What Investors Should Know Before Trading Zcash

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Coins

Over the last several years, the number of digital currencies has skyrocketed. While some of these have developed substantial market capitalizations and carved out their own unique niches, few have shown promise for offering users a high level of privacy and fungibility.

Bitcoin, which had its genesis block mined in 2009, was the first digital currency to scale. While many early adopters took interest in bitcoin because of its promise of privacy, the digital currency failed to provide this benefit, as interested parties can look examine the transactions recorded on bitcoin’s blockchain to get a sense of exactly what a person or entity has purchased.

In the years following bitcoin’s release, developers have created privacy-oriented digital currencies including Dash and Monero. Both of these use innovative technologies to help increase the chances of their users remaining anonymous.

Dash leverages a technique called “CoinJoin”, in which several users put funds into the same transaction in order to increase the chances of privacy. Alternatively, Monero harnesses ring signatures to reduce the chance of detection.

Both of these cryptocurrencies have made great progress toward realizing the goal of anonymous transactions, and Monero has received widespread adoption in the dark web.

However, Zcash’s technology seemingly gives users the ability to enjoy an even greater level of privacy. By allowing users to remain anonymous, Zcash can provide them with greater fungibility.

This is because many digital currency transactions rely on the use of private keys – strings of letters and numbers that identifies a user. And an address can become attached to several transactions over time, making it easy for friends, family, marketers or even government authorities to learn more about a person’s purchasing trends.

And if a user’s private key is attached to certain transactions, some parties may refuse to accept his or her money. This is where Zcash comes in.

What is Zcash?

Zcash leverages zero-knowledge proof constructions called zk-SNARKs, which allow two users to exchange information without revealing their identities. While the bitcoin blockchain contains records of the participants in a transaction, as well as the amount involved, Zcash’s blockchain shows only that a transaction took place, not who was involved or what the amount was.

Zcash is the result of continuous efforts by developers to create cryptographic protocols that offer greater privacy. Zooko Wilcox has founded and served as CEO of both Zcash and the Zerocoin Electric Coin Company, which created a protocol named Zerocoin between 2013 and 2014.

The developers involved started the Zerocoin project to address the security limitations of bitcoin. The protocol they created allowed users to convert bitcoin to zerocoins, which provided a greater level of anonymity by concealing the origin of a payment. The protocol allowed users to split up or alternatively merge zerocoins, and also convert them back to bitcoins.

More recently, the aforementioned developers collaborated with cryptographers from MIT, Tel Aviv University and The Technion (Israel Institute of Technology) to create Zerocash – an improved protocol that provided payments with greater privacy than offered by Zerocoin, and has been developed into the cryptocurrency Zcash.

Zerocash offers zerocoins, which help users insure privacy, as well as basecoins, which do not have the extra privacy features.

Under the Zerocash protocol, users have the ability to conceal both the senders and recipients involved in transactions, as well as the amounts transmitted. The Zcash staff refrain from describing the new technology as anonymous, although in most cases, the technology has that quality.

One major benefit that has stemmed from this greater level of anonymity is greater fungibility.

Why fungibility matters

Fungibility, the ease with which units of a certain asset can be substituted for one another, is important because it ensures that one person’s money is as good as another’s. When history exists for money, that money may not be accepted for all kinds of transactions.

For example, if a vendor accepts digital currency as payment for their goods, but can easily track the history of the currency it accepts, the vendor can simply reject payment from certain would-be customers based on their prior purchasing behavior.

‘Blacklisting’ coins

Bitcoin users have already encountered challenges stemming from the public nature of the blockchain. Some bitcoin exchanges have “blacklisted” or refused to accept of certain bitcoins after significant amounts of the cryptocurrency were stolen from wallets.

When certain coins are blacklisted in this manner, users are given an additional burden of confirming the origin of these coins. Past that, requiring users to verify a coin’s user history could produce additional problems, for example users finding themselves unable to use a specific coin because of someone else’s past actions.

Security concerns

While Zcash’s cryptography is bleeding-edge, it is “highly experimental” and “relatively weak,” Bitcoin Core developer Peter Todd wrote in a blog post. He further elaborated on his skepticism, writing:

“[I]f zk-SNARKS turned out to be totally broken, unlike more mainstream crypto, it just wouldn’t be all that surprising.”

Todd went into further detail:

“There appears to be uncertainty about the strength of the actual parameters chosen for Zcash’s crypto,” he said. “The threat here is that an attacker may be able to create fake zk-SNARK proofs by breaking the crypto directly, even without having access to the trusted setup backdoor.

Technologists have also pointed out that challenges could arise as a result of the ‘ceremony’ that was used to create SNARK public parameters. Developing these parameters, which are numbers with a “specific cryptographic structure that are known to all of the participants in the system,” essentially requires creating a public/private keypair and then destroying the private key.

The ceremony, which is formally called a multi-party computation protocol, involved six participants creating individual “shards” of the private/public keypair and then burning them to DVDs.

Participants, including Todd, followed instructions contained in a document called “Zcash Multi-party Computation Instructions” to create these individual shards. This document, which was acquired by CoinDesk, provides technical requirements for the hardware used, as well as instructions for downloading the needed software and burning the shards to DVDs.

After following this process, the six participants destroyed their shards of the private key and combined the shards of the public key to create the SNARK public parameters. ZCash referred to the private key shards as “toxic waste”.

In reference to the ceremony, Zcash stated that:

“If that process works – i.e. if at least one of the participants successfully destroys their private key shard — then the toxic waste byproduct never comes into existence at all.”

Following the ceremony, the participants proceeded to destroy the computers used to create the shards with the intention of preventing anyone from using the keystrokes entered into those computers to create counterfeit Zcash currency (which goes by the token symbol ZEC) that users cannot identify as being fake.

This approach comes with a few drawbacks. For starters, there is no way to prove that the six participants did not conspire together to keep the public key. Past that, they could have been compromised somehow, resulting in an outside party receiving the information needed to create another public key.

Individuals interested in creating counterfeit Zcash tokens could potentially recover the keystrokes from the computers used in the ceremony through traditional cameras, radio signals, satellites and other methods, said Todd.

If they could recreate the aforementioned ceremony without missing anything, it would give them the ability to create counterfeit currency. Because all Zcash transactions involve zero-knowledge transfers, users would be unable to distinguish between counterfeit Zcash coins and ones created through legitimate mining.

How the market works

While ZEC is far newer to the scene than some digital currencies like bitcoin, its market functions in a similar fashion. Traders can buy and sell it outright through exchanges like Poloniex and Kraken.

ZEC have been available for trade since 28th October, 2016, when the Zcash genesis block was mined and the first tokens became exchange listed.

Before ZEC tokens began trading on exchanges, interested investors could buy or sell Zcash futures on BitMEX, where they trade under the ZECZ16 contract. This contract, which went live on BitMEX 15th September, uses ZEC/XBT as the underlying currency pair. Traders can use these futures to either speculate on the future value of Zcash or hedge their existing holdings of ZEC tokens.

Before futures trading became available, interested parties could gain exposure to Zcash tokens by mining them.

Mining Zcash

Like many other digital currencies, Zcash offers interested parties the ability to mine blocks. The Zerocash protocol harnesses a proof-of-work algorithm which relies on how much RAM a miner owns.

On 9th September, Zcash announced the first beta release of the Zcash reference implementation (v1.0.0-beta1), which it deployed to the testnet. All coins mined using this software remained testnet coins, and therefore had no monetary value, until Zcash’s official launch in October.

Following this release, the digital currency attracted a tight-knit group of developers. On 27th September, Zcash announced that it was hosting a challenge whereby competitors could submit new methods for mining the currency. These participants were given until 27th October to provide new potential methods.

On 5th October, hosted mining firm Genesis Mining showed its support for the privacy-focused digital currency when it announced that it would soon allow customers to purchase miners operated by Genesis for the sake of mining Zcash.

Unique mining model

Zcash’s supply model is rather similar to that of bitcoin, although it has some key differences. Like bitcoin, the Zcash protocol caps the total number of tokens at 21 million. In addition, its mining reward is cut in half roughly every four years, just like bitcoin.

One major difference that sets Zcash mining apart is that 10% of the 21m units mined using the Zerocash protocol will go to Zcash’s stakeholders, ie: its founders, employees, investors and advisors. This is called the “Founder’s Reward“.

The stakeholders will not receive this reward in a linear fashion. In the beginning, the protocol results in the creation of 50 ZEC every 10 minutes, with 20% going to the founders and the remainder going to the miners. Every four years, this mining incentive will be cut in half, but 100% of this reward will go the miners after the first four years.

Slow-start mechanism

Another important difference is that the Zerocash protocol harnessed a slow-start mechanism, which impacted the incentive provided for the first 20,000 blocks (mined over approximately 34 days). The rationale behind taking this approach was managing the risk of the protocol having a “major bug or security vulnerability.” If such a problem was discovered, the slow-start mechanism would help reduce its impact.

Pursuant to this mechanism, the mining incentive slowly increased until it reached 12.5 BTC at the 20,000th block. The rate of increase was such as the first 20,000 blocks would create a total mining reward of 125,000, half as much as the 250,000 it would be if they all provided an incentive of 12.5 ZEC each.

Slow start rate of Zcash

The Zerocash protocol scheduled the next halving for the 850,000th block, at which point the reward would decrease to 6.25 ZEC.

Price volatility

Several factors have combined to help fuel price volatility in ZEC. The cryptocurrency enjoyed very strong demand shortly after its release, resulting in its price surging to roughly 3,300 BTC (more than $2 million) on its first day of trading, according to Poloniex. However, ZEC quickly moved in the other direction, falling to 48 BTC the same day.

By 20:15 UTC on 23rd November, ZEC was trading at 0.097 BTC ($71.82), less than one-tenth of a bitcoin, according to additional Poloniex data.

ZEC chart
Image source: Poloniex

These sharp price fluctuations took place after BitMEX Zcash futures experienced sharp appreciation leading up to the digital currency’s 28th October release, which surged from as little as 0.027 BTC ($18.50) on 15th September to 0.78 BTC ($535) on 28th October, BitMEX figures reveal. However, the futures had plunged to 0.049 BTC ($36.17) as of 15:00 UTC.

In addition to the Zerocash protocol’s zk-SNARKS being largely untested, the digital currency had yet to be adopted by any platforms that might use it as a currency. As a result, its value was purely speculative at the time.

Going forward, Zcash prices will depend on supply and demand, with the former steadily increasing and the latter uncertain. Fortunately, the volatility that goes along with speculation has created opportunities for traders, who might invest in Zcash in an attempt to turn a profit.

This article is not intended to provide, and should not be taken as, investment advice.

Coins image via Shutterstock

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Stay among the coral reefs in this unique underwater hotel room

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Stay among the coral reefs in this unique underwater hotel room

The underwater room is a luxury hotel resort that gives guests a 360 degree view of the ocean. At $1,500 a night, the inverse aquarium is literally one of a kind. 

After the area around the floating structure was put under conservation, a coral reef underneath is flourishing.

Nikolay Nikolov

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Sphero’s BB-8 wearable brings Force control to home automation with IFTTT support

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Sphero’s BB-8 was the most memorable bit of merchandizing among last year’s epic Force Awakens merchandising bonanza. It was the perfect piece of synergy – leveraging the hardware startup’s compelling piece of remote control technology to bring to life the film’s most marketable creation.

This year the company looked to take things a step further with the addition of the Force Band, a wearable that brings gesture control to the lovable robot, mimicking the franchise’s force pushes and pulls. It’s a fun addition, but a little tricky to control – and priced a bit high at $80 as a standalone (or $200 if you buy them as a bundle).

Appropriately unveiled the week of Black Friday, Sphero’s taking the Force Band’s functionality to a compelling new level with the addition of IFTTT (If This Then That) support. That means the sky’s really the limit on the sorts of things wearers will be able to control with the wrist band. Users can create commands to control all sorts of smart home functionality with a push, pull or stop. Behold, the Jedi coffee maker:

Sphero’s posted up some pre-made functionality over on its page – controlling smart lights like the Philips Hue is a pretty obvious one. And hey, who wouldn’t want to force pull a Tweet and Slack post or force stop some music? It’s probably more fun that legitimately useful, but the force still seems pretty strong with this one.

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Ledger Launches Hardware Wallet for the Smart Contract Era

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Ledger Blue demo

Ledger, the French company known for its range of bitcoin hardware wallets, has launched a new extension of its product line: the Ledger Blue.

Billed as “the most advanced hardware wallet on the market today”, the Ledger Blue is a significant departure from the thumbdrive style of Ledger’s previous products. With a 320 x 480 pixel screen (along with BlueTooth and near-field communication (NFC) capability), it’s a handheld touchscreen device that can run a number of different applications.

In a video call, Ledger CEO Eric Larchevêque talked to CoinDesk about the product’s evolution, design philosophy and target market.

Support for smart contracts

Ledger launched its first product, the Ledger Nano, in December 2014, marketed at the time as a small, secure and low-cost hardware wallet.

Then, earlier this year, the Nano S was released – a line extension that included both a small LED screen and support for other cryptocurrencies like ethereum and litecoin. (Ultimately, it was hailed as a more affordable competitor to the popular Trezor wallet).

The launch of the Blue now comes as as a response to the increasingly complex needs of an ecosystem that now includes smart contracts, token exchanges and other types of asset trading – creating a situation where transactions and contracts can involve multiple parties and variables, each of which the signatory needs to verify.

“Say you want to develop smart contracts on ethereum, at the moment it’s hard to validate everything on a small screen,” said Larchevêque. “But the Ledger Blue allows you to build your own application to validate a specific smart contract.”

The amount of screen real estate means that an application can present multiple data fields for inspection before the final confirmation is given, an essential step when a contract will then automatically execute itself.

“With the blockchain, so much of the security relies on the endpoint – that’s why it’s really important to know that what you see is what you sign,” Larchevêque said.

The Blue also includes support for a range of cryptocurrencies: the device’s technical spec currently lists bitcoin, ethereum, Zcash, Dash and Monero, along with the ability to integrate with other wallet providers like Electrum and Mycelium.

According to Ledger’s description of their custom-built Blockchain Open Ledger Operating System, these different currency handling applications are run in isolation from each other and cannot access memory or storage used by another, meaning that cryptographic secrets should remain safe even if one application is compromised.

Tech-savvy targeted

The Ledger Blue is also built with open-source principles in mind both for software and hardware design.

Whereas most smart devices ship with completely sealed enclosures, the Blue’s case is held in place magnetically and can be detached.

In a video demonstration, Larchevêque showed the case quickly separating and reattaching to reveal the components inside, a design choice which reflects the assumption that this is a product geared towards technically skilled end users.

“We already know that crypto asset enthusiasts want to have a powerful, best-in-class hardware wallet. But the new customers we want to reach with this product are enterprise customers … who are already starting to build solutions on the blockchain using our products,” Larchevêque said.

Some enterprise clients that have already signed up include Monax and Stratumn, two enterprise blockchain platforms which will use the Blue as a hardware endpoint for their services. With its enterprise SDK included with the product, Ledger is also hoping to attract developers to the platform.

With the product priced at €229 before VAT it’s decidedly high-end, but looks to offer a vastly different user experience to anything currently on the market. Once the first units reach consumers, we’ll no doubt be hearing a range of feedback on how it compares.

The Ledger Blue is available for pre-order today, with devices expected to ship by December 18th. Customers can get 20% off for Black Friday only with promo code BBF21.

Images via Ledger 

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One simple way billionaire investor Peter Thiel identifies game-changing startups

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Peter Thiel Casual

Peter Thiel is one of the most successful VC investors in the world.

He’s most famous for his early investment in Facebook, but he also owns a stake in many startups worth billions of dollars, like Palantir, Stripe, and SoFi.

How does Thiel seem to find fast-growing startups so easily?

One good rule of thumb: look for startups that can’t be articulated in the right words.

Thiel shared his thinking in an interview with Keith Rabois at this year’s KV CEO Summit, hosted by VC firm Khosla Ventures. The event took place in July but the video of the interview was posted earlier this week.

"I think in some ways the really good companies often couldn’t even be articulated…we didn’t quite have the right words. Or maybe they were articulated but were articulated in terms of categories that were actually misleading," Thiel said.

That means the startup’s idea has to be so new that it’s not easily understood by everybody. For example, Thiel said most people called Google just another search engine, when in fact, it was the "first machine-powered" search engine. Even Facebook, he says, was called just another social network, when it was actually a company that "cracked real identity" online.

Thiel added the same thinking goes the other way: avoid startups that use too many buzzwords.

So if a startup describes itself with trendy words like big data, cloud computing, or software-as-a-service, it’s time to run away.

“I’d often said when you hear those words, you need to think fraud and run away as fast as you can," Thiel said. "It’s like a tell that you’re bluffing, that there’s nothing unique about the business."

You can watch the full interview below:

 

SEE ALSO: This 23-person startup raised $10 million using these 21 slides

Join the conversation about this story »

NOW WATCH: Elon Musk just unveiled something that could revolutionize how you power your home

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Release The Funk And Make Music Anywhere/Anytime With The Minim Mobile Music Maker

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Minim Mobile Music Maker

Feeling like Kanye on the subway again? Pay attention. Minim is the world’s first wireless, pocket-sized instrument designed for mobile music. With expressive pads, 3D motion control, and touch-sensitive technology, you can play music intuitively on your smartphone, tablet, or computer with ease. You can make incredible, complex music using the free Minim Music Lab app, or integrate with your personal app preferences like Garage Band or Ableton Live. Buy It Here: $99.99 (Usually $149.99)

Minim Mobile Music Maker

Minim Mobile Music Maker

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Buy Today: $99 (Usually $149)

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Turn Your MacBook Pro Into Kitt From Knight Rider, Compute Like David Hasselhoff 

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Ever since Apple dropped its latest MacBook Pro with a cool but mostly unnecessary Touch Bar, programmers have been jumping at the chance to make cool but mostly unnecessary apps to run on it. This new one does not break from that tradition but it does turn your MacBook Pro into Kitt from Knight Rider.

Anthony Da Mota recently uploaded KnightTouchBar 2000 to GitHub for any and all to try for free. All it does is make the touch bar look and function exactly like the red light bar on the front of KITT 2000 Pontiac Trans Am—just idly bouncing back and forth at the top of the keyboard. Oh, and it plays the theme song for the iconic television show. It’s tough to say whether that’s a bonus or not.

If you don’t have a fancy, expensive Mac with Touch Bar, there is a way to fake it, but just check out the video below if you want to see this particular app in action.

[Technabob]

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Fidel Castro died and people won’t stop talking about Liam Neeson

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After former Cuban leader, Fidel Castro, passed away on Friday, people thought it would be the perfect time to discuss his uncanny resemblance to actor, Liam Neeson.

Following the news, side-by-side shots of Castro and Neeson began flooding social media, as did jokes of Neeson’s shoo-in role as the lead in a future Fidel Castro biopic.

Seriously, people couldn’t stop talking about the facial similarities the former Cuban President shared with Bryan Mills from Taken, Jedi master Qui-Gon Jinn from Star Wars: Episode IThe Phantom Menace and of course, that sweet dad from Love Actually.

In their defense, the facial hair and withering stares do look remarkably alike.

And for all those wondering, the real Liam Neeson is alive, well and hopefully considering a biopic in his future.

BONUS: Things you (probably) didn’t know about ‘Rocky’

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Stop and watch Amber Heard’s emotional domestic violence PSA

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This is difficult to watch, but do it anyway. 

To honor International Elimination of Violence Towards Women Day, Amber Heard recorded an emotional two-minute video detailing her experience in — and path out of — an abusive relationship. 

“There is a lot of shame attached to that label of ‘victim’,” Heard says in the video, which was shot for The Conversation with Amanda de Cadenet in partnership with #girlgaze. “If I hadn’t had a few people that I really trust around me, a few women, support, a few friends, if I didn’t have them around me, how different my life would be.”

In May, Heard was granted a restraining order against actor Johnny Depp, her husband at the time. She alleged that Depp rampaged around their shared condo, attacked her with a bottle of wine and hit her in the face with a thrown cellphone, court documents revealed. 

The couple reached a settlement and divorced in August.

If you need help, call the National Domestic Violence Hotline at 1−800−799−7233 or TTY 1−800−787−3224.

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