Zcoin Mining Explained
Last Updated: 1st November 2018
Zcoin is a decentralized cryptocurrency that is designed to safeguard financial privacy when transacting on the network. By serving as a platform upon which private transactions can be made, Zcoin aims to encourage and guarantee the freedom of commerce. Fungible Zcoin tokens (XZC) that are produced from the Zcoin mining process are also intended to meet this overarching project objective, as fungible currency is necessary for the success of a truly private and decentralized ecosystem.
One arguable weakness of Bitcoin is its weak privacy features, at best, Bitcoin can be regarded as being pseudonymous instead of anonymous. Because information such as wallet addresses are publicly broadcasted when a transaction is initiated, if an individual can link identities and organizations to their wallet addresses, it then becomes possible to determine the transactional activity of that individual or organization. This considerably undermines a user’s transactional privacy, as the actions of that user can effectively be tracked and monitored. Bitcoin’s privacy weakness has resulted in the emergence of privacy coins which all take a different approach in tackling user transactional privacy. For example, Monero utilizes ring signatures, stealth addresses, and ring confidential transactions to strengthen user privacy, whilst cryptocurrencies such as Dash make use of a coin-mixing service that is based on CoinJoin. Zcoin on the other hand, makes use of RSA accumulators as the basis of their anonymity methodology.
RSA accumulators are one-way membership functions that can provide cryptographically verifiable answers to membership queries. Accumulators operate on sets of values, and they can provide an answer to a query as to whether or not a candidate is a member of a group without having to reveal the individual members of a set. By using RSA accumulators, the Zcoin project contends that it is able to provide greater anonymity protection than privacy coins that may use ring signatures or coin-mixing services. This is because privacy features such as ring signatures and coin-mixing are limited by the size of the ring signature or mixing cycle. However, because Zcoin utilizes RSA accumulators that operate on sets of values, which in this case can encompass all minted coins, it is argued that Zcoin’s anonymity feature can scale to the thousands. The Zcoin protocol also employs zero knowledge proofs, which are a type of proof construction that allows a user to prove possession of information without having to reveal that piece of information. In Zcoin, when a user transacting on the blockchain is sent any given amount of Zcoin, that user is only made aware of the amount of money that was sent to their wallet. Transactional data such as the sender information is not made available. This is possible because Zcoin’s deployment of zero knowledge proofs ensures that there is no information leakage when a transaction is initiated.
Zcoin Mining Algorithm
Zcoin mining currently employs a temporary mining algorithm known as Lyra2z. This algorithm is designed to give a slight advantage to GPU miners, whilst also making the activity of CPU mining a possibility. The Lyra2z algorithm that comprises Zcoin mining is temporary, and is expected to be replaced by the Merkle Tree Proof (MTP) algorithm in September of 2018.
Created by Alex Biryukov and Dmitry Khovratovich, developers of the Equihash algorithm, MTP is a memory-hard proof of work mining algorithm. MTP is designed to encourage a fairer and democratic cryptocurrency mining landscape. Mining in cryptocurrency systems such as Bitcoin is such that it has become centralized toward individuals who possess application-specific integrated circuit (ASIC) hardware. ASICs are integrated circuits that have been custom built for a particular use. With cryptocurrency mining, ASICs are incredibly powerful and efficient in computing a tremendous amount of proofs, giving them an advantage in proof of work systems such as Bitcoin. As a result, the mining landscape in proof of work systems is such that cryptocurrency mining is largely comprised of mining farms that make use of ASIC hardware.
MTP is designed to make proof of work mining a more egalitarian activity by rendering ASIC development for this particular mining algorithm, expensive and inefficient. Because MTP is memory-hard, the amount of proofs that can be computed is primarily determined by how much memory i.e. RAM an individual possesses. As memory is an expensive resource in computer systems, optimizing for RAM on an ASIC chip will come at a significant cost to the user. Thus, a core element of MTP and Zcoin mining is to require the large (in size) and intensive (in bandwidth) use of RAM.
How to Mine Zcoin
An official guide for Zcoin mining can be found below: