“A perfect tool for secret payments” - From Bitcoin, with Zero Knowledge (Proof). The impact of Z-Cash.

This is Zerado’s first point of view on a cryptocurrency due to our key focus on mainstream cryptographic solutions and exhibiting to and advising banks, governments, and other entities.

However, Z-Cash is a big deal, not primarily as a medium of exchange, but as the first practical, global deployment of a very advanced form of cryptography. 

When we began socializing our cryptography research initiative among our client and partner base, we came up with a diagram illustrating the progress made by different classes of cryptographic technologies (see below):

This started with keyless cryptography (hashing), symmetric cryptography, public key cryptography, and highlights that the future will bring cryptography based on Zero-Knowledge-Proof and Fully Homomorphic Encryption.

That future, is here today. And it’s exciting! 

Z-Cash is a cryptocurrency like Bitcoin. Its primary purpose is to allow markets to assign value to a token that is artificially scarce but easily transferrable. Unlike Bitcoin, whose design principles focused entirely on making it impossible to censor, but also made it public and allowed all parties, including law enforcement, to trace tokens as they move through the system, Z-Cash promises complete anonymity, while allowing everyone to have confidence in the resilience of the system.

How is that possible? It’s due to its underlying mathematics, something called zk-SNARK, which stands for zero-knowledge Succinct Non-Interactive ARgument of Knowledge (and which we won’t elaborate on now, but please feel free to reach out to have a geeky conversation in the comments below.) 

Suffice to say, zk-SNARK makes it possible to prove to the entire world that you're entitled to make a payment (and have then made it), without ever disclosing how you came into possession of the money in the first place, and with the recipient being the only one to know how much you're paying. 

This should make everyone's hair stand on end: we have just described a perfect tool for making secret payments – one that goes against the intent of most of today's financial regulations. 

When we presented our views to MEPs at a European Parliament roundtable earlier this year, we seconded an opinion that even relatively benign opposition to Bitcoin could spark a much more difficult opponent. Z-Cash is that opponent. 

There is an old saying about the internet: that it treats censorship as damage and routes around it. While it can be disputed, the only effective regulation of the internet has to start with a comprehensive understanding of it. 

As part of our research initiative, we have shared the vision of the development of cryptographic technologies. We have been right with the timing so far:

With the successful completion of the Parameter Generation Ceremony earlier this week, and the subsequent launch of the Genesis Block of Z-Cash five hours ago, we're now witnessing the validation of the first thousand Z-Cash blocks. The launch of every large cryptosystem improves the public’s understanding of how cryptography works. We do not expect that everyone should, or even can, follow the details of the Multi-Party-Computation, or the mathematical incantations therein - in the same way that people can't be bothered to understand the intricacies of Border Gateway Protocol that ensure you can get your weekly Netflix fix. It just works.

One of the tenets of Zerado’s vision revolves around bringing modern cryptographic systems forward for the benefit of the society. We are both glad and excited that Z-Cash has come to life as it will serve as a powerful demonstrator of this new generation of technologies. We look forward to referring to it, and explaining how similar systems can be used, for example, to prove eligibility for insurance products without exposing personal information, or in healthcare, finance and voting.