coin-X, Binance, QB etc.
In terms of volume the top three exchanges control over 85% of it so slightly concentrated.
However, there appears to be reasonable levels of liquidity on most exchanges.
For example, the Zcoin, Bitcoin order books on Binance are deep and have decent turnover levels, so easy execution.
In terms of storage your best bet is probably to use the official Zcoin desktop wallet.
However, if you’re looking to store it on mobile then you could use the Edge wallet or the Coinomi wallet.
We’ve reviews for each of these if you’re interested.
So what do I really think of Zcoin?
Well I’m cautiously optimistic.
The project is pretty well established and includes a number of unique features not seen on other privacy coins.
They’ve also recently shed the troublesome ZeroCoin protocol which was the source of much concern around the safety of Zcoin.
The developers also appear to be quite competent motivated and are actively pushing out code at a frenetic pace.
Finally, there are also some really interesting updates that we can look forward to in their roadmap.
Now having said all of this of course there are potential bumps in the road ahead.
Firstly, it’s still early days on their segment protocol so the jury is still very much out on that.
You also have an increasingly saturated market for privacy coins.
The market may be slightly jaded by the plethora of projects occupying the space.
Finally, that Zcoin price is still quite depressing.
This is not only impacting the value of the HotList portfolio but it’s also reducing the potential return for Z node operators.
No doubt all eyes will be on the outcome markets over the coming months.
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