How To Invest In Zcash - Step-by-Step Guide
Zcash (ZEC) is a decentralised cryptocurrency that works with an open-source system. This method is very useful when it comes to private transactions and ensuring transparency. In fact, payments with Zcash are present on a public blockchain, but only the two parties facing the transaction are aware of personal information.
This cryptocurrency is based on the Bitcoin protocol but it has its own cryptocurrency and blockchain. The system uses Zero Knowledge Proof Protocols (ZKP) that allows complete anonymity. The minds behind the creation of this cryptocurrency are Matthew D. Green, Ian Miers and Christina Carman.
Table of Contents
Invest in Zcash in 3 Steps
Get a Zcash wallet
You must first have access to a wallet in order to begin buying/selling Zcash. You can use a wallet app, log into a wallet website, or buy a Zcash compatible hardware wallet.
In recent years, mobile wallets which also sometimes offer a trading service, have unquestionably been the most convenient place to store cryptocurrencies like Zcash. You can monitor your funds from the palm of your hand by downloading Zcash compatible wallet apps to your phone.
Join a Zcash exchange
After selecting a wallet, the next step is to sign up for a cryptocurrency platform that helps you exchange Zcash for fiat currency. As previously mentioned, several apps and websites provide both trading and wallet services. If you want to invest in the near term and need to keep the situation under check, this choice is ideal.
Invest in Zcash
At this stage, you can begin trading Zcash. You will be asked to verify your identity and choose a payment form. This could take longer than a day, depending on the service provider. After your checking account or credit card has been verified, you will be able to make your first payment.
Investing in Zcash Explained
As a good practice, you should familiarise yourself with the various tools you will be using during your investment journey to boost your success when investing in Zcash.
One of the most useful instruments as a trader is your wallet, which allows you to store and protect all of your cryptocurrencies. Crypto wallets are available in several forms, but they are often divided into two categories depending on whether they are either internet-connected or not.
What does this mean in practice? Cold wallets derive their name from the fact that they put your funds in "stand by," preventing it from being exposed to the internet. This functionality could be crucial for some users, as it is not advisable to leave funds vulnerable to future hacking if you are planning a long-term strategy. It is a useful strategy to easily reach and manage your funds, but it also means having a higher exposure to risk and fraud. When it comes to large acquisitions, this is particularly true, and you should pay further attention. There are hardware wallets that are not always connected to your computer or any other internet source.
As the name implies, hot wallets are places where you can store your cryptocurrency and access it quickly. Smartphone applications are, without a doubt, the most popular way to store cryptocurrency funds these days. This could be the right option for you if long-term investments are not in your plans. Since it represents a centralised system from which the user can easily handle their investment, these software wallets are especially useful for storage and selling.
Considering we are well aware of how dynamic this industry is and how quickly we will need to sell and buy cryptocurrencies, being able to access these markets from the palm of our hand may be particularly practical.
On websites that trade cryptocurrencies, various protocols are in place to ensure protection.
To begin, we have multi-factor authentication, which is the most widely used encryption tool among the world's major financial institutions. During the registration process, the user is required to share several communication channels. This is due to the fact that the program would first prompt you for your preferred password, and then send you a message, an email, or a phone call after to ensure that you are the user trying to access the account.
This is necessary because if anyone with bad intent wants to take your money, you will be able to deter them from doing so.
Another protection mechanism is the Know Your Customer (KYC) strategy. This method of surveillance is used to discourage improper access to financial resources by illegal organizations or individuals.
Now that you have a better idea of how the instruments that can help you invest in cryptocurrencies operate, you will go further into more specific information, such as which platforms are the best to use and which trading techniques may work well for you.
We will go through different techniques and learn how to use them in the sections that follow.
Where Can You Invest in Zcash
To provide our readers with the best Zcash trading experience, our team has selected a few platforms that offer Zcash trading services. This decision is based on their regulatory status, user-friendliness and reputation. These pages were chosen with consumers' best interests and financial institution knowledge in mind.
You'll be able to trade in Zcash in a number of ways. Most of the platforms where you can buy Zcash support both bank account and credit card purchases.
Default payment must be verified before it can be used, which is why you will typically be asked to confirm your preferred payment methods during the registration process.
The provider will either remind you to upload a small amount to your account or charge the same small amount to your credit card or bank account. Verification can take a few hours to several days, particularly if you are paying with a bank account.
Once your payment option has been verified, you will be free to make your first deposit. Remember that just because you sent money to the website does not mean you are selling cryptocurrency, you are merely depositing funds into an account where you will be able to start trading your preferred fiat currency for Zcash.
Zcash Investment Strategies
We will now go over some of the most well-known Zcash trading strategies. These strategies will teach you how to start investing, make the most of your money, and profit from it.
Buy and 'Hodl'
What is it?
This method gets its name from a common joke in the cryptocurrency culture. When the Chinese economy tanked in 2013, Bitcoin's value plummeted, igniting a wave of economic activity across the cryptocurrency exchange. The value of cryptocurrency was going down. GameKyuubi, a drunk man, posted "I AM HODLING" during that tragic scenario.
His message was important: if you are not a great businessman, you should not try to fool the market. If you stay put, new opportunities will present, and your status will revert to its previous value. Hodling requires patience on part of the investor and ignores short term price fluctuations.
How to use this strategy
The "buy and hodl" strategy is simple to implement. You should simply invest in Zcash and then leave it. This is the best way to avoid a trader's greatest rivals, FOMO (Fear of Missing Out) and FUD (Fear, Uncertainty, and Doubt).
When to use this strategy
When the price has hit a low point on the graph, this strategy is perfect. In the last 52 weeks, the price of ZEC has fluctuated between $18.94 and $188.61. A user looking to benefit from HODL strategy would ideally try to purchase Zcash at the lowest price and then wait for the price to appreciate significantly before deciding to sell.
It is also worth noting that cryptocurrencies are very volatile, with new markets often outperforming mature markets.
Buy Fractional Zcash
What is it?
Investing fractional is a strategy under which the aim is to buy a small volume of cryptocurrency, less than one unit, rather than a significant amount. This method is more often applied to cryptocurrencies that have reached a considerable high value that not all traders can handle.
With Zcash you can surely think about applying this strategy. This could be more effective when prices are rising, and maybe you only want to invest $50 in a certain week. This method is widespread on cryptocurrency trading apps, where you are allowed to buy minimal quantities of cryptocurrency. This aspect is quite user-friendly, considering that many new inexpert traders are entering this environment. Allowing them to invest fractionally is a great way to encourage beginners to start.
How to use this strategy
In the long run, this strategy is advantageous and practical because it incorporates those consumers who cannot afford to spend large sums of money into the industry. By setting away a small amount of money per month, a user can build up a large investment. In addition, the investment is likely to grow in value over time.
When to use this strategy
This strategy is very useful when prices are going through a low period, so that you can buy Zcash at a more convenient price and see its value grow during more profitable moments.
Long Position on Zcash
What is it?
The most popular cryptocurrency trading technique is to take a long position, which is the polar opposite of a short position. This strategy involves purchasing a financial asset, such as a Zcash deposit, in the hopes of seeing its value increase in the future.
These methods are widely used in margin trading, a practice that involves borrowing capital. Naturally, investing without necessarily owning the funds necessitates a certain degree of competence. You could risk a lot of money if you make a poor move, so you should be able to afford an error before you start selling.
Another kind of long position strategy is going long with CFDs (contract for differences). CFDs are a form of derivative financial instrument whose value is calculated by the underlying asset, which in this case is a cryptocurrency investment. Bear in mind that you never own access to an asset while exchanging CFDs; it's just a way to value your contract.
Going long is a strategy that involves using the CDF to benefit from an increase in the price of a resource. This is the same as if you had bought the financial commodity and the benefit or loss was decided by the difference between entry and exit price.
How to use this strategy
This strategy involves investing in a bull market, and it can be easily applied on any trading platform or mobile app. The expression "bull market" refers to a market that is rising in value and in which you can invest in your cryptocurrency in the hopes that its value will follow growing.
When to use this strategy
During a bullish market, this strategy will pay off. The rise may be due to a variety of influences, like political news or simply a trend spread by more powerful traders. It is a good thing to keep up with what is going on in society and in the blockchain world because these events can have a big impact on the market's overall direction.
Benefits of Investing in Zcash
- Privacy- Without any doubt, this is the most crucial quality of this cryptocurrency. Zcash blockchain is all about privacy, and this is the most valuable asset for its investors.
- Scarcity- The market cap of Zcash is set at 21 million ZEC issued over the project's life.
- Scalability- Zcash improved upon Bitcoin performance. In fact, scalability is one of the significant concerns of Bitcoin users, considering its transactions are way slower than other systems like Zcash.
- Security- Zcash team did a great job earning the reputation of a highly valuable asset in terms of security.
- Zk-SNARK protocol- Its name stands for "Zero-Knowledge Succinct Non-Interactive Argument of Knowledge." Its design is thought to ease the nodes' work in the verification process during transactions.
Disadvantages of Investing in Zcash
- Legal issues concerning privacy- Under a legal point of view, this system's complete anonymity creates doubts, as there is no way to know how the coin is being used.
- Can only be mined through CPU mining- Zcash is designed for Linux, and as such is only suitable for CPU mining. It is not as profitable when used on MAC or Windows.
Other Ways of Investing in Zcash
In the sections above, we looked at different ways to invest in Zcash. However, there are also other options for investment in this cryptocurrency.
If you are considering meeting with an unknown seller, make sure you meet in a safe environment and have some background information about them. Instead, if you meet other people who are investing in this cryptocurrency, face-to-face transactions are a reasonable option. Peer-to-Peer marketplaces help in connecting prospective buyers and sellers. Some platforms also provide escrow services to ensure greater security.
Leveraged investing and exchange-traded funds (ETFs) are two other ways to trade Zcash. Let's look at these two options more closely.
Trade Zcash on Leverage
When it comes to cryptocurrency investing, leverage is a powerful tool. This is why it isn't always permitted, and verifications are needed before it can be used. Trading with leverage entails borrowing funds from your lender and trading them as if they were your own. When traders are looking to make short-term moves, this approach is ideal.
On platforms like eToro, Skilling, and Plus500, leverage is possible, but it is not available to all members. This is because if this strategy is not used carefully, it will result in substantial damages, and all trading sites must guarantee that you can accept such a move.
Invest in a Zcash ETF
ETFs (Exchange Traded Funds) are another way to trade Zcash. If you are not sure you will be able to keep up with price monitoring or regular asset checks, this solution may be right for you.
This investing approach is easier for beginners because it helps them to conduct certain business activities without actually participating in the market. Thanks to this method, it is possible to invest in Zcash singularly or in assembled funds that include more than one cryptocurrency.
Zcash is a cryptocurrency that can also be mined. The algorithm that powers this system is Equinash, and it is a Proof-of-Work type of protocol. Its structure has a code defined as Asymmetric Memory Hard, which creates a bottleneck at the RAM level. This is thought to avoid ASIC machines with integrated circuits designed to solve this type of problem.
The Crypto community does not really appreciate ASIC machines, as they are specifically dedicated to mining and in the long run, they lead to a progressive centralisation of the token.
Frequently Asked Questions
Yes. You can find Zcash on most of the leading platforms but check with your local platforms to see if they have listed Zcash.
Different investment platforms employ KYC and AML regulations to combat money laundering and other types of fraud using cryptocurrencies.
Matthew D. Green, Ian Miers, and Christina Carman are the founders of this cryptocurrency.
It depends on the laws within your jurisdiction; therefore, it's essential to consult with your official government website to understand what rules are involved in the purchase and sale of Zcash.
A user should use a regulated and reputed platform and could also use additional security measures such as 2FA to reduce the risk of fraud.