Risk Warning: Your Capital is at Risk.
So you’ve heard about the privacy-focused Zcash.
On this page, we explore the ways in which you can trade Zcash as a cryptocurrency derivatives instrument, like Zcash CFDs, options, and futures.
If you’re unsure or don’t understand Zcash as a financial instrument, you can see our thoughts on why you may or may not trade it.
We also put together a list of regulated brokers in so you can get started, should you decide to speculate on Zcash prices.
Should You Trade Zcash?
As with any financial instrument, there are reasons why you may or may not consider trading it and speculatively betting on it’s future price.
Please note, this is an example trade – not a recommendation.
3 Reasons Why You Might Trade Zcash
- State of the art privacy protection
- Development team with a background in cryptography
- Privacy coins are poised to do well
State Of The Art Privacy Protection
Like Monero and Dash, Zcash is designed to protect its users’ privacy. However, the approach taken by Zcash is different.
Monero uses the ring signature (you can find out more about ring signatures in our Monero guide) to scramble transactions. This technique is imperfect and a number of early transactions were in fact linkable.
Rather than simply scrambling transactions, Zcash uses zk-SNARKs to ensure that shielded transactions are completely hidden from the network.
Development Team With A Background In Cryptography
Many altcoins have incredibly talented teams behind them but few have a team filled with academic cryptographers.
This gives Zcash an edge over its rivals as it means that they have access to people who specialize in implementing and testing cutting-edge cryptography.
This team is part of the reason that Zcash was able to develop and implement zk-SNARKs.
Privacy Coins Are Poised To Do Well
Privacy coins are becoming an increasingly important aspect of the broader cryptocurrency market.
2 Reasons You Might Not Trade Zcash
- The controversy surrounding its creation
- Founders fee might discourage miners
The Controversy Surrounding Its Creation
The controversy surrounding the Zcash catch has not fully gone away. While it unlikely that anybody has gained access to the master-key, and therefore the ability to create ZEC, it will always be a possibility.
Unless the team can prove that the Parameter generation ceremony was successful, then users will be unable to tell whether their ZEC are counterfeit or not.
Founders Fee Might Discourage Miners
The founders’ tax has proven to be controversial. Miners are essential for a blockchain to function and losing 20% of their profits will discourage some miners from choosing Zcash.
The fee has also allowed other cryptocurrency teams, notably Monero, to accuse Zcash of forcing miners to pay a tax in order to pay traders.
Zcash Brokers: Where Can I Trade Zcash?
One method is to not buy Cryptocurrencies at all and instead, trade Contracts for Difference (CFDs) through a regulated broker.
A CFD is a contract between you and the broker. Instead of directly buying Cryptocurrencies, you would buy a CFD and take a short or buy position.
If the market moves in your favor then you will receive money based on your CFD. If it moves against you then you will have to pay.
This allows you to take advantage of Cryptocurrencies without ever having to take on the risk of owning a single token.
Crypto Brokers Available in
Here’s a list of regulated options available in that offer CFDs and other trading products on cryptocurrencies such as Zcash.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 73.90%-89.00% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Zcash Exchanges: How to Buy Zcash
So you’ve decided that you want to buy ZEC. The next step is figuring out how to get Zcash.
The best way to acquire ZEC is through a cryptocurrency exchange. You use these exchanges to trade fiat currency for Zcash. Some exchanges like BitMex and OKEx also offer cryptocurrency derivatives like CFDs, options, and futures.
Unfortunately, using exchanges can be risky. You need to take care to protect your trade. If you have any problems you are pretty much on your own.
There are two main ways to buy Zcash. Which one you decide to use will largely depend upon your priorities.
Coinbase: A Regulated BTC Marketplace
It comes with a large number of currency pairs and you even have the option to buy BTC using your credit or debit card. Coinbase has a competitive fee rate.
Purchasing BTC will typically result in a 3.99% fee if using a credit or debit card and a 1.49% fee for most kinds of bank transfers.
Verification At Coinbase
Coinbase requires your ID and address when registering. This kind of verification is a standard procedure and considered best practice for many exchanges.
It’s designed to prevent the exchange from being used for money laundering and other criminal activities. Privacy-conscious traders should consider using a different exchange.
LocalBitcoins: A Peer-To-Peer Exchange
Rather than buying ZEC directly you can first buy Bitcoin through a peer to peer Bitcoin Exchange that does not require an ID. One of the best options is LocalBitcoins which allows users to buy Bitcoin with almost any currency.
If you choose to use LocalBitcoins make sure that you vet other users thoroughly. There is a review function and you should make sure you use it. Some unscrupulous users have been known to scam new traders.
If you get a bad feeling or see poor reviews it is generally best not to make the trade. Some LocalBitcoins users will even meet in person to conduct trades, to help ensure that both parties are being honest.
Binance: Converting Zcash Into Bitcoin
However, you choose to acquire your BTC the next step is to convert that into ZEC and one of the best exchanges for that is Binance.
Binance is a good choice thanks to its relatively low trade fee of 0.1% and minimal withdrawal fees.
Step-By-Step: How To Convert ZCash Into Bitcoin
The process can be a little daunting for new users but it is not as complex as it looks at first glance.
Once you have made your account the first step will be to go to the ‘deposit’ section and acquire your deposit address (it will be a string of numbers and letters).
Keep this, you’ll need it in a moment.
Ensure you only transfer to your exact deposit address, otherwise you risk losing your currency
Send Your Bitcoin To Binance
Go back to your Coinbase account and find your Bitcoin wallet. Click send and paste in the exact address provided to you by Binance.
Click send and wait 40-60 minutes depending on the amount of activity on Bitcoin. Once your funds are verified then your Binance wallet will be automatically updated.
Exchange Your BTC To ZEC
Now you can finally trade your Bitcoin for ZEC. Go to the exchange tab and click basic.
Next search for ZEC in the box on the right, click “market” in order to buy Zcash at the current market price and place your order. Once this goes through you’ll have finally acquired your first ZEC tokens.
You can also choose to buy at Limit which will allow you to specify the price you want to buy at, rather than just buying at the cheapest currently available.
Are Cryptocurrency Exchanges Safe?
Keep in mind that exchanges are not safe and you will need to be serious about your security. Always enable two-factor authorization and avoid keeping all of your coins in a single wallet.
Also, remember that you should never leave your coins in an exchange wallet unless you are planning to exchange them. The best way to secure your Zcash is in a hardware wallet or by putting them in cold storage.
How Safe Is Cryptocurrency Cold Storage?
Cold storage involves keeping your cryptocurrency in an offline wallet that only you have access to.
Remember that you are entirely responsible for your own security. If you don’t own the keys to your wallet, you don’t own your tokens.
You will also need to take extra care to ensure that your computer is secure and password and protected. Any breach could result in your coins finding their way into the wallet of a hacker.
Can You Manage Your Own Zcash?
Managing your own Zcash isn’t an easy task. Not only do you have to navigate the exchanges but you will also need to take extra care to keep your computer secure.
You will need to take extra precautions to protect yourself against phishing scams, viruses, and other risks. You will also need to keep very careful track of your wallet’s access codes.
If you misplace those then your ZEC trade will be trapped in a wallet you can no longer access.
What Other Risks Are There When Owning ZCash?
On top of this, there are risks that you have no control over. Whenever you use an exchange you are relying on them to protect you and your ZEC. The problem is that they sometimes fail to do this properly.
The most notorious example is MtGox. Back in 2013, MtGox was by far the largest Bitcoin exchange with control over 70% of the market. In May of 2013 the cracks started to show when FinCEN seized their accounts.
This led to users losing their ability to draw USD from the exchange. MtGox’s woes continued when hackers attacked the exchange and stole around $500 million, forcing MtGox to file for bankruptcy.
What Drives the Price of Zcash?
For a long time, Zcash was, by cryptocurrency standards, relatively stable and on a slow upward trajectory. Like many other cryptocurrencies, it saw a marked increase in value following the frenzied speculation that took place in December 2017.
The factors that drive the price of ZEC are broadly similar to the factors that impact other cryptocurrencies, particularly privacy-focused coins.
How Does The Media Influence Price Speculation?
Arguably the primary price driver for all cryptocurrencies is media attention. As mainstream newspapers pick up a currency it encourages more traders to pile in.
This often results in large increases of value and day-traders will often seek to “profit take” and sell off their assets. If you buy before the increase and sell before the major drop it is possible to make a profit by keeping an eye out for rumors.
However, it should be noted that this is risky and if you miss the sweet spot you could well lose money rather than make it.
Zcash rose sharply in anticipation of the Bithump announcement, only to plummet as traders engaged in profit-taking Sept – Oct 2017
Exchange Availability Impact On Prices
One major price driver for cryptocurrencies is the availability on exchanges. Generally, when a major exchange announces that it is going to list a currency, there will be a rapid surge in value.
This happened when Zcash was listed on Bithumb. The news led to a short-term spike in the value of ZEC. This jump was particularly pronounced because it allowed Zcash to gain access to the lucrative South Korean market.
How Might Government Regulations Impact Zcash Prices?
Like other privacy coins Zcash will also have a better ability to weather any potential government regulations.
This makes ZEC an excellent hedge in case the USA or EU decides to follow China’s example and make moves to more heavily regulate cryptocurrency.
This would have a disastrous effect on currencies like Bitcoin but Zcash’s Shielded transactions may encourage users to use ZEC to protect their assets.
This makes Zcash and other privacy coins a good choice as a hedging asset.
If you’d like to learn more about the history of Zcash and how the coin is produced, see our general guide on ZEC.
We have several cryptocurrency trading guides for specific coins, like: