Understanding Zcash: Privacy, Addresses, and How It Differs from Bitcoin

Most blockchains make your entire financial history public.
Every balance, every transaction, permanently visible.
This is how Bitcoin works — transparent by design.

Zcash is different. It was created to give users the choice between transparency and privacy, without sacrificing cryptographic security or decentralisation. Using a technology called zero-knowledge proofs (specifically zk-SNARKs), Zcash enables private transactions where the sender, recipient, and transaction amount can be hidden, while still proving the transaction is valid.

This makes Zcash one of the most significant innovations in blockchain privacy.

Privacy is enabled by allowing users to own "transparent" and "private" wallets

Shielded Address (z-addr): Sender, receiver, and transaction amounts are hidden
Transparent Address (t-addr): sender, receiver, and amounts are publicly visible

To unify the ownership of these wallets, users have a Unified Address (UA), a single address that can receive both transparent and shielded funds.

Unified address

Transparent address

Shielded address

How Zcash Compares to Bitcoin?

Zcash wins in privacy. Bitcoin is fully transparent; Zcash offers optional privacy using zero-knowledge proofs.

Zcash is at parity for scalability. Bitcoin processes around ~7 transactions per second. Zcash has similar throughput (~6–26 TPS depending on implementation).

Zcash has the same tokenomics. Both have a fixed max supply of 21 million coins. Zcash also undergoes halving events just like Bitcoin.

Like Bitcoin, Zcash reduces its block rewards over time in scheduled halving events.

• Original block reward: 12.5 ZEC per block
• Current block reward (after the 2024 halving): 1.5625 ZEC per block

A portion of each block reward supports:

• Miners securing the network
• The Zcash Foundation
• The Electric Coin Company (ECC)
• Community grant programs

TLDR; Bitcoin is public digital gold. Zcash is private digital gold.

But who typically uses Zcash?

Zcash can have a legitimate use case to prevent bad actors from tracking down the usage pattern of wallet addresses and phishing attempts on wallets, since the public does not know what balance is in it.

Users in unstable political environments can also find Zcash useful for hiding their transaction activity when remitting money.

However, Zcash checks all the boxes for inviting grey flows. With fully private on-chain activity, no one can see a user's balance or transactions. And this will likely invite higher restrictions on on/off ramps for fully private blockchains for AML or CTF checks.

Visit zcashexplorer for on-chain exploration.

Example shielded address: zs1cpf4prtmnqpg6x2ngcrwelu9a39z9l9lqukq9fwagnaqrknk34a7n3szwxpjuxfjdxkuzykel53
Example transparent address: t1PEp2GJLSdhDfCKqc2J211WKDUS1NfoQNy
Example UA address: u13qutpuktq026dwczvxmnh8mxdacsjx3kg2rrhzgns8zsty53t9y0hqp5d440zc9w7z7zkkjqw8dq0uuc0mkt883464mq8mkys7l4xjnhylh7u3u02ukknurm5yxerqlf500y2atq28e