Question: What is a trusted setup and why does it affect trust?

Answer: It is a procedure for generating cryptographic parameters for zk-SNARKs. If, during the ceremony, someone retained “toxic waste” (secret data), it could theoretically enable undetectable issuance. Zcash used multi-party ceremonies to reduce this risk, but the model remains an additional trust point.

Question: Why might a “privacy coin” still not be very private?

Answer: Privacy in Zcash is optional: if many users rely on transparent addresses or “bridge” between t- and shielded addresses in recognisable patterns, the anonymity set becomes weaker. Plus, metadata (IP, timing, amount patterns) can help correlation.

Question: Why is Zcash sometimes delisted or restricted?

Answer: Because of regulatory sensitivity around privacy assets: in some jurisdictions, exchanges and payment providers reduce compliance risk by restricting privacy coins. That can reduce liquidity and availability.

Question: If I need privacy, what should I set up first?

Answer: Use shielded addresses wherever possible, minimise “recognisable” transaction patterns, handle exchange deposits/withdrawals carefully, and consider metadata (VPN/Tor, separate wallets/devices, discipline around amounts and timing).

What is Zcash (ZEC)

Zcash (ZEC) is a cryptocurrency focused on financial privacy: it supports both public (transparent) and shielded transfers, where sender/recipient/amount details are hidden using zk-SNARKs (zero-knowledge proofs).

Launch 28.10.2016 Zcash (ZEC) mainnet — Proof-of-Work (Equihash)

Who created it

Electric Coin Company (ECC); Zooko Wilcox, Daira-Emma Hopwood, Sean Bowe, Jack Grigg, and researchers who worked on the Zerocash ideas.

Why it was created

To enable users to make payments with strong cryptographic privacy on a public blockchain, while preserving optional transparency when needed (for example, for reporting and compliance).

How it’s used

Private P2P transfers via shielded addresses (z-/UA)
Public transfers via transparent addresses (t-addresses) when privacy is not required
International transfers/remittances with enhanced confidentiality
Salary/business payouts where it is undesirable to reveal amounts and counterparties
Donations and tips without public exposure of transactions
Savings/holding with reduced leakage to on-chain analytics

Risks

Potential “hidden inflation”/counterfeit coins if a cryptographic vulnerability exists or zk-SNARK parameters are compromised
Trusted setup as a trust point: security depends on the correctness/honesty of parameter-generation ceremonies
Regulatory/listing risk: privacy assets may be restricted or delisted, worsening liquidity and fiat on/off ramps
Development/funding centralisation risk: notable reliance on key organisations and the distribution of the block reward (dev fund)
Governance risk: public conflicts and governance/team restructures can slow development and undermine trust

FAQ

Question: What is a trusted setup and why does it affect trust?: Answer: It is a procedure for generating cryptographic parameters for zk-SNARKs. If, during the ceremony, someone retained “toxic waste” (secret data), it could theoretically enable undetectable issuance. Zcash used multi-party ceremonies to reduce this risk, but the model remains an additional trust point.
Question: Why might a “privacy coin” still not be very private?: Answer: Privacy in Zcash is optional: if many users rely on transparent addresses or “bridge” between t- and shielded addresses in recognisable patterns, the anonymity set becomes weaker. Plus, metadata (IP, timing, amount patterns) can help correlation.
Question: Why is Zcash sometimes delisted or restricted?: Answer: Because of regulatory sensitivity around privacy assets: in some jurisdictions, exchanges and payment providers reduce compliance risk by restricting privacy coins. That can reduce liquidity and availability.
Question: If I need privacy, what should I set up first?: Answer: Use shielded addresses wherever possible, minimise “recognisable” transaction patterns, handle exchange deposits/withdrawals carefully, and consider metadata (VPN/Tor, separate wallets/devices, discipline around amounts and timing).