Zcash (ZEC) is a decentralized and open-source privacy coin facilitating anonymous digital payments. It employs resilient cryptographic encryptions to keep transactions confidential. Its fungibility makes all tokens identical without individual transaction histories, so it isn’t easy to track payments.
Zcash uses a Zero-Knowledge Proofs (ZKP) construction called a zk-SNARK. This allows the network to maintain a secure ledger of balances without disclosing the parties or amounts involved. Instead of publicly demonstrating spend authority and transaction values, the transaction metadata is encrypted and zk-SNARKs are used to prove that nobody is cheating or stealing. Thanks to selective transparency of transactions, users can choose to send Zcash privately (no personal information is disclosed) or publicly (similar to performing a Bitcoin or Ethereum payment).
The network employs a Proof of Work consensus mechanism(similar mining incentive system as Bitcoin), where miners receive tokens as rewards for the blocks they mine. The protocol distributes 80% of the payout to miners, while the remaining 20% goes to the protocol’s founders, investors, team, and the Zcash Foundation.
ZEC is the network’s native cryptocurrency of Zcash, used primarily to provide an alternative digital payment. It is also used to settle transactions within the network.