The operators of Firo (FIRO) bet that privacy is the key to making money in cryptocurrency.
The Firo blockchain emphasizes privacy by automating transactions. Trustless means they automate Firo to conduct transactions without telling users.
In a trustless blockchain, algorithms or smart contracts conduct all the transactions. All the user does is to initiate the transaction, the blockchain does everything else. By eliminating the humans, the Firo tries to keep all transactions private. Hence, you could theoretically buy, sell, or transfer Firo (FIRO) secretly.
Firo tries to increase privacy by rewarding activities that increase privacy. For example, the Firo blockchain has over 5,000 nodes, which makes it easy to hide transactions. They pay people who operate nodes with Firo (FIRO).
What is Firo (FIRO)?
Firo (FIRO) is the cryptocurrency formerly known as ZCash (ZEC) or Zero Coin. Hence, Firo has been around since October 2016, which makes it old for a cryptocurrency.
I consider Firo a blockchain research organization that tries to develop new privacy tools. Notably, the Firo team claims responsibility for some of the most “significant blockchain privacy protocols on record.” They built those protocols into Firo. Those protocols include:
The Lelantus Technology developed by Firo’s Aram Jivanyan. Lelantus lets users burn or destroy coins by hiding them in an anonymity set of over 65,000. Ideally, Lelantus lets users break all links to them by using an anonymity pool.
Essentially, Lelantus lets users cover their tracks by destroying and hiding records of their transactions. I think some records of Firo (FIRO) transactions hide, but those records are so well hidden it will take enormous resources to find them. IE the National Security Agency (NSA) or the GCHQ could probably track your Firo transactions, but the average hacker cannot.
How Firo (FIRO) Increases Privacy
Another Firo feature is the Sigma Technology. Sigma Technology uses 256 ECC curves for proof sizes. Sigma was the precursor to Lelantus.
The Dandelion Technology hides your IP address to increase privacy and anonymity. Dandelion hides IP addresses by shuffling them around in over 5,000 nodes. The hope is to make it impossible to trace the origin of a Firo (FIRO) transaction.
The Merkle Tree Proof (MTP) mining algorithm increases the practical anonymity of Firo (FIRO) transactions. One way MTP increases anonymity is by preventing miner centralization. Hence, there are many miners and no central location where somebody can search for FIRO transactions. Somebody looking for a Firo transaction will have to search through thousands of miners.
Hence, Firo does not guarantee privacy. Instead, Firo increases privacy by making it hard to find and trace transactions. The hope is that searchers will need to invest enormous amounts of time, effort, and money to trace Firo (FIRO) transactions. Hence, it will be too difficult and expensive for most people to track Firo transactions.
What Value Does Firo Have?
Mr. Market assigns some value to Firo (FIRO). For example, CoinMarketCap gave Firo a Coin Price of $5.90 and a Market Cap of $72.777 million on 21 September 2021.
In contrast, CoinMarketCap estimated Firo’s Fully Diluted Market Cap at $126.339 million and its 24-Hour Market Volume at $6.823 million on the same day. They base those numbers on a Circulating Supply of 12.327 million FIRO, a Maximum Supply of 21.4 million FIRO, and a Total Supply of 21.4 million FIRO.
Interestingly, the Winklevoss twins’ crypto company Gemini still tracks Zcash (ZED). Gemini gave Zcash a Coin Price of $110.72 and a Market Cap of $1.22 billion on 21 September 2021.
Overall, CoinMarketCap listed Firo as the 415th most valuable cryptocurrency on 21 September 2021. Similarly, CoinMarketCap ranked Firo as the third most trending cryptocurrency on 16 September 2021.
Is Firo (FIRO) a Viable Cryptocurrency?
I think Firo’s biggest attribute, the privacy features, could limit its value. Privacy could limit Firo’s value by limiting the number of potential customers.
For example, Firo (FIRO) could violate the US government’s Financial Crimes Enforcement Network’s (FinCen) Know Your Customer (KYC) and Anti-Money-Laundering (ALM) regulations. To elaborate, under KYC and ALM, it is illegal for banks to process financial transactions made by people they cannot identify.
One problem is that financial institutions could assume anybody who uses Firo is a criminal. Hence, a bank, investment bank, or cryptocurrency exchange could block all Firo (FIRO) transactions.
Financial institutions could reject Firo in order to avoid regulation or attention from law enforcement agencies. Federal agents with a warrant going through all of a bank’s records, for example.
Is There a Market for Firo?
Consequently, the market for Firo (FIRO). However, demand for some of Firo’s protocols could be substantial.
For instance, investment banks or central banks could use the Lelantus Technology or the Merkle Tree Proof in their stablecoins, nonfungible tokens (NFTs), cryptocurrencies, or synthetic assets. A synthetic asset is a token that invests in an asset, such as a stock, a bond, real estate, or a commodity.
Similarly, a company that builds NFT collectibles could use Lelantus Technology to increase originality. I think Lelantus Technology could make it harder for fraudsters to copy an NFT. An artist could use Lelantus Technology to make it harder for forgers to copy her NFTs.
Thus, Firo’s technology could have enormous value. However, I think Firo (FIRO) itself is a niche cryptocurrency with a small market. I advise speculators to stay away from Firo because its potential value could be small.
Originally published at https://marketmadhouse.com on September 21, 2021.