Author: Wuhuoqiu
Reprinted: Vernacular Blockchain
Amidst frequent pullbacks in mainstream currencies and a double-dip market, Zcash ($ZEC) has charted a remarkable upward trajectory, bucking the trend. This leads one to wonder: Is the era of "Gen Z cash" approaching? Or is the original crypto-punk spirit returning?
For those who entered the crypto world after the DeFi summer of 2020, Zcash, the "grandfather of privacy coins," may be unfamiliar. Today, we'll briefly review the evolution of privacy sims and delve into why investment tycoon Naval Ravikant has recently shown interest in Zcash.
(This article is intended for general knowledge, and many technical details are not elaborated in detail. Interested friends can research it themselves based on the key terms.)
Four generations of privacy simulation
Generation Zero: Bitcoin ($BTC) - Alpha Privacy
Many people may not know that Bitcoin itself has a certain degree of privacy, but this is a "privacy pseudo-". Its implementation relies on the UTXO model and the search for zero mechanism.
For example, Xiaoming has a UTXO of 7 BTC in address A, and he wants to transfer 5 BTC to Xiaohong. After the transaction is completed, 5 BTC will go to Xiaohong's address, and the remaining 2 BTC will automatically find a new address B (this new address still belongs to Xiaoming).
For ordinary users, after several transactions, the flow of funds will indeed become complicated and difficult to track. However, for professional institutions, due to the transparency of the blockchain, they can still reverse-engineer the complete flow of funds through on-chain analysis.
Keywords: UTXO (Unspent Transaction Output), Change Mechanism
First Generation: The Three Musketeers of Privacy — Dash, Monero, and Zcash
Old players who entered the circle around 2017 are definitely familiar with these three. They jointly defined the first generation of privacy coins.
1. Dash ($DASH) - Weak Privacy
Dash is a privacy-enhanced version of Bitcoin. Its core technology is similar in concept to the later Tornado Cash, but the technical implementation differs. Simply put, it mixes and redistributes the UTXOs of multiple users' transactions, disrupting the original path of funds. However, this privacy is relatively limited and can be easily deciphered by specialized analysis tools.
Keywords: CoinJoin protocol
2. Monero ($XMR) — Enforced Strong Privacy
Monero is a hardcore privacy coin. It mixes real signatures with multiple "decoy" signatures, making it difficult for children to distinguish the true signer. It also conceals transaction amounts and recipient addresses. This strong privacy feature has made it a mainstream choice on the Dark Web after the increasing use of Bitcoin for laundering. However, its "enforced privacy" feature has made it difficult to regulate, and recent changes in the computing power ecosystem have created challenges for its development.
Keyword: Ring Signature
3. Zcash ($ZEC) — Optional Superior Privacy
The protagonist of the paper is also the large-scale evaluation of cryptocurrencies.
It is an exaggeration to say that without the exploration of Zcash, there would be no Tornado Cash, zkSync, StarkWare, and today's flourishing ZK ecosystem.
Zero-knowledge proofs completely encrypt transaction data (sender, recipient, and amount), achieving 100% privacy protection. Even better, Zcash's privacy is "optional." Users can freely choose to conduct transparent, partially private, or fully private transactions. This approach makes transactions simpler than Monero's in the face of increasingly stringent regulations.
Key Terms:
Zero-knowledge proofs (zk-SNARKs)
Core question: How to understand “Zcash is insurance for BTC”?
The catalyst for Zcash’s recent price surge stems largely from Navarre’s poignant statement: “Bitcoin is insurance for fiat, and Zcash is insurance for Bitcoin.”
This sentence can be understood from two levels:
“Bitcoin is insurance for fiat currency”
This is relatively easy to understand. When the monetary system faces crises (such as extreme inflation, capital controls, and political instability), Bitcoin can serve as a safe haven for storing value. Even in peacetime, the continuous increase in currency issuance makes Bitcoin's scarcity extremely valuable.
“Zcash is insurance for Bitcoin”
This is the crux of the matter. Bitcoin's greatest strength is its openness and transparency, but this could also become its Achilles' heel. As Bitcoin becomes more competitive and mainstream, if large institutions begin to rigorously monitor on-chain activity (such as tracking wallet addresses and restricting specific transactions), Bitcoin's reputation for censorship resistance will be maximized.
Zcash offers an answer.
Where would Bitcoin’s original cypherpunk spirit go at that point? It offered users a way to maintain financial freedom and privacy through optional, robust privacy features. While Bitcoin’s “square” became excessively loud and transparent, Zcash offered a “secret room” where the curtains could be drawn.
Finally: An interesting point of knowledge
Perhaps 99% of investors don't know that the ZK-Rollups we know today (such as zkSync and StarkWare) actually have little to do with "ZK" (zero-knowledge) from a strictly academic perspective. They should be more accurately called "SNARK Rollup," "STARK Rollup," or generally referred to as "Validity Rollup."
But does it matter? Probably not. After all, who says there has to be a wife in a wife cake?
Link to this article: https://www.hellobtc.com/kp/du/10/6076.html
Source: https://x.com/Wuhuoqiu/status/1977234027670388790
