On June 26, the network of the anonymous Zcash cryptocurrency underwent a hard fork, which was called Overwinter. The fork occurred on block 347,500 and was the first such update in the history of the project. On the day of the fork, operations with the ZEC cryptocurrency were frozen on some trading platforms, including OkEx. DeCenter considered the changes that could follow the historical hard fork and what risks the network might face in the near future.
Reasons for Overwinter
On Tuesday, June 26, Josh Swihart, Zcash's marketing director, announced the successful completion of the hard fork of Zcash's blockchain. The cryptocurrency launched by Zerocoin Electric Coin Company in 2016 is primarily aimed at a high level of security and anonymity. To do this, Zcash uses the Zero-knowledge proof cryptographic protocol, which allows the conducting of transactions between network users without the need to disclose information about the amount of the transaction and its participants.
The high level of anonymity contributed to the growth in the popularity of the cryptocurrency and was also highly appreciated by a number of well-known personalities. For example, Edward Snowden called Zcash the most interesting alternative to Bitcoin.
Along with popularity, however, the blockchain network faced problems such as scalability, "heavy" transactions, and congestion of the mempool. To solve these problems and further develop the project, the development team proposed a plan consisting of two phases for updating the Zcash network protocol.
The Overwinter hard fork is the first step in this direction, which was announced by Zerocoin Electric Coin Company in March of this year. Soon after, in May, an official client for the Zcash network was released for its users. The second stage of the network update will be the so-called Sapling upgrade, scheduled for release in October of this year. In this regard, the main goal of the Overwinter hard fork is to strengthen and increase the security of the main protocol of the Zcash blockchain and prepare it for future updates.
For this purpose, the Zcash Overwinter hard fork now includes protection against the repeat of transactions during network updates, which will protect users' funds. Among the main innovations is the function of an expired term of transaction, within which users can automatically cancel transactions that are in the queue for inclusion in the block for more than an hour. Thus, the developers hope to solve the problem of high network overloads. At the same time, Overwinter solved a hash bug that caused some transactions to be "heavier" than others, and this update helps improve the efficiency of transparent transactions.
Together with the launch of the Overwinter update, the Zcash development team published an updated roadmap for the project. The project plans for the near future include:
Further integration of the Zcash cryptocurrency into third-party wallets;
Increase in the level of privacy of users;
Conducting research to identify solutions for the Zcash blockchain’s scaling problems and the development of the underlying network protocol;
Expansion of the business plan and marketing campaign, including community work, brand development, and the launch of educational programs;
Support and development of the blockchain, including activation of the Sapling update, elimination of security problems, changing the rules of the Proof of Work consensus algorithm, and the implementation of measures to prevent 51% attacks;
Support for Linux, Windows, and MacOS operating systems;
The development of the Zcash Foundation to support decentralization through protocol management.
Crypto Community Support and Potential Risks
According to the official statement, the updated version of Zcash's blockchain has already been supported by a number of large companies, mining pools, and crypto exchanges, including Binance, Bitfinex, Gemini, Poloniex, Bitfly, Huobi, Exodus Wallet, F2Pool, FlyPool, and others. This list continues to grow, and the developers have no doubt that the introduction of the hard fork will not cause problems for users.
Despite the support, however, the risk of branching of the Zcash blockchain and the emergence of a competing cryptocurrency is still present. This can happen if certain members of the community do not agree with the update of the network and will continue to use the old version of the Zcash blockchain. But, according to Zooko Wilcox, the CEO of Zerocoin Electric Coin Company, co-founder of the project and part-time development leader of Zcash, the chance that this will happen is insignificant, as the company has successfully worked with a number of partners to launch and implement the Overwinter update as smoothly as possible:
"We worked with many industry partners, and they all joined the launch program. The whole company is engaged in a smooth implementation of the update in order to increase the security of all users."
The same opinion is shared by Simon Liu, one of the engineers at Zcash, who does not foresee the emergence of problems in the future:
"We have obtained absolute support for the update from all the parties involved."
For this purpose, in March 2018, the Overwinter code passed a series of tests to ensure that the developers could verify the compatibility of the update with third-party software. As Wilcox noted:
"I want us to prove to the world that we are capable of launching complex and innovative improvements and do it without disturbing or creating threats to the whole ecosystem."
This does not mean, however, that the team did not have to face problems before launching the update. On June 20, Jane Mercer, developer of the Zcash client for Windows, threatened to stop working on the code if he did not receive further funding for his part of the update. The situation was resolved as soon as the developer received compensation for his work.
How to Update the Software?
According to the official statement of the company, all users of Zcash had to switch to the updated software immediately after its release. To do this, the users first needed to make sure that they were working with the latest version of the software that had been released in the last three months. In this case, the update happened automatically.
Users who worked with third party services, such as cryptographic exchanges or wallets, also needed to make sure that their service supported the new update. If this was the case, then no further action was required.
The team also notes that the users who sent transactions during the update could face problems. In this case, they recommended the users who had not passed their transaction to re-submit it.