Name: Zcoin (XZC)
Mining Algorithm: MTP
- Proof-of-Work – MTP (Custom mining algorithm)
- Lelantus is Zcoin’s next generation privacy protocol. It improves on current privacy protocols foundling on security and mainstream usability
- The Zcoin Blockchain Platform conducted the 2018 Thai Democratic Elections
Zcoin is a privacy coin originally built upon the Zerocoin protocol. The Zerocoin protocol was at the time one of the most robust privacy protocols. Zcoin currently runs on the Sigma Protocol and will soon switch over to Lelantus.
Although this privacy coin shares some features with Zcash, such as a founder reward and a similar name “Zcoin”, Zcoin is not a code fork of Zcash. The founders reward is crucial in providing funding for the development of new technology. Furthermore, a constant source of funding, guarantees the sustainability of this project.
That being said, Zcoin is a vastly different coin, backed by different technology. Zcoin’s privacy technology is far more usable and practical for the average consumer, but more on that later.
In addition, in 2018 the Zcoin Blockchain Platform served as a decentralized platform to elect Thailand’s Democratic party leader. During this election, the Zcoin platform efficiently tallied and received votes, proving that the scalability and real-world uses case exsists.
Zcoin Consensus Algorithm (Mining)
Zcoin, like the majority of privacy coins, employs a Proof-of-Work consensus algorithm. In short, transactions on POW blockchains are verified and processed by a decentralized network of cryptocurrency miners. In return, these miners receive a portion of the block reward for providing hashing power.
Like Bitcoin, Zcoin initially featured a 10 minute block time. Meaning, a block is found on the network every 10 minutes on average. A 10 minute block time is fairly uncommon among POW cryptocurrencies as rewards are generated at a less frequent internal and periods of low mining power can result in long transaction times.
However, a longer block time of 10 minutes also has its advantages. A longer block time results in a fewer blocks, and as a result, a “lighter” blockchain. Furthermore, shorter block times result in a higher uncle block rate. (Read about uncle blocks in our Ubiq guide).
Zcoin currently features a 5 minute block time combining the best of both worlds. Forking from a 10 minute to 5 minute block time doubled the rate of new blocks. Consequently, the new block reward is now half, pre-fork as there are twice as many blocks.
Zcoin will has a max supply of 21.4 million XZC, with a halving occurring every 4 years. Within each block, 14% of the new coins (down from the original 20%) will go to the Founder’s reward, which is used to fund future development. After 4 years of the network being launched (~2020), all rewards will go to miners and Znode holders.
Featuring a unique mining algorithm, Zcoin’s MTP is built around usability and mainstream adoption. Merkle Tree Proof (MTP) is a custom mining algorithm designed by the same researchers behind Equihash (Zcash’s mining algorithm).
Like Ravencoin, the Zcoin team believes ASIC development directly contradicts decentralization. As a result, MTP is a memory intensive algorithm. Memory intensive algorithms are known to slow down blockchains as nodes have to verify large amounts of data. However, MTP’s technology allows memory intensive proofs to be verified using very few resources.
Unlike, traditional Equihash, and even modified variants of the popular mining algorithm, MTP miners require up to 10GB of memory. This makes ASIC development unfeasible and too expensive to ever be profitable. Preventing ASIC mining promotes decentralization, as ASIC miners centralize and industrialize mining.
Zcoin is a privacy coin and thus has a variety of privacy features. However, while most privacy coins feature basic privacy protocols, Zcoin employs more secure, usable, and practical protocols than its competitors.
The Zerocoin Protocol is one of the first cryptocurrency privacy protocols. In short, this protocol works by burning sent coins, replacing them with new coins, and as a result, obfuscating prior transaction history.
Using this protocol each transaction involves new coins without any prior transaction history. This is possible by burning the sender’s coins and minting new coins for the recipient. As a result, the recipient’s coins would have no prior transaction history.
This protocol was meant to be an extension of the Bitcoin blockchain, enabling users to send private transactions. Although this protocol was not adopted by Bitcoin, this privacy protocol was the basis of Zcoin. Zcoin was the first full implementation of Zerocoin.
Although the Zerocoin protocol was quite revolutionary for its time, it was not perfect. The Sigma Protocol built upon the weaknesses of the Zerocoin protocol.
This new protocol features three main changes:
- Removal of trusted setup
- Proof size reduction from 25 kB to 1.5 kB
- Security improvements
Put briefly, removing trusted setup would eliminate a variety of potential security issues.
Trusted setups require a certain degree of trust as the key when generating new coins must be erased and the data associated must be erased. If not done so properly, users with the key can theoretically, mint an unlimited amount of these anonymous coins. A secure trusted setup such as the one previously used with Zerocoin and Zcoin was still vulnerable to exploitation by bad actors. Furthermore, a trusted setup contradicts the trustless, immutable principles of the blockchain and decentralization.
Proof Size Reduction
Zero-knowledge proofs take up a significant allocation of resources. And thus, impractical for the majority of consumers to use on a everyday basis.
With Sigma, proof size would go from 25 kB to 1.5 kB allowing for further usability and allowing for blocks to hold a larger amount of private transactions. As a result, the blockchain’s max transaction capacity increased, a crucial element during periods of network congestion and future scalability. In addition, users will now pay a considerably smaller transaction fee as transaction “competitiveness” is reduced.
This reduction of proof sizes is a clear step towards mainstream usability, one of the key focuses of Zcoin.
The Sigma protocol comes with considerable security improvements.
The security improvements within the Sigma protocol aim to future proof Zcoin. Zerocoin uses 2048 bit RSA while the Sigma protocol implements 256 bit ECC curves, comparable to 3072 bit RSA. 3072 bit RSA will future proof Sigma past 2030.
Lelantus is Zcoin’s next generation privacy protocol. Lelantus builds upon Sigma and adds additional features and security. Lelantus is on track to launch late 2020 after thorough testing and peer review.
Led by Zcoin cryptographer Aram Jivanyan, Lelantus is currently under development. As shown above, Lelantus combines the best from multiple protocols to create one all encompassing protocol.
Lelantus’ key feature will be removing the fixed denominations when sending or minting new anonymous coins. This will increase usability as users will now have greater flexibility on transactions. In addition, this will also reduce blockchain congestion and overhead.
Lelantus will reduce proof sizes allowing Zcoin’s blockchain to be usable at transaction volumes where the Bitcoin blockchain comes to a halt.
Using batch proof verification, proofs may take as little as 23.7 ms versus the 200 ms using the Sigma Protocol. Long proof verification times is one of the drawbacks of privacy coins.
This performance improvement comes as it is key to user usability and mainstream adoption, one of the team’s core development focuses.
Furthermore, the Sigma Protocol acts as a placeholder until Lelantus incorporates even more security imporvements. These include the removal of trusted setup, one of the biggest drawbacks of the Zerocoin protocol.
Zcoin recently launched its decentralized crowdfunding system. This crowdfunding system functions similarly to other cryptocurrencies that feature decentralized funding platforms. Zcoin’s ultimate goal is to achieve complete decentralization.
This decentralized crowdfunding system is a 4-part system.
First, the idea is published onto the decentralize platform, where peers and community members have a chance to offer feedback and suggestions.
Using the feedback the working proposal incorporates changes to reflect the community’s concerns. Once the community reaches a positive consensus the next phase begins.
Once the community reaches a consensus, funds are allocated towards the project and the team or individual behind the project begins work.
As the project develops, funds are gradually released as the project reaches predefined milestones ensuring the third-party completes the project.
ZCS (Zcoin Crowdfunding System) is crucial in promoting third-party development, which in turn will further Zcoin’s mission to bring privacy to all.
Zcoin vs Zcash
Zcash is known as the original privacy currency. What makes Zcoin different from Zcash?
In short, Zcoin is an entirely different coin offering better performance, user experience, all while hosting more robust security protocols.
Transactions using the Zerocash/Zcash protocol are comparably more resource intensive. Proofs take longer to compute and thus affecting the practicality of private transactions using this protocol. In addition as Lelantus develops, transaction times will further decrease on the Zcoin blockchain.
Both Zcoin and Zcash feature a similar max TPS (Transactions Per Second) of 25 TPS. Although, other cryptocurrencies can support a greater capacity of simultaneous transactions, many do not offer the same level of privacy.
What really differentiates Zcoin is the use cases it already serves. As talked about earlier, the Zcoin platform facilitated Thailand’s Democratic Party Elections. Competent to work on grander scales, the project’s dedication to scalability allows Zcoin to work during periods of high traffic.
Zcash already institutes advanced security protocols, but Zcoin takes that one step further offering more advanced and up to date options.
Zcoin removes trusted setup, one of the biggest flaws of the Zerocash and the Zerocoin protocol. Trusted setup can potentially allow bad actors to mint an infinite supply of coins as coins are not auditable.
Furthermore, there are security concerns regarding the proofs themselves. Zcash proofs are also known as zkSNARKs. Although zkSNARKs are generally smaller and faster to verify, this form of cryptography is relatively new technology. On the other hand, RSA is established and industry an industry, and thus has been battle tested for bugs and vulnerabilities over an extended duration of time. Using experimental cryptography like zkSNARKS may prove beneficial but lack the thorough testing present in established cryptography.
In addition, Zerocash’s cryptography is very sophisticated and therefore only a few people on the entire planet are able to fully understand it, and thus going against the principle of decentralization. Many would dismiss this as a minor factor and as the product of innovation, however it is still important to keep this in mind.
Future Plans and Roadmap
With a large stake of Zcoin from every block, the Zcoin team has plenty of resources to fund sustainable development.
The Zcoin roadmap outlines past and future plans. The team has been reliably meeting previous deadlines, proving that they are more than competent.
There are several items from the 2020 roadmap that stand out. A decentralized governance platform is in the works, similar to other cryptocurrencies. A decentralized governance platform is vital as it allows the project to change as different needs arise.
In addition, Zcoin will research into Quantum resistant zero knowledge proofs. Investing into research is crucial for future development as Zcoin becomes a leader in privacy coin technology. We are excited to see the new innovations Zcoin will bring.
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