What is Zcash?
Summary
Zcash is a blockchain for payments that lets users choose to protect their payment details. ZEC is the crypto asset used for payments on the network. Built from Bitcoin’s code, Zcash supports both transparent and shielded addresses. Zero-knowledge proofs let the network verify shielded transactions without publishing the underlying information.
- Zcash can transfer ZEC while protecting payment details.
- Transparent addresses are public; not every Zcash payment is private.
- Zero-knowledge proofs verify payments without publishing the underlying information.
- Virtune Zcash ETP provides exposure to ZEC price movements without requiring a personal crypto wallet or the use of shielded payments.
What is Zcash used for?
Zcash is a blockchain for payments that lets users choose to protect their payment details. ZEC is the crypto asset transferred between users. The network was built from Bitcoin's original code1, with a different approach to the information a payment makes public.
Consider a payment between two people. The recipient needs to receive the money, but other people do not need to see the sender's balance or earlier payments. Zcash can support that payment using shielded addresses. This choice over payment privacy2 is its defining feature.
Are all Zcash transactions private?
No. Zcash supports both shielded and transparent addresses. A transparent address makes balance and transaction information public on the blockchain. A shielded address protects that information. The type of address used2 matters; a payment is not automatically private just because it uses Zcash.
Bitcoin records payments on a public blockchain. Zcash adds zero-knowledge proofs for shielded payments3, allowing the network to check a payment without publishing all the information behind it. The cryptocurrency overview explains the wider role of blockchains and digital currency.
Two types of Zcash address
| Address | What is public? | What does it mean for a payment? |
|---|---|---|
| Transparent | Balance and transaction information are public | The payment does not have the privacy of a fully shielded transfer |
| Shielded | The address protects balance and transaction information | A transfer between shielded addresses can keep payment details private |
How does a zero-knowledge proof work?
A zero-knowledge proof establishes that a statement is true without revealing the underlying information. An analogy is proving that someone is above an age limit without showing their date of birth. In Zcash, the proof establishes that the payment is valid4: the sender must have enough ZEC, but does not have to publish their balance or transaction history.
Other participants therefore do not have to take the sender's word for it. Verification and public disclosure are separate: the network can check the proof while the payment details remain private.
Where did Zcash come from, and how many ZEC can exist?
Electric Coin Co. launched Zcash in October 20165, following work on cryptocurrency privacy. The Zcash Foundation was formed in 2017 to support the project.
The maximum supply is 21 million ZEC6, the same maximum number of units as Bitcoin. New ZEC is issued through mining as blocks are added. The block reward halves roughly every four years7, reducing the rate at which new ZEC is created. This rule explains issuance; it does not determine the price people will pay. The types of cryptocurrency overview puts Zcash's payment function alongside other uses of crypto assets.
What does Virtune Zcash ETP provide?
Virtune Zcash ETP provides exposure to the ZEC price through an exchange-traded product. It is physically backed by ZEC as collateral8, held with custodians. The security sits in a brokerage account, without the holder having to manage a crypto wallet or private keys.
The investor owns the ETP, not ZEC in a personal wallet. The holding cannot be used to send Zcash or make shielded payments, and Zcash's privacy feature does not make a brokerage holding private. The product does not stake its holdings. The Virtune Zcash ETP product page contains current product details and terms. Access depends on a broker that offers trading on Nasdaq Stockholm; an English-language product page does not establish a listing in every country.
Costs when buying Virtune Zcash ETP
| Cost | Charged by | When |
|---|---|---|
| Brokerage commission | Broker | On every purchase and sale |
| Difference between bid and ask price | Market | On every trade |
| Management fee, 1.49% per year | Issuer | Ongoing, from the product's value |
| Currency conversion | Broker, if applicable | If the product trades in another currency |
Which risks matter?
ZEC's price can move sharply. Crypto-asset prices can fall quickly9; transaction privacy does not protect against a price decline.
The ETP also has issuer, custody and trading risk. ZEC held as collateral reduces credit exposure to the issuer, but does not protect against a fall in ZEC's value or remove custody risk. The bid-ask spread and available liquidity can also affect the price at which a trade is executed.
Related product
Sources
- Zcash: What is Zcash?
- Zcash: What is the difference between shielded and transparent Zcash?
- Zcash: How is Zcash different than Bitcoin?
- Zcash: What are zero-knowledge proofs?
- Zcash: Who created Zcash?
- Zcash: Does Zcash have a max supply?
- Zcash: What are the economics of Zcash?
- Virtune Investor Relations: Collateralization Methodology
- EBA, EIOPA and ESMA (the European Supervisory Authorities): EU financial regulators warn consumers on the risks of crypto-assets
