ZCash is a privacy-focused cryptocurrency launched in 2016 as an alternative to growing centralized cryptos like XRP and Ethereum (to some extent). Although it is over a decade old, the interest in the project has been on the rise in 2025 and 2026 because of growing requirements around AML laws in crypto markets.
What are Privacy Coins: How Do They Differ From Bitcoin and Ethereum?
What is ZCash?
ZCash or ZEC is a privacy cryptocurrency based on Bitcoin. It was created in 2016 after a hard fork in Bitcoin. It was one of the first cryptocurrencies to feature a Zero Knowledge, a technology which was only adopted by Ethereum after 2020.
Based on Bitcoin. ZCash shares several features with Bitcoin, such as halving, proof-of-work of work consensus mechanism, and its encryption, making it one of the most secure cryptocurrencies among the privacy coins.
Although ZEC is a privacy-focused cryptocurrency, it differs from its peers, such as Monero. ZEC adopts the now widely adopted Zero Knowledge Protocols and SNARKs opposed to RingCT signatures in Monero. Further, privacy is kept as optional in ZEC, helping those in adoption who want greater traceability of the funds with them.
ZCash was created by the Electronic Coin Company for privacy-centric users. At the time of its launch, cryptocurrencies were shunned by governments worldwide, leading to shadow bans on Bitcoin and most other cryptocurrencies. The aim behind creating ZCash was to create a safe, private, and censorship-resistant platform for everyday use, unlike Bitcoin, which had a very slow transaction throughput (7 to 10 TPS).
An added feature of ZEC is that it helps you send private messages on the ZCash blockchain, a feature which almost all cryptocurrencies miss.
Add a Security Layer on Top of Privacy. Protect Your Crypto Hot Wallets From Getting Hacked
Technologies Supporting ZCash
Bitcoin
ZEC borrows most of its features from Bitcoin, as it is itself a Bitcoin Hard Fork, created in 2016.
Zero Knowledge
ZEC uses Zero Knowledge to obscure its privacy-focused crypto transactions. Since the technology is already widely adopted across different crypto projects, it is less susceptible to bans like Monero.
SNARK
ZEC uses SNARK, which validates transactions based on Merkle Root Hashes so that the transaction can be verified without revealing any details such as wallet address.
How Does it Work?
Consensus Mechanism
ZEC uses the same proof-of-work consensus mechanism as Bitcoin. It differs slightly because ZEC miners do not need the sophisticated rigs that Bitcoin miners do. Equihash Algorithm prefers decentralization over mining hash rate.
Further, to support global energy sustainability, ZEC is on a track to adopt Proof of Stake in 2026.
Consensus Mechanism: How do Proof of Work and Proof of Stake Differ?
Fixed 21 Million Token Supply
The total token supply for ZCash is capped at 21 million and is expected to follow a similar emission curve to Bitcoin, limiting inflation.
Further, similar to Bitcoin Halving, ZCash halving also serves to prop up the price of the ZEC token.
How Does it Ensure Privacy?
ZCash uses ZK SNARK to ensure that transactions on its blockchain are verifiable without publishing the sender or buyer address or the amount transacted.
ZCash uses selective transparency with transparent addresses and shielded addresses. If you select the latter, your transactions will be shielded with respect to the data mentioned above.
Is it Different than Monero?
ZCash offers selective transparency, whereas Monero is privacy-enabled by default.
Further, ZCash uses SNARKS to ensure privacy, whereas Monero uses Ring Signatures.
Why are Privacy Coins So Popular?
Privacy coins are becoming increasingly popular in the modern crypto landscape because they can hide user funds from blockchain explorers, government agencies, data collection platforms, and other similar entities that appear to collect user data.
Here’s what crypto influencer Arthur Hayes has to say about ZCash.
First, increasing government surveillance for crypto-related crimes has mandated KYC for ordinary users, which then violates their privacy.
Second, they protect user funds from unwanted attention, whether from spammers, scammers, or others.
