Zcoin was an anonymous coin that utilized advanced cryptographic primitives in order to provide untraceable as well as anonymous spending. Zcoin was renowned for introducing the Zerocoin protocol, conceived by its creator, Kim Dichuine, into the crypto world. Zcoin made significant contributions to the maturity of the crypto field called privacy technology. The current version of the coin has introduced a new name, but the concept underlying it, that of Zcoin, has been integral in the history of digital privacy. In this article, let’s explore what Zcoin was, what it offered, and why it mattered.
What Was Zcoin?
Zcoin was an open-source, decentralized cryptocurrency with privacy as its foundation. The 2016 startup had one mission in mind: breaking Bitcoin’s one major vulnerability: weak financial privacy. Bitcoin transfers are pseudonymous, but every transfer becomes public knowledge once it’s posted on the public ledger. There’s nothing stopping an individual with the proper tools from tracing the transfer right back down to an IP address or user. Zcoin set out to fix this with the use of cryptographic techniques to “mint” and “burn” coins, essentially severing the tie between sender and receiver.
Zcoin, at its fundamental level, utilized the Zerocoin protocol, an approach that had been put forth as an extension of Bitcoin but never implemented within it. The protocol had users destroy coins while generating new ones with zero history. The process aided in giving each coin utilized a blank slate, supporting higher-level anonymity compared to most other coins existing at the time.
It later transitioned beyond Zerocoin, having its own privacy technology with an emphasis on its leadership in the emerging privacy coin market.
Understanding the Zerocoin Protocol
The Zerocoin protocol was the foundation of Zcoin’s original privacy mechanism. It was proposed by cryptographer Matthew D. Green and his colleagues in 2013. The protocol allowed users to burn coins by sending them to a special “mint” function. Once destroyed, users could then generate a cryptographic proof that they had destroyed a coin, which could later be used to redeem a new, unlinked coin.
This process effectively erased the history of the coin. Even though the new coin had the same value, it had no link to the original transaction or wallet that held it. This made it difficult for anyone analyzing the blockchain to trace where the funds came from or who was using them.
However, the original code of Zerocoin, as innovative as it was, was similarly problematic and had its flaws, including its effect on performance, coupled with vulnerability that resulted in an inflation bug in 2019. Consequently, Zcoin subsequently replaced the Zerocoin framework with its own new protocol.
Sigma and Lelantus Protocols
After moving away from the original Zerocoin protocol, Zcoin introduced a new privacy mechanism called Sigma. Sigma removed the need for trusted setup, which was a concern with Zerocoin’s cryptographic model. It also improved the efficiency and scalability of private transactions.
In 2020, Zcoin took another step forward with the development of the Lelantus protocol. Lelantus allowed for greater anonymity sets, meaning users could hide their transactions among a much larger group of possible senders. It also introduced the ability to burn arbitrary amounts of coins rather than fixed denominations, which made it more practical for real-world use.
Lelantus simplified and made it easier for users while retaining stringent cryptographic guarantees. It became an integral part of the platform and made Zcoin stand as a serious privacy coin instead of an experimental venture.
Rebranding to Firo
At the close of 2020, the Zcoin project changed its name to Firo. The rebrand was more than renaming, it was the birth of the new direction within the project. The team wanted an independent identity better reflecting their practical take on privacy along with future development after the original Zerocoin concept.
“Firo” means an abbreviation of “fire” and represents burning coins as an aspect of privacy. The rebrand included new branding, a new website, and continued evolution under the same core team. All Zcoin coins (XZC) were exchanged to the new Firo (FIRO) coin in 1:1 ratio.
While the rebrand shifted attention to Firo, the legacy of Zcoin remains important as it laid the groundwork for the new project. It also helped define how privacy could be approached using cryptographic burns and zero-knowledge proofs.
Mining and Consensus Mechanism
Zcoin, like Bitcoin, utilized a proof-of-work (PoW) consensus mechanism. It, however, didn’t use Bitcoin’s SHA-256 algorithm. It, instead, utilized an in-house algorithm called MTP (Merkle Tree Proof). The MTP concept was designing an ASIC-proof mining algorithm to be executed with general-purpose hardware typically found with consumers.
MTP was constructed with the intention of making the mine less dependent on raw processing power and more on memory, making it less centralized in its early network days. Subsequently, with issues with MTP’s performance among other adoption challenges, the project moved over to the use of FiroPoW, an algorithm based off RandomX, continuing with the ASIC-resistance.
During its existence, Zcoin embraced community mining and even implemented community-oriented funding mechanisms to help fund the project’s development.
Community and Governance
Zcoin was an open-source venture. It had its core group working on it, but most decisions were arrived at after cross-checking with users, miners, among other members. The venture adopted a decentralized fund allocation method with its “block reward allocation” in that part of the rewards in the block were allocated to community projects and development.
Transparency in expenditures was also stressed by the team. Budget proposals were made public, and feedback from the community was taken into account when planning. This helped instill trust and made the project accountable to its users.
Zcoin (later Firo) also concentrated on forging partnerships with advocates of privacy and open-source contributors. It wasn’t a fork of some other chain or clone project but an independent implementation of concepts discussed in research circles for years.
Wallets and Availability
Zcoin has at one point been traded on some conventional cryptocurrency exchanges when it was active, like Binance, Huobi, and Bittrex. These made it accessible to individuals everywhere in the world, enabling it to create liquidity.
The project also developed and maintained several wallet options for desktop and mobile. These included a full-node wallet, a lightweight Electrum-based wallet, and third-party integrations with multi-asset wallets like Coinomi.
Security was given paramount importance, and the team made efforts to ensure that the wallet accommodated both private and transparent transactions. The users could select the nature of the transaction they desired to make, as per their requirements.
Use Cases and Purpose
The main goal of Zcoin was to provide financial privacy. In countries with high surveillance or unstable political systems, privacy coins can be an essential tool for protecting financial freedom. Zcoin offered a way for users to transact without exposing their identity, spending history, or account balances.
Along with regular payments, Zcoin also once had hopes of enabling anonymous voting processes, secure chat, and decentralized financial instruments. Even though not all of these features were finalized, the foundations contributed to driving later projects dedicated to privacy throughout the overall blockchain scope.
Present Legacy and Historical Interest
Zcoin played a crucial role in the history of private cryptocurrencies. It brought the Zerocoin protocol into an existing blockchain, tried new cryptographic methodologies, and subsequently expanded into something bigger with the rebrand into Firo. Zcoin’s work ranged from innovations in mining all the way to community-led development, contributing significantly to what’s done with the concept of privacy in the crypto sector. Although the name Zcoin is no longer used, its impact continues through Firo and through the broader movement for privacy in digital finance. For anyone studying the evolution of crypto privacy technology, Zcoin stands as a key chapter worth understanding.