Zcoin (XZC) Review (UPDATED 2018): A Beginner’s Guide | VKOOL

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User privacy is one of the biggest issues of the day. Fears of scammers, keyloggers, malware, or database hacks (like the recent Equifax debacle) have made people all the more conscious about what they do online. The cryptocurrency started with user privacy in mind, but big coins like Bitcoin aren't as anonymous as you might think.

That's why Zcoin is here, a cryptocurrency that uses a special protocol to send coins totally anonymously. It's an alternative to other coins like Bitcoin that make too much personal information public.

Using our guide below, you'll get acquainted with what Zcoin is and how it works. When you're done, you should also check out  our new list of the best altcoins of 2018 which features Zcoin as one of our top picks!

The Zerocoin Protocol

The platform makes spending anonymous by erasing any record of a coin's spending history. How? The Zerocoin Protocol.

If you want to send money to an address, you choose the amount of coins you want to “mint,” by converting your Zcoins into Zerocoins. These Zerocoins are brand new and have no transaction histories. When the receiver gets these Zerocoins, they are converted back into Zcoins. This clever process allows people to send and receive digital currency with no spending history, and therefore no records of who has sent them and in what transactions.

All these transactions are still stored on a public ledger, like Bitcoin, but with no history for the coins being sent, no one can trace their owners.

Making and Spending Zerocoins

Making Zerocoins is easy. All you need to do is choose how many you want to “mint” and then pay the additional .01 Zcoin fee. All people get to choose the same denominations of Zerocoins to mint (1, 10, 25, 50, etc) and all are round numbers. This way, no one can tell who minted what, since everyone's minting the same numbers of coins at a time.

One drawback is that you have to wait a little over an hour (around 70 minutes) after minting before you can spend your coins, so mint them ahead of time to make sure you have them on hand to spend.

The Zero-Knowledge Proof

A zero-knowledge proof is a cryptological term that refers to a way to demonstrate to another party that you know a certain value without also having to release any other information about yourself. The Zerocoin method works in the same way: the proof shows that you have the ability to mint X-number of Zerocoins without telling the other person how many Zcoins you have, what their history is, or who or where you are.

Using this principle, people can maintain total anonymity even when directly sending someone a certain amount of currency, something difficult (or impossible) with other systems.

Anonymity and Privacy

The Zerocoin Proof uses the proof in a way that makes it more private than Bitcoin. With Bitcoin, the information about both parties of a transactions are recorded on the blockchain. Zcoin only records the value of the Zerocoins used in the transaction on their blockchain, using a serial number generated from the creation of a Zerocoin out of Zcoins.

To prevent double spending (an early problem Bitcoin sought to tackle) different nodes are used to confirm that the transaction's proof was solid, and that the serial number of the Zerocoin had not already used in a previous transaction.

How To Mine In Zcoin

Zcoin utilizes Lyra2z, a proof-of-work algorithm that is CPU/GPU-centric. This means you don't need an expensive ASIC rig set up to mine, as the platform is set on encouraging more competition and making sure mining doesn't end up centered around a handful of high-powered miners. It keeps things egalitarian, and makes it so that even people with cheap setups can mine just as well as anyone else.

Soon, Zcoin will make the move to the Merkle Tree algorithm, which goes even further in the memory-centric (not processing power / energy-centric) mining direction.

The Reward for Founders

During the first 4 years of its existence, 14 out of ever 100 Zcoins that are mined go to the Founder's Reward. This is a fund that helps power and fund the development of the Zcoin platform. 6% of that goes to the investors that put up some of the initial capital, with the rest going to the development team and the founder Poramin Insom. This is practically the same thing that other blockchain projects do, although they usually channel initial ICO startup funds towards those same areas. This will end after the 4 years are up, with all Zcoins then going to miners and Znodes.

What Are Znodes?

The Znodes are nodes that process transactions and keep a copy of the Zcoin blockchain on their node. They get rewarded for this, in the form of 30% of all mined Zcoins in each new block formation. Not just anyone can host a Znode, however. You first need to stake 1000 Zcoins, as a way of showing that you're committed to the Zcoin platform and have a vested interest in seeing it do well. This ensures everyone does their job to the best of their abilities, to the network's improvement.

The History of Zcoin

The Zerocoin idea came first, created by a professor (Matthew Green) and two students (Ian Miers, Christina Garman) from Johns Hopkins University in 2013. After conception, it was pitched to the Bitcoin community. It never took off, however, because they couldn't settle a vote on implementing it. Blockchain developer Poramin Insom came up with Zcoin and wanted to use the protocol in his own platform, so he reached out to them. Since 2016, the two ideas have become conjoined.

To create the mining process, the platform has looked into complex factoring and computational complexity numbers to figure out ways to make the platform as secure and encrypted as possible. This is not only to prevent people from wreaking havoc on the platform, but to prevent anyone from coming up with a way to create their own Zcoins out of thin air.

The Competition

Zcoin isn't the only privacy-oriented coin out there. Other coins like Zcash also use the zero-knowledge proof method for their transactions. Others include Bytecoin (which uses one-time keys) and Monero (which uses ring signatures to disguise signatures for signing off on transactions). Some of these other coins may also have more features than Zcoin, but the way Zcoin is set up makes it simpler and possible more adoptable than others, in some circumstances. Others will prefer the way that it implements the Zerocoin Protocol, and the fact that its coin supply is audited, which prevents the likelihood of coins going missing through hacks

And if you like Zcoin, you can check out other privacy-oriented coins at our list of the best altcoin investments of 2018.

The Supply of XZC

Zcoin got off to a slightly shaky start. Howso? Well, they meant to create 21 million XZC in total, but a problem in the code accidentally created an extra 388,450 XZC. Since then, however, the team fixed the code meaning that same thing will likely not happen again.

As of the writing of this article, there are around 4.2 million XZC in circulation.

XZC is created each time a block is generated, which is once every 10 minutes (like Bitcoin). The rewards will begin going down as time goes on, however, meaning that like other blockchains, users will have to make their XZC from charging fees for transactions, rather than mining.

The Team Behind Zcoin

Zcoin was officially started by Poramin Insom, a graduate of Johns Hopkins University. While there, he came up with a paper about the uses of the Zerocoin Protocol, developed by the fellow students Ian Miers and Christina Garman. He also studied under the professor that helped develop the Zerocoin idea, Matthew Green.

In 2014 Insom developed Vertcoin, another blockchain cryptocurrency, but was seized with the desire to create another coin more anonymous. That's where Zcoin came from.

Currently the other main developer is Peter Shugalev, a programmer and engineer with over fifteen years of experience. Other developers assist on the project as fellow contributors.

The Future of Zcoin

In their roadmap, Zcoin's team has revealed that they intend to ditch their current cryptography protocol (based on an RSA number that is so complex that it has not yet been factored, even with a $200,000 prize for the winner) in favor of another: Sigma. This new protocol is supposed to make the Zerocoin proof size lower, which would lead to a small blockchain and thus a more efficient blockchain that takes up less space.

As further proof of their dedication to user anonymity and privacy, they also plan to use The Onion Router (TOR) as a way to hide user IP addresses, making it virtually impossible to track someone down after a transaction (since tracing a jumbled, randomized IP address back to the original is virtually impossible). As you can see from the graphic, they also want to implement user voting into the platform, as well as optimizing the network for larger-scale transactions.

The Trading History of XZC

XZC has had a couple of big booms, followed by longer periods of relative inaction. Over time, however, the price has steadily climbed, rarely (if ever) falling below where it was before the boom. As with almost all cryptocurrencies, it experienced a huge price surge in January, hitting its all-time high of around $141 before steadily dropping down to where it is currently. At the time of this article, it sits around $44.72.

Its price could go up with new announcements, partnerships, or even when they finally make the move to the new Merkle Tree algorithm for more egalitarian mining.

Other exciting coins can be found on our new list of the best altcoins to invest in in 2018 – read it here!

Buying XZC

In a turn of events which is unusual in crypto, most of XZC is being traded on the Chinese exchange AEX. It's been speculated that the popularity of Zcoin in China could be explained by the fact that China recently outlawed the buying of Bitcoin, with the fear that it could lead to people investing more outside of China than within.

You can also buy XZC on the popular exchanges Bittrex and Binance, where you can trade for Bitcoin. Other exchanges carry XZC (like Upbit and Cryptopia), but their prices are way higher due to the low percentage of total Zcoin being traded there. You're better off sticking with the ones we mentioned above.

Storing XZC

Zcoin offers their own native wallet with XZC support, which you can download from the main site. It's a desktop wallet, so you'll have to run it from your computer, and won't be able to access it from a browser. The wallet allows you to spend and mint Zerocoins, making it useful for more than just storing.

The other wallet that supports XZC is Coinomi, which holds many different cryptocurrencies in addition to XZC.

To our knowledge, there are no mobile wallets (aside from Coinomi) available at the time, nor are any under development.

Zcoin vs Zcash

These platforms have almost identical names, but they're not the same platform. Both have an emphasis on user privacy, and both use zero-knowledge proofs to achieve this. Zcash makes a big deal out of being open source, while Zcoin doesn't. They use different cryptography protocols (Zcoin uses RSA and Zcash uses zk-SNARKS), the former of which is more tested and the latter of which is newer and has had fewer implementations. Both have their own tokens that are trading on exchanges. Zcoin's supply is also auditable, making it so that people can keep track of the total amount of Zcoin and make sure no hacks or bugs are occurring, while Zcash keeps the amounts of their coins private.

Zcoin vs Monero

These platforms are both focused on keeping transactions secure and private, without exposing user information in them. Both also have a keen desire on keeping their coins fungible (“one coin is as good as another”) by keeping no record of a coin's previous owners or what it's been spent on. Zcoin keeps transactions anonymous by using a zero-knowledge proof that prevents user info from being shared in a transaction, while Monero uses ring signatures (to allow people to sign for transactions and then have it mixed up with others, so that no one can trace the signer). Monero also uses stealth addresses, which Zcoin doesn't. Monero has several wallets available for it, while Zcoin only has two.

Zcoin vs Zencash

These platforms are quite different, despite their similar aims. Both want to provide users with a secure way to spend money that keeps user info private. Both make use of zero-knowledge proofs to this end. While Zcoin is simply an electronic currency network, Zencash offers a lot more, including dApp development, secure messaging, and (eventually) even the ability to add a layer to your website to prevent it from being blocked by regulations. Zcoin is mostly focused on giving people a private and anonymous way to send and receive money, while Zencash has user privacy on their mind too, they have a ton more features and options. Zcoin has two wallets at the moment, while Zencash can be stored on five different wallets (including paper ones).

Frequently Asked Questions

  1. Where can I read Zcoin news?
    You can read news on their main website, crypto blogs, Twitter, or even on Reddit.
  2. What's the value of Zcoin?
    Last we checked, it was around $44.
  3. Where can I see a chart of Zcoin's future development?
    They've provided one on their main website, containing a roadmap for the future.
  4. Do you know how to buy Zcoin?
    You can buy it with Bitcoin on Binance and Bittrex, or at AEX with BITCNY.
  5. Is there a Reddit for Zcoin?
    Yes, there's a sizeable community of people discussing it there.
  6. Is Zcoin an exchange?
    No, it's a platform that allows for secure and anonymous sending and receiving of cryptocurrency.
  7. What will happen to the price of Zcoin?
    It's possible that the price could go up if they announce new features or release new versions of the platform (or if they announce a partnership).
  8. How does Zcoin mining work?
    It uses an algorithm called Lyra2z that makes use of CPU/GPU proof of work algorithm, but will soon use Merkle Tree (both are memory-focused and not processing power-focused).
  9. What is Zcoin?
    It's a privacy-centered P2P cryptocurrency where coins have no traceable transaction history, and all transactions are anonymous.
  10. Where can I read a review of Zcoin?
    You're reading one now! You can also read others on Medium and Reddit.
  11. Is there a Zcoin wallet?
    Yes, there is one official wallet (desktop), and it can also be stored in the Coinomi wallet for Android.
  12. Who is the owner of Zcoin?
    Technically the developer of Zcoin is Poramin Insom, so that's the closest to an “owner” there is.
  13. What's the price prediction for Zcoin?
    The price could go up with new developments, new announcements, and the move over to the new and more inclusive mining algorithm.
  14. Can I buy Zcoin with a credit card?
    Not at the moment. It looks like you can only get Zcoin from exchanges that trade in Bitcoin or Ethereum. LiteBit.eu trades for euros, but we're not sure if it'll work with European credit cards.
  15. How does Zcoin fare vs Monero?
    You can read our comparison between these two in the section above.

Conclusion

As more and more people become aware of how importance online privacy really is, cryptocurrencies have risen to meet the demand for coins that expose less user information during transactions. Bitcoin's biggest criticism is that all transactions are stored on the blockchain for all to see – and not everyone is comfortable with that. Zcoin is offering one of the strongest solutions to this problem by relying on proven protocols and cryptography, and using a system that ensures no coin has a usage history.

While Zcoin doesn't have lots of flashy features like some of the other cryptocoins out there, it might be just what some people are looking for: a simple, anonymous way to send and receive money.

Zcoin isn't the only coin that made it to our new list of the best altcoins of 2018. Click the link to read about more great coins to invest in!

Peter Lehmann

Peter is a blockchain investor and cryptocurrency writer at Vkool.com. Since 2014 Peter has advised blockchain startups and ICOs on content marketing, strategy and business development.

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