Company: ZCSH
Filing Date: 2025-03-07
Form Type: 10-K
Source: 0000950170-25-035469
Chunk: 61

Company: Grayscale Zcash Trust (ZEC)
Filing Date: 2025-03-07
Form: 10-K
Item: Item 1
Chunk 61
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 transaction information, to the Zcash Blockchain. Although the Zcash Network is publicly accessible, it does not, by design, have the same level of transparency as the Bitcoin blockchain.

Brief Description of ZEC Transfers

There are two types of transactions that can occur on the Zcash Network: (1) unshielded transactions, which are very similar to the transactions that take place on other blockchains, such as the Bitcoin network and the Ethereum network and (2) shielded transactions.

Prior to engaging in ZEC transactions directly on the Zcash Network, a user generally must first install on its computer or mobile device a Zcash Network software program that will allow the user to generate a private and public key pair associated with a ZEC address, commonly referred to as a “wallet.” The Zcash Network software program and the ZEC address also enable the user to connect to the Zcash Network and transfer ZEC to, and receive ZEC from, other users.

Each Zcash Network address, or wallet, is associated with a unique “public key” and “private key” pair. To receive ZEC, the ZEC recipient must provide its public key to the party initiating the transfer. This activity is analogous to a recipient for a transaction in U.S. dollars providing a routing address in wire instructions to the payor so that cash may be wired to the recipient’s account. The payor approves the transfer to the address provided by the recipient by “signing” a transaction that consists of the recipient’s private key with the private key of the address from where the payor is transferring the ZEC. The recipient, however, does not make public or provide to the sender its related private key.

Neither the recipient nor the sender reveal their private keys in a transaction, because the private key authorizes transfer of the funds in that address to other users. Therefore, if a user loses his or her private key, the user may permanently lose access to the ZEC contained in the associated address. Likewise, ZEC is irretrievably lost if the private key associated with them is deleted and no backup has been made. When sending ZEC, a user’s Zcash Network software program must validate the transaction with the associated private key. The resulting digitally validated transaction is sent by the user’s Zcash Network software program to the Zcash Network to allow transaction confirmation.

Shielded transactions utilize a scientific breakthrough in the field of cryptography known as “zero-knowledge proofs.” Zero-knowledge proofs allow users to prove knowledge of some facts about hidden