People sit at home, and disasters come from outside. These words may be appropriate to describe Zcash's recent fortune.
At a blockchain summit last week, experts from Deloitte and Ernst & Young were merciless when evaluating Zcash. First, EY's blockchain expert Byrd revealed the shortcomings of Zcash, bluntly saying that it has the problem of low usage rate of private transactions.
If this is bearish, then Deloitte's blockchain leader Davis is directly "seeing death".
Davis said that "Zcash is a failed project" and "it will only go so far", and listed several arguments.
Zcash (ZEC), whose Chinese name is "Da Zingcoin", was founded in October 2016. It can realize comprehensive anonymous transactions through zk-SNARKs technology. currency.
However, in the two years since its birth, Zcash seems to have been living under the aura of Dash and Monero, and it lags behind in various indicators such as the number of active addresses on the chain and transaction volume. Next, there will be the pursuit and interception of the new generation of anonymous currency Grin; the second largest public chain Ethereum has repeatedly demonstrated its ambition to adopt zk-SNARKs technology, and it is not impossible to set off a battle for users by then.
Coincidentally, on the second day after being "watched dead" by Deloitte, Electric Coin Company, the development company of the ZCash project, disclosed its transparency report for the second half of 2018, in which a financial deficit of $3 million was very eye-catching.
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It can only go so far?
At a blockchain conference on May 13, Tim Davis, director of Deloitte's "chain reform" business, made a surprising statement, "Zcash is a failed project" and "it can only go so far", he said.
Let's first look at the reasons given by Davis.
First, Davis believes that one of Zcash's technical settings, multi-party secure computation (MPC), is an "inherent flaw."
The main purpose of this setting is that computing power from multiple parties is required for verification during the Zcash generation process to prevent malicious actors from spamming Zcash.
But Davis expressed concern about this process, "This requires us to believe that these verification nodes are not doing evil and not spamming Zcash. But for a serious investor, using a technology that needs to trust the executor is not good for users. The costs and risks are too high."
In this regard, Davis agrees more with Monero’s setup, “Monero’s recently updated features allow users to check the circulating supply. If someone is minting XMR, other users will see it.”
Davis’ second reason for attacking Zcash is the nitpicking of the privacy coin space.
He believes that the privacy protection of blockchain is still controversial. "For enterprises, whether it is completely anonymous or only anonymous transactions needs to be considered. The introduction of privacy settings by enterprises will bring troubles to supervision, and naturally bring troubles to themselves."
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Ernst & Young's "replenishment": Zcash's private transaction usage rate is not high
Davis has a clear stance, and his peers agree.
Ernst & Young representative David Byrd revealed yet another Zcash "scar". Byrd said that the cost of using Zcash for private transactions is quite expensive, which also prevents most transactions on Zcash from using zk-SNARKs technology.
zk-SNARKs is the zero-knowledge proof mechanism, which is the core technology of Zcash. Zero-knowledge proof can fully prove that one is the legal owner of certain rights and interests without disclosing information about rights and interests—that is, the "knowledge" to the outside world is "zero". This kind of proof allows both parties to the transaction to hide the transaction address and amount.
Of course, concealment exists as an option in Zcash, and users can also choose not to conceal addresses and amounts during transactions.
The Zcash block explorer shows that in the past week, the number of private Zcash transactions accounted for about 9% of the total number of transactions, and the proportion of private transactions to the total transaction volume was even lower—less than 1%.
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The operating company lost $3 million in the first half of the year
What is shocking is that, in addition to doubts from outsiders, the Electric Coin Company, the development and operation company of the ZCash project, also came forward the next day to "exposure its own ugliness".
On May 14, Electric Coin released its transparency report for the second half of 2018, detailing the company's financial status and use of funds.
According to the report, Electric Coin earned a total of 36,750 ZECs (from mining rewards) in the second half of 2018. Based on the average price of ZECs at that time of $60/piece, Electric Coin’s total revenue during this period was $2.205 million. The total expenditure is US$700,000 per month, which is US$4.2 million for half a year, plus an additional promotional fund of US$930,000. Apparently, Electric Coin lost nearly $3 million in the second half of 2018.
Electric Coin spending categories for the second half of 2018
As Electric Coin wrote in its report, the company is running at a loss.
In the first half of 2018, the problem of Electric Coin's inability to make ends meet has emerged. In the second half of the year, this deficit is still expanding, and it can only be subsidized with money from the company's assets. Compared with June 2018, the company's book assets are now equivalent to US$5 million, which is US$2.25 million less.
In order for the Zcash project to carry out R&D investment, engineering development and application landing normally, Electric Coin had to take action.
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Ethereum "forcing the palace"
In addition to the embarrassment of its low usage rate of private transactions and insufficient funds, Zcash also suffers from the enemy in the privacy currency arena.
Although it is one of the top three anonymous coins along with Monero and Dash, Zcash, which was born two and a half years later, is obviously weak.
In terms of market value, it is only 1/3 of Dash's market value. In terms of popularity and application rate, Zcash is also behind.
According to Blocktivity.info data, Zcash’s daily average chain activity in the past 7 days ranks 25th among all blockchain projects, with 4459 active addresses on the chain, which is only 40% of DASH, and the transaction volume is even less than 1% of DASH. %.
In addition, according to a statistics on websites that support digital currency, there are currently 34 websites that support Zcash payment, all lagging behind Monero and Dash.
There is interception in the front and pursuit in the back.
Zcash, which has been in development for nearly two years, not only failed to "successfully rise to the top", but also "beware" the upstart of the anonymous currency - Grin.
Grin was popular in the digital currency investment circle at home and abroad at the beginning of this year. Its design mechanism has many similarities with Bitcoin, for example, the project is released by anonymous persons; the project has no pre-mining and ICO. The initial distribution is fair and transparent; at the same time, Grin is more private than Bitcoin, and the privacy protocol Mimblewimble it adopts allows it to have the same hidden function as Zcash.
Although Grin's current market value and popularity cannot endanger Zcash, people's pursuit of more innovative and decentralized projects is almost inevitable.
In addition to near-term worries, there is another "long-term concern" before Zcash. In the "Byzantine" hard fork carried out by Ethereum in 2017, it was intended to "take the zk-SNARKs technology for its own use" and put it on Ethereum, but later gave up with the adjustment of the technical route. Even so, with V God's admiration for zk-SNARKs, he still insists on adding this technology to Ethereum 2.0 to support anonymous transactions.
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Zcash may still have time
Despite many difficulties, perhaps this is the only way for a public chain to continue to grow and develop. Just like Ethereum, the market does not lose confidence because of its temporary setbacks.
From the perspective of market performance, investors’ confidence in Zcash is not affected by the comments of the “big four” experts and the dilemma of the operation team.
In the past week, Zcash, as one of the mainstream currencies, has experienced several ups and downs with the big pie of Bitcoin. Overall, it still has a 20% increase in the week.
Technically, the steady Zcash team is also continuously upgrading its technology.
In October last year, Zcash launched a major upgrade in recent years (codenamed "Sapling" sapling).
This upgrade not only introduces new addresses to improve anonymity, but also significantly reduces the block confirmation time and memory usage of anonymous transactions.
Before the upgrade, the transaction time to initiate an anonymous transaction was tens of seconds, and the memory occupied by the transaction reached 3 GB. In the era of Sapling, the memory required to initiate an anonymous transaction has dropped to about 40 MB, and the time has also been shortened to less than one second. In other words, things that previously required high-performance computers can now be realized on mobile devices such as mobile phones and tablets. This removes a major obstacle to the popularization of anonymous transactions.
By October this year, Zcash will launch the last version upgrade in the roadmap - Blossom (blossom), which can also add points in usability.
According to the plan, Blossom will support the addition of BOLT (an off-chain lightweight transaction, similar to Lightning Network) technology. At that time, Zcash will be able to better serve light wallet users, making payment faster and more convenient while obtaining privacy and security.
Looking at its technological development history, the rating agency TokenGazer gave the evaluation that "the team's development roadmap is clear and the plan is well completed." Perhaps it is this "reliable" feature that JPMorgan Chase (JPMorgan) was very early Previously, it worked with Zcash's development team to provide privacy design for the bank's enterprise-grade blockchain, Quorum.
(I am the author Xuejiao. For blockchain and mining reports/communication, you can add WeChat hxjiapg. Please note your position and reason)
(I am the author Xuejiao. For blockchain and mining reports/communication, you can add WeChat hxjiapg. Please note your position and reason)
