Let’s have a look at two important coins that were designed to solve an interesting puzzle: to make transactions on the most public ledger ever – a blockchain – private. Monero vs Zcash, the longest-standing and most important privacy coins. What do they have in common and what are the important differences?
Monero and Zcash are so-called privacy coins: they use advanced cryptography to allow users to transact while protecting privacy. A user’s address and balance are not visible. Monero is the biggest privacy coin in terms of market cap. Zcash is slightly smaller. Monero is widely accepted on darknet markets, which is not the case for Zcash. Both are way ahead of the pack in terms of market cap and history.
Both coins are mined and have similar issuance to Bitcoin. Like Bitcoin, Zcash will top out at 21 million coins. Monero has no cap but has a constant inflation rate of 0.6 per block.
Why does Privacy Matter?
That we close our curtains in the evening doesn’t mean we’re engaging in illegal activities. Same with spending money: wanting privacy in our spending habits doesn’t mean we’re all buying illegal stuff on the dark web. Privacy should be thought of as the default.
But it’s not. Just think of the trail you leave if you transact with a non-privacy network like Bitcoin or Ethereum. On Etherscan or another block explorer, it’s there to see for everyone and forever: entire series of purchases and wallets can be linked to your identity indefinitely.
The problem with privacy settings of protocols, according to Zooko Wilcox, co-founder of Zcash: ‘Privacy isn’t a thing you can add [to applications]. It’s not a feature like a new button or dark mode. You can add features but you can’t really add privacy.’
For that reason, Monero and Zcash approached the entire design with privacy in mind. It’s important to realize that both coins can’t solve the entire privacy problem. In both cases, it’s likely (but not necessary) that you buy the privacy coins at an exchange that knows your data. But how you spend your coins after that, is invisible.
Comparing Monero vs Zcash
So let’s compare some basic facts about Monero and Zcash.
| Monero (XMR) | Zcash (ZEC) | |
| Launch | April 2014 | October 2016 |
| Founders | Anonymous | Team from Johns Hopkins Uni |
| Developer community | Big (60+) | ? |
| Funding | Venture capital | Venture capital |
| Market cap (August 2022) | $ 3 billion | $ 1 billion |
| Circulating supply | 18 million | 15 million |
| Supply cap | unlimited, fixed inflation rate | 21 million |
| Consensus mechanism | Proof-of-work | Proof-of-work, talks of moving to proof-of-stake |
| All-time high | $516, May 2021 | $900, Jan 2018 |
| Transparant transactions optional | No | Yes |
| Block size | Adaptable | 2 MB |
| Block time | 2 minutes | 75 seconds |
| Private verification method | Ring signatures | Zero knowledge (zk-snark) |
| Transaction fees | varies, recently much less than $ 0.01 | 0.0001 ZEC (about $ 0,007) |
| Acceptance on darknet markets | high | low |
How does ZCash Work?
Zcash is based on the bitcoin protocol. The most important addition is privacy-preserving transaction data using zero-knowledge proofs. Zcash also includes some non-privacy changes to bitcoin, including its proof-of-work algorithm. Just like Bitcoin, the Zcash block mining reward is cut in half every four years. All 21 million are expected to be mined by 2032.
In a recent upgrade (NU5, June 2022), Zcash has introduced features like switching the default setting for…
Erik started as a freelance writer around the time Satoshi was brewing on the whitepaper.
As a crypto investor, he is class of 2020. More of a holder than a trader, but never shy to experiment with new protocols.
