ZCash Day Trading Tutorial, Brokers and Buying Guide

ZCash (ZEC) is a cryptocurrency based on a decentralised blockchain. Where it differs from the likes of Bitcoin (BTC) is its use of cryptography to provide enhanced anonymity. This page will break down everything you need to know about ZCash, including its history, wallets, mining and future price forecasts. Finally, this page will wrap up with guidance on how to go about day trading with ZCash gold coins.

Day trading with ZCash

What is ZCash?

ZCash is the first open-source, permissionless cryptocurrency. Essentially, ZCash is Bitcoin but with some important improvements. Instead of your entire payment history being public if someone has your address, ZCash encrypts all information using zero-knowledge cryptography. As a result, users can’t see the:

  • Sender
  • Recipient
  • Blockchain value

Much of the cryptocurrency’s value and potential profitability centres around this promise of enhanced privacy.

Supply

According to the website, there is to be a limited total supply of 21 million units. However, in the first four year period, 20% of the coins generated were to be allocated to a ‘founders reward’, which would be shared with investors, developers and a non-profit.

ZCash also uses the same insurance rate as Bitcoin with 21 million ZEC to be brought out over 131 years. Although, instead of 10-minute block transaction times, ZCash will use a 2.5-minute block average with four times greater block rewards that halve every four years.

Privacy

Understandably, a difficulty this cryptocurrency is facing comes from law enforcement, who distrust the uses brought about by the privacy features. In fact, the founder has held numerous virtual meetings to emphasise “they did not develop the currency to facilitate illegal activity“.

However, ZCash does facilitate a ‘selective disclosure’ process. This enables private transactors to prove payments for auditing purposes. This gives clients the option to comply with anti-money laundering and tax regulations. As the developers explained, “Transactions are auditable but disclosure is under the participant’s control“.

So while the network’s usage may be questionable, long-term scalability looks promising and is set to attract considerable investment.

History

ZCash came to life in October 2016 when founder Zooko Wilcox-O’Hearn wanted to tackle privacy issues online using an open financial system. As laid out in the white paper, instead of offering the open ledger system of Bitcoin, ZCash wants to provide an encrypted open ledger.

The founder appears to be the right man for the job. He has over 20 years of experience in decentralised systems and cryptography. In fact, his highly regarded works include:

  • ZRTP
  • DigiCash
  • BLAKE2
  • SPHINCS
  • Mojo Nation
  • Tahoe-LAFS
  • Zooko’s Triangle

Also among the founding team is cryptographer Mathew D. Green and initial investor Roger Ver. Of course, a huge number of other people helped build the system too. In fact, it began with the Zercoin protocol bring improved and turned into the Zerocash system. This was then enhanced and turned into the ZCash cryptocurrency in 2016. Protocol evolution is implemented by the Zerocoin Electric Coin Company, also known as the ZCash company.

The year after its launch there was a clear upward trend in favour of ZCash, as the currency was trading at $68.7 by April 2017. Price analysis shows it also boasted a market capitalisation of $80.2 million, ensuring it ranked on the list of top ten cryptocurrencies. This rise continued into the start of next year, as 2018 price predictions were met and often exceeded. In fact, the cryptocurrency regularly reached new all-time highest prices.

Overall, news of ZCash’s worth and reviews of the coin have helped shaped its history so far and continue to drive future forecasts.

ZCash Live Chart

How it Works

Head over to cryptocurrency forums and anonymity will often feature in discussions. Fortunately, ZCash uses sophisticated software and code to ensure privacy.

A special proof, zk-snark secures the network. The zero-knowledge proof basically allows two users to transfer capital without either party having to reveal their addresses. Obfuscation also ensures the value of the transaction is kept a secret. The addresses that are stored on the blockchain are shields, making it virtually impossible to trace the path between sender and receiver.

Whereas with Bitcoin, each full masternode stores details of what is held by each address in the UXTO or unspent transactions output database. Each transaction is then verified in order to unlock the output.

The approach taken by ZCash essentially implements an additional layer of privacy into transactions. Having said that, by the end of 2017, only about 4% of coins were in the shielded pool. At this point, most wallets did not actually support Z-addr and there were no online web-based wallets that did either.

Uses

Aside from cybercriminals on the darknet, there are a number of reasons users may want to use ZCash, including:

  • Those who want protection from data leaks.
  • Couples who may want to buy intimate toys anonymously.
  • Individuals who need a straightforward currency converter.
  • Companies who want to protect trade secrets or supply chain information.
  • An enterprise who wants legal services in a private matter, such as bankruptcy.
  • Individuals with serious medical conditions who may want to anonymously purchase medication online.

On balance, the long-term outlook and uses for ZCash look both positive and legitimate.

Benefits

For those deciding whether to buy and sell ZCash, there are several serious advantages to consider, including:

  • Fungible cryptocurrency – ZCash ensures fungibility by unlinking shielded coins from their blockchain history.
  • New applications – Zero-knowledge proofs promise fully encrypted transactions can be verified as valid. As a result, new classes of blockchain applications can be built.
  • Privacy – You get all the benefits of a public blockchain, as well as the promise that private information will be kept secure.
  • Popularity – Recent ICOs have helped the live price of digital currencies rise. This helps create precisely the sort of volatility intraday traders need to turn a profit.
  • Governance – While some argue this is negative, having a captain to steer the ship can clearly be thought of as a help, not a hindrance.
  • Mining difficulty – Mining pools are to start early, ensuring there won’t be an early rush where a few get to take it all. Mining guides will also make it a more even playing field for solo, dual, CPU, GPU, Windows and Android miners.

So for many reasons it has become accepted ZCash has a lot to offer potential investors and cryptocurrency explorers. In addition, the advantages are only likely to increase as the roadmap is followed and updates are made.

Drawbacks

Despite the benefits outlined above, there are also risks to consider, some of which may lead to a drop and even crash in ZCash prices, including:

  • Fork – Someone may hard fork ZCash, creating a clone, similar to Ethereum.
  • Central flaw – There is just one central key to the ZCash network, which if mismanaged, may lead to transactions no longer staying anonymous.
  • Deflation – There is a danger that having a fixed max supply of coins will lead to deflationary problems. This may mean you won’t get as much for your dollars as if you invested in an established index, such as the FTSE 100.
  • Legislation – Putting any network difficulty to the side, governments, especially in the US, do not like the concept of secret money. As a result, the cryptocurrency could face severe restrictions and even a ban. This may deter those who are still unsure of whether ZCash is worth investing in.
  • Competition – When you put ZCash vs Ripple, Ethereum, Monero and other altcoins, it’s hard to see precisely why ZCash will be able to take any market share from its rivals. There are already secret coins to choose from. Furthermore, you could add ZCash as a side chain to the BTC network.
  • Experimental – Despite the technology being ultra-modern, it is still experimental, with a relatively small blockchain size. It could well fail when it faces significant hurdles. In fact, according to BTC core developer “There appears to be uncertainty about the strength of the actual parameters chosen for ZCash’s crypto…The threat here is that an attacker may be able to create fake zk-SNARK proofs by breaking the crypto directly, even without having access to the trusted setup backdoor.”

So despite promising stats so far, there are a number of factors that could cause ZCash rates to start falling.

How to Buy ZCash

There are a number of exchanges where you can buy ZCash online either directly with a debit card or by purchasing BTC and transferring it to ZEC. Popular options include:

  • Kraken
  • CEX.io
  • Binance
  • Bittrex
  • Coinbase

Regardless of whether you’re from the UK, the US or Europe, look for the lowest quotes, rates and transaction fees. For example, USD exchanges may offer accounts with better prices to USD than GBP and Euro. Remember also that many brokers offer single click access to cryptocurrencies (IQ Option offer over 20) – allowing trader to speculate and day trade on price movements, with needing to own the asset itself.

Alternatively, you can try ZCash on the test network for free by heading to a faucet.

Wallets

Once you have your gold coins, you will also need a secure wallet to store them in. Fortunately, you can download a number of wallets. The official wallet is built for Linux. However there are also iOS app wallets, Mac wallets, other desktop and hardware wallets, plus you can get offline paper wallet generators. But perhaps the most popular option is the Ledger Nano S.

Although you now know where to buy ZCash, effective intraday trading with these coins will require careful price analysis of graphs and the following of the latest news.

ZCash Mining

Cryptocurrency mining is becoming increasingly popular. Unsurprisingly joining the best GPU ZEC mining pool is a high priority for many. ZCash will use the hashing algorithm Equihash. This is an asymmetric memory-hard PoW algorithm. It works much like Ethereum. It comes with high hardware requirements, including significant RAM to narrow the generation of proofs and ensure ASIC development isn’t possible.

You can test ZCash with a free cloud mining contract from the Genesis. Flypool has also attracted a number of perspective USB and other miners.

However, it’s worth bearing in mind you need to do more than learn how to mine. There are also risks to consider. For example, CPU Linux and Mac mining rigs will require an expensive amount of electricity. You will need to consider this price in your earnings calculator. Also, conduct a hardware comparison before you start to ensure you explore the most viable route.

Fortunately, detailed guides can walk you through everything you need to know, from network hashrate calculators and hashing power to mining hardware and pool lists.

What’s Next for ZCash?

It has been clear since the launch date that this cryptocurrency had potential and historical prices so far have confirmed that. In fact, some even suggest the digital currency remains undervalued.

Having said that, the crypto world has set a high benchmark. Furthermore, the Zerocash protocol’s zk-SNARKS is relatively untested. As a result, many classic price forecasts have been purely speculative. Therefore, it is likely that future prices will depend on supply and demand, with the former rising while the later remains unclear. Thankfully this promises intraday traders precisely the volatility needed to yield profits.

For more crypto guidance, see our cryptocurrency page.