Cryptocurrencies have completely revolutionized the financial landscape. These act as digital coins that have easily become the medium of exchange, investment, and trading. The level of security cryptocurrencies delivers is unparalleled. There are various types of cryptocurrencies that you can find on the web. Bitcoin is one such name that has become the topic of debate worldwide. But one other cryptocurrency that you may be unaware of is Zcash.
Zero cash or Zcash is another unique type of cryptocurrency opted by traders for speculation and trading. Moreover, the level of security and transparency they deliver simultaneously makes them immensely popular amongst traders. Like Bitcoin, Zcash also trades through the public blockchain infrastructure, but they require no proof of any kind in terms of amount, seller, and purchaser identity. They can be privately traded, developed by an advanced and professional group of cryptographers, and are currently high in demand, allowing traders to earn profits in the short term.
Dedicated companies create platforms and protocols that can make the process of trading easy and hassle-free. Fireblocks is one such company that offers a secured network for exchanging Zcash with speed, efficiency, and complete skill. However, despite the benefits they deliver and their overall lucrative nature, traders must be aware of the following aspects:
1. Price volatility:
The first and crucial aspect of Zcash is its highly volatile nature in terms of price. Zcash is highly speculative. The level of price fluctuations of Zcash or any other type of cryptocurrency depends upon their overall demand and supply. Since their inception, the price of Zcash has risen exponentially and even tumbled down at twice the rate, making them a ticking bomb that can earn you substantial profits, yet can even become the cause of huge losses. It delivered strong returns initially but quickly moved in the other direction in no time, causing immense pain and losses to the traders.
Also, the low level of acceptance by different trading platforms and communities makes them a less lucrative option. The initial surge must not be the only aspect of investment in Zcash.
Traders may look for profit and therefore can bet upon the same but must keep in mind their level of volatility and overall fluctuations in price. You may never know when profits turn into losses and make your invested amount completely barren.
2. Concern over the security level:
Zcash is relatively new in the area of cryptocurrencies. The level of security they deliver is quite questionable. They work on the underlying principle of zero-proof requirements from the parties involved in the exchange. Moreover, the established security protocols are considered experimental and in the initial stages of development, making them all the more weak and reliable. Also, the overall strength of such parameters cannot be easily established with concerns and instances of security breaches.
New traders do not possess the knowledge about various security parameters and can fall into the trap of fake and counterfeit Zcash coins. Finding and reading legitimate Zcash coins is quite difficult for new traders, making them a less lucrative option.
Another aspect of Zcash is the level of competition they face compared to other types of cryptocurrencies available in the market. One can find various types of cryptocurrencies like Bitcoin, Monero, and Dogecoin taking up the heat and high in demand. The level of profits such cryptocurrencies deliver is quite high as compared to Zcash. Therefore, traders may find it difficult to generate enough amounts of profits through Zcash.
Finding adequate buyers and sellers of Zcash is also a difficult process. This can reduce the level of returns, which can discourage traders from trading Zcash.
4. Bounded by restriction and legislations:
Governments of various countries have imposed restrictions and legislations on the reading of Zcash. They have not wholeheartedly welcomed the concept of zero-proof trading points. Moreover, the level of secrecy that this cryptocurrency delivers is quite high, which has resulted in backlash from various extreme governments and organizations. This further makes the process of trading and exchanging Zcash difficult and full of pain.
The high probability of imposition of a ban on the exchange and overall trading of Zcash can prove to be a negative point for traders. Traders must keep in mind this drawback and indulge in trading with extreme caution.
The most crucial aspect and drawback that plagues the cryptocurrency is the deflation that Zcash may face. Being a new entrant into the cryptocurrency market and due to less demand and supply, the level of returns from Zcash can be quite low. In some cases, investment over the long term in mutual funds and other areas can be more profitable than Zcash. Also, in its present state of demands and overall supply, Zcash is fixed in number, making them a subject of deflation soon.
6. Zcash mining:
Zcash, like any other type of cryptocurrency, has to be mined through the use of a computer system. The mining process involves the application of a dedicated computer algorithm for solving complicated equations. When solved, a new block is added to the existing chain that results in the generation of rewards for the miner. Traders, however, are not required to indulge in the process of mining and can exchange the same through dedicated platforms.
One must be aware of the mining process and the rewards they deliver. Moreover, the founders of Zcash receive 20% of all the Zcash coins mined by any individual that you must keep in mind if you indulge yourself in Zcash coin trading. Also, the mining process involves a lot of power from the computer system itself that every trader and miner must be aware of.
Traders go for profits in the near term and are always on the lookout for more options to make them substantial profits. Trading in Zcash may seem profitable, but its various underlying aspects can disrupt its normal flow. Traders must opt for complete research, keep in mind various aspects, and determine their risk before indulging in Zcash trading.