Zcash and Monero are two cryptocurrencies with a focus on privacy. In this guide, we focus on differences, purpose and technical aspects of the platforms.  Zcash originated as a fork of the Bitcoin protocol while Monero’s underlying structure is based on CryptoNote. Zcash carries similarities with Bitcoin. However, the main difference is the level of privacy and fungibility at the same time maintaining the open financial system. ZCash is an encrypted open ledger, meaning that even though all transactions are recorded on a blockchain, the transactions are encrypted and can only be viewed by users that have access.

The Zcash blockchain uses the Zero-Knowledge Proof which allows two users to engage in transactions without either party revealing their addresses to the other. In the end, we have untraceable transactions. The Zero-Knowledge proof has qualities like completeness, soundness and zero-knowledge.  ZEC is the native cryptocurrency of the Zcash blockchain. The token currently lies in the 27th position. By press time, the asset was trading at $51.60 with a market capitalization of $375,529,528.

Monero is also a privacy centred cryptocurrency. Monero is a fork of a digital asset that was known as Bytecoin. The network uses a protocol called CryptoNote which groups transactions on the blockchain. The grouping enhances privacy because it becomes difficult to determine which transaction belongs to the senders. Additionally, it uses the Proof of Work to validate transactions meaning that it requires computational power in updating its blockchain.  The native cryptocurrency of Monero is XMR.

Zcash Vs Monero

Here is an in-depth comparison between Zcash and Monero

Privacy Features  

The Monero blockchain enhances privacy through the use of ring signatures. In normal circumstances, each blockchain payment needs to be signed by a public key. However, we have a great risk of a user’s identity being revealed. With the ring signatures, there are a group of public keys and any one of them can authorize the transaction. In the end, all payment are signed but users cant be identified. The use of ring confidential transactions ensures that we have no double-spending during the confirmation of multiple transaction inputs and outputs.

The Ring Confidential Transaction protects the amount being sent from one account to another. In this case, only the person receiving the XMR can decode how much was sent.  Stealth addresses deployment by Monero ensures transaction details are only visible to the sender and receiver. Stealth addresses are random and one-time addresses generated for every transaction on behalf of the recipient.

On the other hand, Zcash deploys the Zk-SNARK as the main privacy feature. This feature enables nodes to enhance integrity on top of transaction encryption. Hashes are used to provide proof that information in transactions is authentic and accurate.

Speed

The Monero blockchain has a block time of 120 seconds making it five times faster than Bitcoin. On the Monero blockchain, block expand and shrink based on demand. In this case, when the Monero network is working on many transactions, the block size increases providing more capacity.  For Zcash, the block time is about two and a half minutes making it slower than Monero. The Zcash network speed is dependent on how busy the network is. If the network is processing private transactions, the network speed is around six transactions per second. This compares with just over 26 transactions per second.

Privacy Setback

Before the October 2018 hard fork, Monero network had high fees and slow confirmations. The hard fork integrated bulletproofs into the Ring Confidential Transaction reducing the transaction data by almost 80%. On Zcash, there has been an increased demand for processing. However, a section of the user only selected stealth transactions. To date, the stealth transactions are manageable thanks to the sapling upgrade which lowered the RAM demands from 3GB to 40MB.  The Sapling upgrade has made stealth transactions much less taxing by reducing RAM requirements from 3 GB to just 40MB.

Mining  

The use of CryptoNote leaves the Monero protocol ASIC-resistant when it comes to mining. CryptoNote system deploys the CryptoNight hashing algorithm, making it impossible to be mined using ASICs. The aim of using CryptoNote was to bar the emergence of mining pools. Monero also tries to make mining profitable by a smart protocol. Note that there are 18.4 million XMR tokens and mining is projected to go on until 31st May 2022.  After this date, the Monero network is developed in a way that ensures 0.3 XMR/min are continuously emitted by it. The aim is to ensure miners have the incentive to continue mining and won’t have to depend on just transaction fees.

When it comes to Zcash mining, it is done through equihash,  a Proof-of-Work algorithm. Zcash uses the equihash protocol to make mining as ASIC unfriendly as possible. This avoids the creation of mining pools that can lead to a monopoly. Without ASIC mining, the process becomes democratic and less centralized. However, the introduction of the Equihash Antminer Z9 had many of the miners in the community angry about the lack of action from the developers.

Adoption

Both Zcash and Monero are privacy cryptocurrencies and one would expect their adoption rate to be the same. However, Monero seems to have an upper hand because it is more utilized in the dark web. This is because Monero is much easier to use than Zcash at present. Regulators across the globe have pointed out that they might crack the whip on anonymous coins like Monero and Zcash. Unlike Monero, we have few reliable wallets for Zcash at present. However, Zcash is will catch up with time considering its a new cryptocurrency. Zcash might have an edge over  Monero since its transactions don’t have to be private. This capability might help Zcash keep tough regulations at bay.

Distribution

Distribution of cryptocurrency is a major determinant when it comes to a digital asset’s democratization. Having been launched back in 2014, Monero did not have any ICO or presale, unlike other popular cryptocurrencies.  In this case, all minted XMR tokens are distributed to miners. For Zcash,  a total maximum supply of 21 million coins is out. When it launched in 2016, 80% of the coins were allocated to miners and 20% went to founders. However, this has caused controversy on whether the founders need this 20%. Befoe hitting the market, Zcash had a presale.

Monero Advantages/Disadvantages

  • Fungibility. Each XMR coin is the same meaning that tokens cannot be tracked back to its origin by using a blockchain explorer.
  • Default privacy. As transactions are private by default and as more transactions take place, the layers of obfuscation increase.

Zcash Advantages/Disadvantages

  • On paper, Zcash has the potential for stronger privacy. This is because the encryption software can prove transactions are accurate without supplying the data in a public way.
  • As a drawback, Zcash uses two different types of address: ‘z’ which are private and ‘t’ which are transparent. Exchanges only use ‘t’ address, main wallet support is for ‘t’ addresses and these addresses result in lower fees. Most users use these transparent addresses making it more obvious which addresses are for private transactions.

Monero Vs Zcash- Who has an edge?

Compared to Monero, Zcash is still a new cryptocurrency with a lot of ground to cover. However, the asset has some of the advanced privacy features in place. In comparison, Monero has an upper hand based on various factors. Most importantly, Monero has a rich team and community that is guided by ideology as opposed to monetary gains.  Monero has programmers with advanced experience in privacy and security matters. Additionally, the Monero team is more open, unlike Zcash developers and founders.

Conclusion

Monero and Zcash are excellent privacy blockchain projects. On paper, Zcash has good privacy plan in place based on the fact it will enable the strength of zero-proof transactions. Elsewhere,  Monero’s transactions are private by default something that attracts users in need of privacy. Despite some regulation setbacks, Monero is leading the way when it comes to privacy and security.

Image Source: Hacked.com

Amisi Paul

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