If bitcoin resembles “digital gold” (i.e., a store of value), then Zcash is akin to “digital cash,” which offers privacy features similar to those afforded by credit card and debit card transactions, ACH and wire transfers in the U.S. banking system, and international wire transfers on the SWIFT network.

Zcash’s unique value proposition stems from the fact that its encryption technology, known as zero-knowledge proofs or specifically zk-SNARKs (zero-knowledge succinct non-interactive arguments of knowledge), permits users to keep the details of their financial transactions confidential and out of the public eye, while at the same time providing transparency to regulators and financial intermediaries who custody and support the trading of Zcash.

Zcash supports four transaction types: public, shielding, deshielding, and private. A public transaction happens between two “transparent” addresses or “t-addresses” and behaves exactly like a Bitcoin transaction — the amount transferred is publicly visible on the Zcash blockchain. A shielding transaction happens between a t-address and “shielding” address or “z-address.” The balance of the t-address and the amount transferred out is public, however, the balance of the receiving z-address is private. A shielding transaction happens between a z-address and a t-address. The balance of the z-address is private, however, the amount transferred out and the balance of the receiving t-address is public. A private transaction happens between two z-addresses. The balance of both z-addresses and the amount transferred between them is private.