A brief history of Zcash forks

Since its inception, Zcash (ZEC) has been a controversial cryptocurrency. Many in the space have accused it of being rigged in favor of its creators due to its 20% founder fee in its protocol. Supporters have argued that the fee is justified to keep its development going with a strong core group of developers. Supporters of Zcash also point towards its superiority in terms of privacy as opposed to Bitcoin and other top ranked cryptocurrencies. Here is a brief history of Zcash forks, a relative newcomer to the industry along with all the disagreements.

Your capital is at risk.

Zcash blockchain: an ASIC-resistant network that affords anonymity to its users

Like many altcoins before it, Zcash is based on Bitcoin. But its resemblance with Bitcoin is limited. These are Zcash’s basic characteristics:

  • Total ZEC supply is 21 million, just like Bitcoin
  • 20% founder’s fee hard-coded into the system. Founders are expected to get roughly 4 times more ZEC than the amount of Bitcoin believed to be held by Satoshi Nakamoto by the time mining rewards are done
  • Blocks are set to propagate on the Zcash blockchain at a rate of one every 150 seconds, much like on the Litecoin network
  • Halving of ZEC mining rewards take place every 840,000 blocks, or approximately every 4 years, much like Bitcoin in terms of the time frame
  • The Zcash blockchain is a proof-of-work (PoW) blockchain based on the equihash algorithm
  • Equihash is supposed to be ASIC-resistant but Bitmain already released an ASIC miner designed for Equihash
  • Anonymity is not a default Zcash option, users must opt in
  • These privacy settings – using Zero Knowledge-proof signatures or ZK-Snarks – were set to allow users to comply with government regulation

Zcash forks

These features set the stage for a variety of Zcash forks. Some of them are aimed at upgrading the cryptocurrency and others aimed at creating new cryptocurrencies based on ZEC. Zcash forks that created new altcoins, were launched, among other reasons, to get rid of founder fees at least in part. Here is a brief list of Zcash forks that resulted in new altcoins:

  • Zclassic – ZCL, which underwent another hard fork to create 2 different altcoins
  • Bitcoin Private – BTCP is one of the altcoins that was forked from ZCL
  • ZenCash – ZEN was the other altcoin that was forked from ZCL
  • Komodo – KMD, which is a Zcash fork that also relies on record keeping through Bitcoin’s blockchain to make its transactions immutable

Here is a list of the brief history of Zcash forks to improve the Zcash blockchain and ZEC capabilities, along with a brief explanation of what each achieved:

  • Overwinter – a fork launched to strengthen the protocol for future upgrades, which included replay protection, versioning and improvements for transparent transactions. It took place on June 26th, 2018, at block height 347,500
  • Sapling – this Zcash fork provides efficiency improvements for shielded transactions, and improvements for mobile, exchange and broad vendor adoption of Zcash shielded addresses. The fork went through on 29 October 2018, at block height 419,200

Your capital is at risk.

High expectations for the next Zcash fork

Although there are no foreseeable Zcash forks that will result in new altcoins on the horizon, there is one particular Zcash blockchain upgrade that has raised expectations. Zcash’s parent company, the Electronic Coin Company has introduced Halo, its latest cryptographic development. Halo should allow systems that deploy it to extend zero knowledge-proofs to the very setup of a system. Therefore, it should take the trustless nature that cryptocurrency is known for to a whole different level.

Halo’s effects are set to reverberate beyond the cryptocurrency space. After proper testing and vetting, Halo deployment could be integrated into Zcash or other cryptocurrencies as a fork.

The results of Zcash forks

Whether Halo will be deployed on the Zcash blockchain or not, and when it will be deployed should not cloud investor judgement. Historically, Zcash forks have not resulted in higher ZEC prices, unlike Bitcoin’s. Even the hard forks that created other altcoins based on the Zcash blockchain, haven’t performed particularly well over time. Zclassic’s ROI is negative over its lifetime. Bitcoin Private has suffered the same fate. Komodo is the only altcoin that forked from ZEC which has a positive ROI over its lifetime, but its price is in decline after riding the 2017 bull market all the way up.

The future of Zcash

By looking into the brief history of Zcash forks, Zcash itself has had issues with its ROI. Whether it can recover or even gather steam from increased adoption is yet to be seen. Halo and other future developments deployed on ZEC, might not have the desired effect on price or on market fundamentals. Although the idea of having a private coin that affords great degrees of anonymity to its users sounds great, the reality is that adoption and usage must create the basis for sound growth. Zcash proves that technology by itself doesn’t have the kind of effect that so many people ascribe to it.

Your capital is at risk.

Get started on eToro’s award-winning trading platform.

Cryptoassets are volatile instruments which can fluctuate widely in a very short timeframe and therefore are not appropriate for all investors. Other than via CFDs, trading cryptoassets is unregulated and therefore is not supervised by any EU regulatory framework. Your capital is at risk.