How to Buy Zcash (ZEC) - A Beginner’s Guide
Taking the Bitcoin core coding, the developers behind Zcash forked the blockchain in October 2016 to create a new, privacy-based coin. Among the major changes included a 75-second block time, shifting to the Equihash algorithm to make it ASIC resistant, and the ability to hide the amount of ZEC transacted, but still be able to prove the transaction for auditing purposes.
Many people buy Zcash and use it to protect their crypto privacy, and if you are interested in buying Zcash for yourself then this is the perfect guide for you.
5 Steps to Buy Zcash with eToro Now
Buying any cryptocurrency with eToro is easy, simply follow the steps below:
1Sign up for free with eToro, entering your details in the required fields.
2Fill out the questionnaire, this is both educational for you and eToro.
3Click 'Deposit', you'll then be asked how you want to fund your account.
4Choose your required payment method, follow the simple steps to link your payment.
5Enter the amount you want to deposit and you're good to go!
Our Recommended Platform to Buy Zcash
If you are not new to the crypto world, you will probably have a fair idea about buying digital coins, and you can go through our recommended list of different platforms mentioned in this section.
On the other hand, if you do require more information, especially on how to buy Zcash, you can skip this section and read on to learn the tricks and tips we have in store. When you are confident that you have learnt enough, you can come back to this section and use any of the listed platforms to buy ZEC.
Where to Buy Zcash in 2022
Many newcomers are not able to differentiate the two basic ways they can buy Zcash to make profits. For the most part, they seem similar as both carry the same buying and selling concept, transacting at different prices to make profits. That being said, there is one little difference between the two that splits these into different categories.
In a nutshell, buying or investing in Zcash lets you have ownership of the ZEC coins. Though a more practical approach as you have claim over the coins, it is not for everyone. Holding ZEC means having your own crypto wallet with an understanding of what private and public keys are, the extra effort for safekeeping of the extremely long keys and the risk of losing all of your Zcash in case you misplace the private key. Added on top of this is gaining the know-how to use the privacy mode of Zcash.
People who are not interested in deep diving into the complexities of all this and are just interested in using the price fluctuations to profits can always use the other option of trading. Just like buying Zcash, trading ZEC is also done to generate revenue, but with a slight twist: you never take ownership of any actual Zcash coins. In trading, a broker offers you different agreements that derive their value from the ZEC price. Contracts For Difference (CFD) are a popular derivative contract that nearly every Zcash broker offers. You open and close your trades of the contracts and capitalise on the changing value between the start and end. In short, you never hold ZEC.
How to Buy Zcash with a Broker
If you want to use an online cryptocurrency broker, take a look at a couple of things before you sign up for the services. You will be essentially transferring your hard-earned money and thus the reliability of the broker is paramount. Keep a close eye on their reputation and any regulations they comply with.
Along with this, have a look at their fee structure as this can take a chunk out of your earnings. Lastly, the security of the broker platform should be closely studied. Options such as 2FA, protection against DDoS, and other features are important.
1. Register with the Broker
Since a Zcash broker is running an online trading platform, you will find the registration process very similar to any other website. Take a look at the Plus500 registration. It only asks for your email address and proposed password. It even allows easy registration through Google, Facebook, and Apple accounts.
Other brokers might ask for more than this during the registration. Skilling, for example, will require you to enter your country of residence, contact number, and preferred currency in the trading account.
2. Verify your Identity (KYC Process)
A legally compliant broker will always ask you for your personal and financial information for evaluation before it can let you trade. These checks are mandatory by law and are in place to ensure that illegal movements of money and tax fraud are not done. Know Your Customer and Anti Money Laundering (AML) checks typically consist of submitting a copy of your government ID, proof of residence, and may even require you to show your bank statements as proof of financial source.
Though the KYC process can be cumbersome and even raise concerns of privacy, this is a necessary step to combat fraud. In the case of cryptocurrencies which are an evolving asset class and have little by way of regulations, you will play your part in making Zcash mainstream by using compliant brokers.
3. Deposit Funds with your Preferred Payment Method
You will need to deposit funds in your trading account before you can begin your Zcash buying and selling. Since trading involves opening and closing positions using derivative contracts that rely on ZEC price rather than the coins themselves, most brokers will require you to transfer only fiat.
Credit cards are the most preferred method of funding as they are fast and cheap. All you have to do is to enter your card number, CVV code, the expiration date, and the amount you want to transfer over. Though fast, it does come with a bit of a security issue. If your card data is intercepted or stolen, the malicious actors will be able to use it online and drain your money.
Another common funding option is through bank transfers. This is slower than using a card, but since you will not be entering any data on the broker’s website, you are much safer. The downside to this is that it might be slower and depending on the banking channels, and might even take a couple of days to complete.
A few security tips for funding: always ensure your connection is secure and your antivirus is updated to protect against worms and other illegal software that can note down your information. Send a test transaction first to ensure everything is in order before transferring your main funds.
4. Open a Position to Long/Short Zcash
Zcash derivative trading is based on the price of ZEC, so any sort of contract or agreement can be made, including the ability to inverse trade. Typical trades are long positions, where you enter an agreement when their outlook is a price increase. When you close your position, the difference in the contract value is what gives you profit.
But what to do if the market is falling? Normally, you wouldn’t trade and wait for the market to stabilise before trading. But you can always take a short position in a bearish market. This is essentially the inverse of a long position where the negative difference in opening and closing the position is your profit.
You can use long and short positions with any of the available trade orders. A broker will usually offer you three types of orders:
- Market Order: You buy in a contract at the going market rate and you can only enter the amount you prefer.
- Limit Order: You can specify your desired contract price.
- Stop Limit Order: You define the market condition in which the limit order should be placed.
5. Close your Position
Stop-loss and take-profit are limit orders that can be placed to mitigate your losses or exit a position in profitable situations. Since these have well-defined values, they not only help in your trades, but the automatic placement in the order book means you don’t need to be in front of a trading screen at all times.
Though position closing becomes automated this way, the highly volatile Zcash can flip the situation where you cannot afford to wait for the limit orders to close your position. You can always cancel the placed orders and manually enter or exit.
How to Buy Zcash with an Exchange
If you are interested in holding Zcash or want to go for a long term investment with very little or no buying and selling in between, using a crypto exchange is a better option for you.
Just like selecting a broker for trading, you must be careful in selecting a Zcash exchange that is reputable, legally compliant, and secure. Don’t forget to go through the fee structure to make sure you know what you will be paying from buying in and any deposit or withdrawal.
1. Set up a Zcash Wallet
Exchanges offer built-in crypto wallets for you that you can use to store your bought Zcash but it is always advised to set up a private wallet off the exchange. With the exchange holding enormous amounts of cryptos, they are always at the risk of a digital robbery.
You can select a reputable and secure wallet from the plethora on the internet. There are several types, each offering you different features and benefits. Overall they can be classified into two categories:
- Software/Hot Wallets: Like the digital nature of Zcash, there are crypto wallets that are software-based. Also known as hot wallets, a lot of security and features can be built, but they always carry a risk of theft. Always online (hence hot), a compromised public key means there is nothing you can do to stop a bad actor from looting you.
- Hardware/Cold Wallets: Just what the name says, these are hardware-based wallets and you can physically disconnect them from the Zcash network, meaning even if your private key is stolen, no one can access it as the device is “air-gapped”.
2. Choose and Join an Exchange that sells Zcash
Refer to our list of recommended Zcash exchanges to narrow down your research for reputable, secure and good exchanges. Though all are good in the list, there are a few like Coinmama, Binance, and CEX that are extremely popular.
No matter what exchange you use, the buying process is similar, with the only changes being the interface layout and features. Regulated exchanges will also ask you to go through a KYC process so keep checking up on the information they will need from you.
3. Choose Your Payment Method for Buying Zcash
Just as in trading with a brokerage, you will need to fund your crypto exchange account to buy ZEC. There can be a number of supported payment methods on an exchange. Fiat currency support will mostly include credit cards and bank transfers. Popular exchanges may have more options such as PayPal or other payment processor support.
Since exchanges allow for buying and selling cryptos, they will also allow you to deposit cryptos. If you hold one, check out if the crypto exchange supports deposits for it.
4. Place an Order to Buy ZEC
The only thing left to do is to buy Zcash using your account. This may be as simple as one step or you may need to do a couple of different buy and sell orders before you can actually get your hands on ZEC coins.
If you have deposited fiat currency, check if the exchange has a supported ZEC to fiat pair. If not, you will need to find crypto that has both ZEC and fiat pairs (Bitcoin and Ethereum as the most common options). You will need to buy the crypto using your fiat and then buy ZEC with the newly acquired crypto. The same goes if you deposit crypto.
The exchange will present you with the trading interface upon selecting the Zcash pair. You will need to use the Buy option and place your preferred type of order.
5. Safely Storing Your Zcash in a Wallet
A successfully executed buy will have your ZEC coins placed in your exchange wallet. It is advisable to use the private wallet we talked about earlier in this section. Simply withdraw your Zcash by entering the private wallet address within the exchange wallet.
Make sure you enter the right public key or wallet address. Cryptocurrency transactions are a one-way street and there are no reversals possible if you make a mistake.
Should you Buy or Trade Zcash?
The question isn’t difficult for you to answer. It depends on your strategy and intention. If you want to frequently buy and sell to capture the ever-changing ZEC price to make profits, trading is the best option for you. This frees you from dealing with complex crypto technology such as wallets and you can concentrate on making successful trades.
If you intend to wait for a longer time to capture that ever-elusive mooning, you should rather buy Zcash. Not only is that easier, but it also saves you some money since a broker might charge you for holding on to a contract (any interest against leverage, for example) and on the plus side, you also become part of a global movement to promote cryptocurrencies.
What’s the Difference Between a Zcash Exchange and a Broker?
By now you have an idea that using either a broker and an exchange is all about making profits off of ZEC coins. But there is one single difference that makes these fundamentally different.
On an exchange, you buy or sell Zcash. A broker only uses the price of Zcash to offer you contracts. You never get to hold Zcash when dealing with a broker (though some might offer you Zcash in some contracts as settlement).
Since brokers only use contracts, some very complex forms have emerged that would not be possible if you buy ZEC. Futures and Options are timed contracts that you can use to buy ZEC in the future at a price you agree to today. Shorting is another strategy that brokers offer so you can make profits, no matter what the market sentiment is. Leverage can allow you to potentially multiply your profits by increasing your buying power.
Zcash: Long Vs Short Term Investment
Cryptocurrencies are highly volatile and their price is constantly changing, and Zcash is no different. You can invest either for the short term or go long.
If you are confident that Zcash is all set to rise in value in the coming months or years, you can buy and hold it for the long term. This is also a less stressful strategy since you do not have to frequently look up Zcash prices and small level dips and gains will not cause panic.
On the other hand, if you want to take profit every time there is a specific rise in value, you can use a short term strategy. Cycling through the buy and sell process quickly and more frequently, it will help you get small, but steady profits. Short term investments can be further enhanced through the use of brokers’ advanced trading tools.
3 Tips to Buy Zcash
If you are new to buying Zcash, you will need to be careful about three specific things before committing to holding the ZEC coins.
1. Choose the Right Time and Do Your Own Research on Zcash
You must do fundamental and technical analysis to predict short term and long term Zcash price in order to determine when to buy. Rushing in and buying randomly could end you up with inflated prices and the looming crash will see you run losses.
Though you will find a lot of people online who will give out advice, you will need to depend on your own research to have a confident level.
2. Compare Costs to Buy Zcash
Buying and selling Zcash is a very fast process that continues non stop all over the globe. There will be slight variations of the price in each exchange due to the localised demand and supply differences. Another factor in costing is the exchanges’ fee structure, both for buying and deposits/withdrawals. The exchanges will also have a minimum withdrawal limit which will force you to buy and commit more money than you intended if you want to move your ZEC to a private wallet.
3. Safety and Security when Buying Zcash
We have already stressed the safety of the platforms you are going to use. If you find a cheap exchange to buy Zcash but with weaker platform security, it is better to spend a bit more money on another exchange and not risk your assets and money being stolen or lost. Always look for two-factor authentication and turn it on. Use the address whitelisting option if available. Do not forget about your device too. Frequently run updated antivirus scans.
What is the Best Payment Method for Buying Zcash
- Buy Zcash with Cash: Some peer-to-peer platforms connect people to trade directly in cash.
- Buy Zcash with Credit Card: As easy as online shopping. The fastest method.
- Buy Zcash with Bank Transfer: The most secure, but the slowest of all options.
- Buy ZEC with Bitcoin: Nearly every exchange supports a ZEC/BTC pair.
- Buy Zcash with PayPal: Convenient, but many exchanges may not support it.
Other Ways to Buy Zcash
Using money directly isn’t the only way you can get your hands on Zcash. Though forked away from the original Bitcoin Core programming, Zcash still uses Proof of Work consensus. This means you can mine for it. Since Zcash uses the Equihash algorithm that is ASIC resistant, you don’t need to spend a fortune on specialised mining equipment. A good, powerful computer can do the trick.
You can always increase your chances of finding a ZEC block by joining forces with other miners in a pool. This will dilute your earning since your share will be equal to your computing power ratio in the whole pool.
If you don’t want to go through the hassle of setting up your own mining computer, you can always rent out one online and join a pool through cloud mining.
There you go, you are now armed with the complete knowledge on how to buy Zcash and are ready to make your first ZEC purchase.
Frequently Asked Questions
Exchanges always retain a small amount to help you cover any other exchange fee should you decide to buy or sell cryptos.
If you want to spend your ZEC coins, hundreds of retailers and online merchants accept the cryptocurrency.
Zcash wallet addresses that start with the letter z shield transactions from the public, activating the privacy mode.
More and more exchanges today are also offering leverage services, so it could be either.
Contact your card issuer. Most payment processors will automatically convert to major fiat currencies such as USD, EUR and GBP.