Zcash is changing its ideology

Confidentiality-oriented Zcash cryptocoin is getting ready to move away from the Proof-of-Work (PoW) protocol and switch to Proof-of-Stake (PoS). There are two reasons for that: security and environment.

Zcash cryptocurrency has been gradually increasing in price in recent weeks. Currently, the cost of one cryptocoin is $ 118. And the rate of growth may well intensify because Zcash is in for some major changes. Its creator, the well-known cypherpunk Zooko Wilcox, believes that the Zcash network must be transformed in the same way as Ethereum and many other coins now, shifting from the Proof-of-Work algorithm to Proof-of-Stake.

According to Wilcox, PoS is eco-friendly, as it doesn’t consume a lot of energy while also providing increased security levels.

“I think Proof-of-Work has certain security drawbacks, as was demonstrated by recent 51% attacks (when one miner controls most of the computer performance in the network and is able to steal tokens), – said the creator of the coin -. I believe that Proof-of-Stake can provide a much more efficient type of security at lower costs.”

Zooko Wilcox is a man who stood at the very origins of the cryptocurrency movement, working alongside the legendary Satoshi Nakamoto. He certainly recognizes all the advantages and disadvantages of PoW and PoS algorithms. Wilcox suggests focusing on such successful PoS-based projects as Algorand, Cardano, Cosmos, and Tezos.

As it stands, the Proof-of-Work algorithm is the foundation of the Bitcoin network. It offers miners a reward for solving complex mathematical problems in the process of creating new blocks in the network, which also means the creation of new coins. This consensus mechanism is often criticized for a large amount of energy it requires to support the network’s performance. And the more popular the coin, the more computer performance its mining necessitates, which in turn increases energy consumption and, therefore, the “carbon footprint” of the coin. The power used for BTC mining, for example, is already equal to the energy consumption of Ireland.

However, the Bitcoin community is now actively defending the benefits of PoW, completely disregarding the weight of the Wilcox name. The adherents of the classical BTC model of blockchain construction are convinced that Proof-of-Stake blockchains don’t measure up to the BTC security level. Moreover, the PoS algorithm is constantly being attacked for the possibility of potentially moving away from decentralization and even “establishing plutocracy”.

Among those skeptical about the potential benefits of PoS is Blockstream CEO Adam Back, who believes that this consensus mechanism has its own fundamental problems.

Wilcox’s current initiative could be viewed as an attempt to “refine” Bitcoin, to do something that was never done back in 2010. Then the BTC algorithm was supposed to be supplemented with the zk-snarks (Zero-Knowledge Succinct Non-Interactive Argument of Knowledge) component to use it in a blockchain and hide not only the identity of the sender and recipient but also the transaction amounts. It would have presumably ensured complete confidentiality.

While developing Bitcoin, Satoshi Nakamoto himself hoped to integrate zk-snarks into the network, but it wasn’t to be. The technology was considered “immature”, threatening to slow down the already functioning BTC blockchain. Later, in 2012, Wilcox, along with other developers, suggested integrating zk-snarks in the Bitcoin network at a conference in San Jose. Still, the main developers refused, saying that the technology should first be tested on another blockchain. Well, they got what they asked for: Zooko Wilcox integrated zk-snarks into the new network, and the Zcash cryptocurrency was born.

Now it looks like the creator of Zcash wants to put his brainchild in the lead, giving it two key advantages for our times: environmental friendliness and security/privacy. And the first step here is to move from an energy-intensive Proof-of-Work consensus mechanism to a greener Proof-of-Stake approach.

The result of this transition may be unpredictable for the crypto market since current Zcash is the closest “relative” of Bitcoin: its code is essentially a slightly modified BTC code. So, on the one hand, Zcash itself may become more popular among users, but most importantly, the question will be raised about Bitcoin moving to the Proof-of-Stake algorithm in the future. The first cryptocurrency could face the choice predicted for it a few years ago: “Adapt or perish!”

It is worth remembering, however, that there is a reason they call BTC “digital gold” – partially because the community around the first cryptocurrency traditionally resists major changes, and the need to use PoW has become an integral part of Bitcoin’s ideology. On the other hand, Wilcox, a true visionary, says the entire cryptocurrency world is at the “inflection point” of protecting privacy from governments and corporations. In his opinion, the rates are rising because central bank digital currencies (CBDCs), with their built-in mechanisms to track all transactions from the very beginning, are about to enter the scene. Notably, though, Zcash creator is not at all opposed to commercial banks integrating his cryptocurrency into their services.