Understanding the Mechanism of Zcash & its Addresses.

• Zcash is a cryptocurrency based on Bitcoin’s code.
• Z-addresses and T-addresses and their transaction types.

Zcash is a type of cryptocurrency, which is developed on Bitcoin’s codebase. Its main focus is on user privacy and anonymity, enabling it to be more secure as compared to Bitcoin.

According to the scientists who created Zcash: Eli-Ben Sasson, Alessandro Chiesa, Christina Garman, Matthew Green, Ian Miers, Eran Tromer, and Madars Virza, there were numerous security insufficiencies in the manner in which the transactions were traced. 

To address these issues, Zcash uses a proofing method called Zk-SNARK.

A Zero Knowledge Proof is simply a method by which the proving entity can prove a certain statement to the verifying entity that the statement is genuine but doesn’t provide any further information to maintain the anonymity and security of the user. 

What do you understand about Zcash addresses?

Zcash consists of two types of addresses. First, private addresses, these addresses start with a “z” and second, transparent addresses, these addresses start with a “t”.

A Z-to-Z transaction usually occurs on a public blockchain, which lets you know that a certain fee was paid for this transaction. In a Z-to-Z transaction details like transaction amount and memos are hidden from the public and it is in the owner’s hand if they want to reveal that information to a trusted third party. 

A Z-to-Z transaction is only possible with the use of zero-knowledge proofs. These are known as shielded transactions.

A T-to-T transaction is almost as similar to Bitcoin. All the transactions are carried out on a public blockchain but unlike a Z-to-Z transaction, the information related to the receiver, the sender, and the transaction value is publicly visible to other users. While several crypto wallets and exchanges currently use t-addresses, many are shifting towards shielded addresses to enhance user data security, maintain anonymity, and mitigate potential threats.

There are four types of transactions:

1. A Z-to-Z transaction – this type of transaction is also called a shielded transaction. Here, both the sender’s and the receiver’s data are kept hidden.
2. A Z-to-T transaction – this type of transaction is called a deshielding transaction because the recipient’s information is publicly visible and the sender’s information is kept hidden.
3. A T-to-Z transaction – this type of transaction is called a shielding transaction because the sender’s information is public whereas the recipient’s information is kept hidden.
4. A T-to-T transaction – this type of transaction is called a public transaction because here both, the sender’s and the receiver’s information is visible to the public.

Zcash is not Bitcoin.

Bitcoin is all about the transparency of the transactions while maintaining the anonymity of the user. However, Zcash not only protects the transaction information but also prevents it from being traced by encrypting the information; moreover, its security protocol Zk-SNARK adds a layer of privacy and anonymity for the user. 

Zcash and Bitcoin both use different algorithms. Bitcoin uses the hashing algorithm SHA-256 whereas Zcash uses Equilash, which is incompatible with the working mechanism of Bitcoin. Compared to Bitcoin, Zcash has larger blocks and increased hashing times which automatically surges the network’s hash rate.