Zcoin, a crypto focussed on anonymity, might not be a top coin, not even in the top 100 in fact, with a modest market capitalization of just over $28 million, as per coinmarketcap.com. But the young currency is making all the right sounds. It has taken a very public stance against big companies that make profits from crypto mining. It is looking to introduce a mining algorithm, the Merkle Tree Proof, that they claim will be able to counteract the benefits of making use of any specialized machines, Thus leveling the playing field against those who use ASIC devices and the big companies run them.
It hopes this will encourage everyday users to get back into cryptocurrency mining and make it worth it for them.
How Does It Work?
Zcoin works similarly to Bitcoin, with an added option for ensuring user anonymity. To give an example, say a user needs to pay 10 Zcoins. They are given 10 Zerocoins by the system. To use this coin those Zerocoins must now be returned and redeemed as Zcoins. This means that the coins are without any transaction history and the total supply is still maintained, only the sender and receiver of the transaction are party to this.
The blockchain is still able to maintain its integrity by checking that both, one who are party to a particular transaction should be able to, without needing to disclose any extra information, undisputedly, prove their legitimacy to anyone – a zero-knowledge proof. Their algorithm is able to understand and confirm when the coin has been used, burned or redeemed, but doesn't know the amount.
What Is The Merkle Tree
The people at Zcoin seem to be on a crusade to rid the crypto sphere of ASIC (application-specific integrated circuit) devices. These are highly specialized computers that are created to effectively mine cryptos. According to Zcoin, these machines are extremely efficient, in fact about 30,000 times more, at generating cryptocurrency than a standard laptop or computer. This makes it really hard for everyday ordinary users to think about its viability. Even if a user purchases one of these machines, the odds are still stacked against them as mining companies generally run hundreds if not thousands of these machines.
Such companies coupled with botnets, a network of devices which have been infected by a hacker to access system resources to mine a cryptocurrency without the knowledge of its owner, are giving the industry a bad reputation. Zcoin feels these ‘cheaters’ need to be weeded out. The more egalitarian solution is their new mining algorithm, the Merkle Tree Proof[MTP]. The companies website states that “The basic concept is that it should establish the same price/cost for a single computation unit on all platforms. This means that no single device should gain a significant advantage over another”.
MTP looks to ensure that all miners are using similar specific hardware. It gets around the advantages of ASIC devices by its intense use of memory and linking all its tasks to certain procedures. Due to this, the performance of a machine is dramatically altered, something that will surely be noticed by any user, should a botnet attempt to use the machine to mine its coin.
Merkle Tree has a branching data structure where successive data blocks are results of the previous ones in the chain. As one might imagine this gives it a tree-like structure. In a Merkle Tree, the original(root) hash code, the identity code which has been assigned to a particular block of data permanently, can be tracked to and fro any branch. This makes identification easy and reliable without needing data about the network to be stored on a computer somewhere.
Not Walking Alone
Indeed, Zcoin is not alone in looking to correct this imbalance. Earlier in the year, the Monero team, a coin also focused on anonymity, warned mining corporations off selling ASIC devices that are focussed on mining their coin. They plan on doing so by changing the coin’s code on a regular basis. Another minor company called Obelisk has launched their cryptocurrency called Siacoin. They have also taken a stand against the practices of businesses towards monopolizing mining.
It will certainly be interesting to note which side public opinion sways; should companies such as Bitmaindesist from making these machines or should coins stop worrying about how they are mined.