ZCoin project purpose and description
What is Zcoin?
Zcoin is a fully decentralized and open source cryptocurrency powered by the ZeroCoin protocol. The protocol utilizes Zero-Knowledge proof that helps to guarantee total financial privacy and anonymity. The protocol has elevated Zerocoin to a class of its own with only a few competitors including Zcash and Monero.
The Zerocoin project is the work of Poramin Insom who implemented the recommendations of his John Hopkins professor, Mathew Green. Earlier on, Poramin had made history by being the first to implement stealth addresses in QT-wallets to improve anonymity.
Though Zerocoin has achieved much in advancing the blockchain systems by enhancing the anonymity, the price and value have changed with a very small margin since inception.
On 21st March 2017, the market capitalization of Zerocoin was about $ 19.6 million at a price of $0.09. The price remained within the same range until November 2017 before shooting by more than 9000% on 15th January 2018. But this growth was short lived.
Between January and mid-2018, the price shot down with more than 8000%. This took it back to the point it started at early in 2018. As the importance of anonymity and privacy in blockchains become even more critical, more people are now trooping to Zerocoin and raising its demand again.
What is the problem that Zcoin Solves?
Though blockchain technology and products are growing remarkably fast, they are faced with serious issues that could negate the progress. Zerocoin’s primary goal was to remedy the issues found at Bitcoin and other proof of work (PoW) cryptocurrencies.
Lack of anonymity
Zcoin was created to help improve anonymity in a scalable way when sending value in its network on a peer2peer basis. When Bitcoin was created, Satoshi Nakamoto intended to demonstrate that it was possible to run a completely decentralized manner. While the peer2peer payment model has been a great success, anonymity has proven to be an uphill for Bitcoin and other cryptocurrencies.
Notably, anonymity was not one of the core goals of Satoshi Nakamoto when he created Bitcoin. To send value, Bitcoin only provides pseudonymity via public keys or hashes. Many Bitcoin users are allowed to generate multiple identities to help preserve their privacy.
Even with these efforts, it is still possible to pull out the details of individual users. How does this happen? The bulk of user information is leaked by web trackers. When people make transactions with Bitcoins especially in stores such as Overstock, the merchants leak information to third parties for advertisement purposes. Others methods that can be used to compromise user’s anonymity include:
- Advanced technology is being applied to connect multiple nodes and discover originators information.
- Following the public ledger, different public addresses can be traced back to specific users.
- When Bitcoin users provide their identity when trading in the exchanges, anonymity can be lost. This method is being by authorities to target specific traders to identify those operating without paying taxes.
In Bitcoin and other proof of work (PoW) consensus and some proof of stake (PoS) based cryptocurrencies, mining has become highly centralized. The situation has been made worse by the development of advanced ASICs mining hardware that generates optimal mining power for individuals/ mining pools. This coupled with the associated high cost of power has made it unviable to mine most proof of work (PoW) cryptocurrencies with CPU or GPU.
Companies with a lot of money have taken the opportunity to set up large ASIC mining farms raising the danger of the bulk of Bitcoins falling into the hands of one or a few players. It also increases the danger of 51% attack in the event that such users in the same pools conspire to harm the network.
How does Zcoin Solve the problem?
Poramin Insom identified the outlined issues when studying for his Master’s Degree in Information Security at John Hopkins University. It is at the university that he wrote the proposed practical implementation of Zerocoin protocol focusing on enhancing anonymity and security in blockchain systems.
The Zerocoin protocol
This protocol works like Bitcoin in many ways with all the transactions getting recorded in a public ledger. But the transactions in Zcoin, unlike in Bitcoin, involve destroying the Zcoins and minting Zerocoins. The Zerocoins are new coins that do not have any transaction history. Then, the Zerocoins are converted back to Zcoins. Because a lot of people are mining Zerocoins, it is very difficult to tell who minted which coins.
The Zero-knowledge proofs
The Zerocoin protocol used at Zcoin employs zero-knowledge proofs that can be instantiated with Schnorr. The technology is applied through conversion of proofs such as 19,20,21,22, 23 … into non-interactive proofs through Fiat-Shamir Heuristic. This means that one party can easily prove to another party that he knows value X without providing any other info apart from the fact that he knows the value of X.
At Zcoin, this technology is applied to help users to demonstrate that they can send Zerocoins without giving personal information. Zero-knowledge proofs is an important component of the Zerocoin protocol because users can demonstrate they can spend the Zerocoins after burning Zcoins without giving additional personal information.
Anonymity of Zerocoins
To get Zerocoins, you are required to start by burning the Zerocoins. When you burn the Zcoins, the Zerocoin protocol generates random number “S” for the new Zerocoins and another secret number “R.” Then, “R” and “S” are used cryptographically to generate another value “C” that you have to commit to. This value “C,” is added to the public ledger so that you do not change it later. When you make payments with “C” some value will be spent but no one will be able to tell that some value of “C” corresponds to it.
To ensure that users do not double spend, nodes on the Zcoin (Znodes) have to verify that the zero-knowledge proof was valid and that the “S” value has not been spent. What this implies is that when one sends you Zerocoin, the recipient can only tell that a specific amount “X” was spent to their wallets. There is no other unintended info about the sender that can be generated from the transaction.
To send Zerocoin “S”, the owner is required to provide a zero-knowledge proof that he has “S” value corresponding to the public value “C”. Here, the zero-knowledge proof can only tell there is some “C” corresponding to your “S,” but not specifically which “S”. This implies that some Zerocoins would, in reality, be spent but no one would easily tell whether the value was from “C” that corresponds to you.
The Merkel-Tree Proof of work (MTP)
To build a cryptocurrency that is completely anonymous, Zerocoin founder knew that it had to be fully decentralized. At Bitcoin, miners are always in the race of looking for more powerful ASICs because they are considered highly effective than GPUs. However, the ASICs are very expensive and, therefore, out of reach for standard miners.
Zcoin uses Merkel-Tree proof of work (MTP) algorithm that is resistant to ASIC and GPU mining. This implies that unlike Bitcoin, Zcoin can be mined using a standard CPU.
What makes Zcoin better than it’s competitors?
Zcoin, like other cryptocurrency networks, is pit against other top competitors in the market. These include banks and cryptocurrencies that are involved in sending value. The following are the top reasons that make Zcoin better than competitors.
- Zcoin is one of the truly anonymous cryptocurrencies in the market. Whether you are sending or receiving value, it is very difficult for other people to follow back and pull out your personal details.
- The Zerocoin network employs Merkel-Tree proof of work (MIT) that helps to completely decentralize mining. This implies that mining has been removed from the hands of a few people with ASICs to the large community including users with standard CPUs.
- As a decentralized network, Zcoin system allows users to send value on a peer2peer basis. Whether you are sending funds within your country or across the globe, the transaction will be cheaper and faster compared to standard centralized organizations such as banks.
- The network is led by a highly enthusiastic team that has demonstrated great commitment to take the blockchain niche to the next level. Just like they found the right method of enhancing anonymity, the founder, and his development team are committed to achieving all the items lined up in the project’s roadmap. In 2018 and 2019, the Zcoin team targets to implement Ethereum inter-ledger connectivity, encrypted communication between nodes, the Sigma protocol, and decentralized anonymous voting.
How can Zcoin be categorized?
Zcoin can be categorized as a truly anonymous cryptocurrency project that is working on helping the blockchain niche edge to the next level. The founder, Poramin Insom, is a computing expert with a special focus on cryptocurrency anonymity. While Zcoin has indeed achieved so much in the industry, Poramin still insists that he wants to take the privacy to another level.
In 2019, the Zerocoin founder targets to implement the Sigma protocol that will introduce the next generation anonymity. This notion has excited the community so much and is expected to push the Zcoin value and token’s price to an even higher level.
What’s Zcoin‘s vision on Security?
When Poramin Insom founded Zcoin, his main concern was not just anonymity. His mission for security was to provide users with a completely anonymous and secure network that they could trust. With the DAO Child attack on the Ethereum system having taken only a few months prior to Zcoin launch, Poramin had to work harder to demonstrate that Zcoin was secure and reliable. Here are some of the strategies used to make the network more secure;
- The network employs Merkel-Tree proof of work that ensures mining is fully decentralized. Under the system, the tokens are spread evenly across the globe to avoid concentration on a specific pool and raising the danger of 51%.
- The network uses advanced cryptography that makes it very difficult for attackers to access users’ details. This, coupled with Zcoin total destruction to generate Zeroicoins implies that even attackers targeting Zcoin users still find it extra hard to break into their accounts.
- The development team at Zcoin is very aggressive. The team progressively works on Zcoin to identify gaps and seal them progressively. For example, the Sigma protocol is expected to improve the security even more.
While the Zcoin team has been very aggressive in addressing security concerns, it appears their efforts need revitalization because attackers are still gaining access. In February 2017, an attacker made away with over $500,000 by taking advantage of a typo error.
Examples of Zcoin’s use cases / applications.
Because of its enhanced anonymity, Zcoin has become a major attraction to users. Here are some of the main use cases:
- The Zcoin platform is preferred as an investment and saving platform. Unlike banks where a lot of people have access to your transaction details and account balance, Zcoin is different. Users can invest without worrying about seizure from third parties.
- Zcoin, like other cryptocurrencies such as Bitcoin and Ripple. Can be used for sending value across the globe. As a decentralized network, users on the network can send funds on peer2peer basis without requiring centralized authorities such as banks to facilitate operations. This makes transactions instant, cheap, and highly convenient.
- Zcoin can be used to pay transaction charges on the native network and when trading in the markets. When trading Zerocoin in the exchanges, users are required to pair the coin with another cryptocurrency such as Bitcoin. In every case, you have the option of selecting which coin to use in paying the transaction charges.
- Zcoin can be used to buy goods and services in various stores that accept the coin. As more people and stores come to accept cryptocurrencies, it is now possible to use Zcoin for direct purchases. You only need to identify a store that accepts the native coin to make a direct purchase.
- Zcoin is a reliable crypto coin for paying taxes in countries and states that accept cryptocurrencies. In the State of Arizona, HB 1091 bill was passed into law to allow residents to pay taxes in cryptocurrencies such as Zcoin and Bitcoin. Other countries where you can pay taxes in Zerocoin include Singapore and Venezuela.