Zcoin 2019 Thought for Your Penny Analysis Guide Cryptocurrency expert analyst Brian Penny has all the info you need on Zcoin.

Zcoin (XZC) is one of the most famous privacy coins. The original blockchain ledger, Bitcoin, showed how dangerous public financial records can be. Zcoin uses escrowed funds, zero-knowledge proofs, and burned intermediary records to obscure and anonymize transactions.

Zcoin was originally adapted from the Zerocoin protocol by Vertcoin (VTC) founder Poramin Insom. It’s not associated with the rest of the original Zerocoin development team, which supports Zcash (ZEC). Zerocoin was changed to zkSNARKs for Zcoin. In July 2019, Zcoin shifted again to an adapted protocol called Sigma.

The project consistently ranks in CMC’s top 100 cryptocurrencies by market value. And the team behind it is continuing to push for increased security and privacy of Zcoin.

Business Use Case of Zcoin

Privacy is a major concern for everyone – businesses, consumers, governments, and everything in between. Equifax, the U.S. Office of Personnel Management (OPM), Yahoo, Sony, Target, Marriott, eBay, Adobe, and JPMorgan Chase have all been the target of massive data breaches over the past decade alone.

Of course, tracking people through smartphones and data is relatively new. Forensics experts in law enforcement and military have long followed the money to track criminal activity. A digital ledger (like those found in cryptocurrencies) is a coveted tool, so even though Zcoin has privacy features, they must be turned off when trading on government-regulated exchanges.

Private transactions are not just used for criminal activity. In fact, every time you paid cash at a garage sale, tipped a server in cash, borrowed cash from a friend, etc., you’ve made a “secret” transaction. The fact that Donald Trump’s taxes were ever an issue shows the importance the U.S. government places on financial privacy. 

Would you stay with your current bank if everyone could see everything you spent your money on?

Notable Zcoin Partnerships and Investors

Zerocoin is one of a handful of prominent privacy coin protocols that enable private transactions. The project was initially conceived by researchers at John Hopkins University (including Insom), before collaboration with MIT, Tel Aviv University, the Technion, and more.

Insom then split and adapted Zerocoin to a proprietary code. After the split, the Zcoin team formed partnerships with a variety of startups to accept XZC as currency, including:

Cookly – Cookly is a themed travel startup that can send you and your friends to an exotic locale like Thailand, Nepal, India, Israel, or Italy to attend local cooking classes of authentic cuisines. Cryptocurrencies like XZC are vital to saving money on foreign exchange rates when traveling internationally.

PolisPayPolisPay is a mobile app with multi-coin support to enable simple crypto mining and transactions. It’s part of an entire segment of crypto companies relieving payment friction. The suite of tools, functional GUI, and integration with other partners will be helpful in driving adoption.

Midas Protocol – The Midas Protocol is a multi-currency wallet integrates Zcoin Znodes ensuring both companies have a stake in future development around privacy-based technology. The partnership is also heavily focused on increasing XZC acceptance in the ASEAN region.

Zcoin Strengths

Development – Cybersecurity isn’t static – for Vcoin to stay private and decentralized for this long shows just how strong the development team is. The team follows its roadmap well, implementing a steady stream of upgrades to Znode security, privacy, and ASIC-resistance. By 2020, it should have smart contract support and be more able to compete with other blockchain projects.

Criminals – Whether your home team is Russia, the U.S., China, or anywhere else, at least a handful of governments are watching you. And that’s just if you’re a normal person – felons are real people living in this world with far fewer rights. In the U.S. alone, over 10 million people are arrested every year. Many end up on probation after release, and after that, they’re still flagged in background checks. Even if privacy coins are only used by criminals, they have numbers.

ASIC-Resistance – Zcoin’s development team keeps an active eye on movement in the ASIC industry, and its latest PoW implementation in late 2018 (called Merkle Tree) bottlenecks these rigs. This keeps the network decentralized from ASIC manufacturers like Bitmain’s Antpool, which is a majority miner of many of the top cryptos. In fact, AntPool owns nearly one quarter of all cryptocurrency mining in the world.

Zcoin Weaknesses

Regulation – Terrorist groups like Hamas being associated with cryptocurrency will always plague the industry. This is an unfortunate reality even though history associates criminal activity with art, cash, music, houses, and…well…pretty much everything you see around you. The buzz of “criminal activity” will never stop being used by critics, no matter what we do as an industry to remain legit.

Big Data – Privacy researchers have long dissected Bitcoin’s now-lengthy digital ledger. In fact, crypto forensics have been popping up all over the place. Because the internet is the internet, amateur investigators are constantly pen testing everything, and the “privacy” in privacy coins will continue to place a target on Zcoin’s head for any cyber criminal looking for infamy. Sooner or later, someone will figure out a way to use Big Data to track even private financial transactions.

Competition – Competition from other privacy coin protocols, like Monero (XMR) could easily sink Zcoin. Pivx (PIV) and Zcash (ZEC) also use an implementation of the Zerocoin protocol, which can confuse consumers. Business is business, and even the anti-establishment can’t avoid office politics and the other trappings of success. And creating a smart contract network on Zcoin opens it up to even more competition.

Upcoming Zcoin Catalysts 

Sigma Upgrade – The latest upgrade to Zcoin’s network is called Sigma. This lowered transaction fees (it’s now dynamic vs fixed-fee), improved transaction speeds, and removed the trusted setups required by zkSNARKs and Zerocoin. This significant upgrade is just one step toward the next deployment, called Lelantus, which will continue decreasing block sizes while increasing security.

Anti-Facebook Sentiment – Mark Zuckerberg is practically a mascot for everything privacy. Facebook’s privacy concerns were a hot-button topic pretty much every day for the past decade, and it’s only getting worse. Even the announcement of the Libra cryptocurrency caused an upward tick in the crypto industry. The longer Libra is used and the more privacy-related problems people discover using it in the real world, the more privacy coins like XZC will flourish.

Cyber Attacks – As with any new software implementation, we don’t know the true security (and vulnerabilities) of Sigma until it’s released into the real world. As great as it all sounds on paper, the possibility always exists that a fatal flaw is exploited by a cyber criminal for profit.

Zcash and Monero Upgrades – Rival Zcash underwent several changes, including a new sharding protocol. Monero is also continuing its push for ASIC resistance with a recent upgrade and every dollar supporting these two projects can be seen as a dollar not in Zcoin’s pocket. The marketing team needs to really push its key advantages over other privacy coins.

Zcoin Summary

Zcoin (XZC) was the first privacy coin on the market to use the Zerocoin protocol and was founded by a member of the original team. Its privacy features and anti-ASIC stance mean that within the community, it can be seen as an evolution of the original vision of Satoshi Nakamoto when Bitcoin was launched.

Privacy coins in general may be considered to have limited use-cases, and Zcoin doesn’t have the same level of adoption as competitors such as Monero, Zcash, and Grin. Without clear and identifiable catalysts, it’s debatable whether Zcoin will ever break into the top echelons of cryptocurrencies.

Versability

Brian Penny is a former Business Analyst and Operations Manager at Bank of America turned whistleblower, troll, and freelance writer.

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