Frequently Asked Questions
As with any other technology, Firo can be used for both good and evil. However, we are firm believers that the net good for Firo far outweighs the bad. Throughout history, freedom of commerce has been shown to prevent wars, promote prosperity, and increase cross-cultural exchange.
Firo is designed to benefit legitimate users who have realized the risk of using a cryptocurrency with a completely transparent public ledger, and the danger of having all their financial details made public with Bitcoin. Because there are already pre-existing mechanisms for such activities, Firo does not affect the status quo for such activities, while it provides notable benefits to legitimate users.
Even without Firo, such transactions can take place via existing financial systems (e.g. by using cash. Although not actually private, Bitcoin has faced the scrutiny of regulators with its potential use in money laundering.
Firo strives to increase individual liberty. By guaranteeing financial privacy, Firo can help ensure freedom of commerce. People should be able to transact however they want, as long as it does not infringe on the well-being or individual liberty of others. We are also big believers that freedom of commerce also facilitates peace and prosperity across countries and cultures. By guaranteeing financial privacy, Firo can directly guarantee fungibility, an essential property for free commerce.
Although there are many anonymity solutions out there for cryptocurrencies, it is our aim in providing the strongest level of anonymity that is possible without sacrificing usability, requiring trust and relying on well established cryptographic protocols.
15% of Firo’s block reward goes towards a development fund to fund development work and other efforts in promoting Firo’s adoption
The fund pays primarily for coder and researcher salaries, community managers, translation work, audits, bug bounties, integration costs and infrastructure overheads.
There will be 21.4 million Firos. Firo follows the same halving cycle as Bitcoin (every 4 years).
The current block reward of 12.5 FIRO/block is divided as follows:
- Miners (50%, 6.25 FIRO)
- Masternodes (34%, 4.375 FIRO )
- Development Fund (15%, 1.875 FIRO)
For more information about how we arrived at this new distribution and the development fund, please read this blog post.
Firo uses the MTP algorithm which aims for democratic mining without sacrificing quick validation.
Firo has plans to switch to a ProgPOW variant in the near future to address the large proof sizes of MTP while remaining FPGA/ASIC resistant.
The MTP (Merkle Tree Proof) algorithm was devised by Alex Biryukov and Dmitry Khovratovich from the University of Luxembourg in their paper published on the 11 June 2016 titled Egalitarian Computing. These are the same researchers who came up with Equihash that is currently used in ZCash and the Argon2 key derivation function.
MTP promotes fair and democratic mining by making ASIC development expensive. The key element of this approach is large (in size) and intensive (in bandwidth) use of RAM. RAM is expensive in both FPGA and ASIC and slow on GPU. Previous attempts in large and memory intensive proof of works were problematic. This is because to verify these memory intensive proof of works, the nodes had to also have that memory and spend a relatively long time calculating it. This made the network susceptible to transaction DoS attacks where nodes are constantly occupied in verifying transactions.
MTP’s advancement means that hard memory intensive proof of works can be verified quickly with low resources. MTP was designed to be able to require miners to utilize large amounts of RAM up to potentially 10 GB while remaining fast to verify! This can potentially revolutionize PoW mining by bringing it closer to the original vision of Satoshi where one CPU = one vote and democratizing mining instead of keeping it within a handful of powerful miners while maintaining a resilient and low resource network of nodes.
Do check out our Firo mining guide!
Blockchains without privacy like Bitcoin only offer pseudo-anonymity. In blockchains without complete privacy, it is the relationships and links between addresses that can reveal private information about you. Every single coin has an immutable history.
This is why freshly mined Bitcoins with no previous transaction history can command premiums of 20% or more as the holder does not have to worry whether it has been tainted and also private.
Firo allows you to burn your coins to destroy them so that they stop existing and then redeem them later for coins that have no previous transaction history. The process of burning and redeeming breaks the links between addresses making transaction graph analysis very difficult.
The burning process destroys the coin so that they stop existing and therefore their transaction history stops there and cannot be traced.
The redemption process involves giving a zero-knowledge proof that you previously burnt coins, without having to show which were the coins you burnt. The freshly redeemed coins appear as new coins with no previous transaction history and hence have no linkage with the original coins that were burnt.
In cryptography, a trusted setup is used to create a cryptographic system by generating certain initial parameters which will later be destroyed. An easy analogy is to imagine creating a lockbox with a key and then throwing the key away.
Why it is called trusted setup is that you must trust the person who created it, to actually destroy the parameters. Zero knowledge proof privacy systems such as the Zerocoin (as originally used in Firo and now deprecated) and Zerocash (as used in Zcash, Komodo and Horizen) protocol requires a trusted setup.
Firo’s Sigma and Lelantus privacy protocols, do not use trusted setups.
Why it Matters
Having a trusted setup is generally undesirable and adds another point of failure. One of blockchain’s mottos is ‘Don’t trust. Verify’ and trusted setups are the antithesis of that philosophy.
A compromised trusted setup in zero-knowledge proofs allows someone to forge the proofs meaning that coins can be created out of thin air leading to hyperinflation. In privacy coins where amounts are obscured, such inflation can also remain undetected.
There are ways to mitigate the risks of a trusted setup such as using a multi-party ceremony that if in theory works, requires all parties in the ceremony to collude. If at least one party destroys their portion of the secret, then the system is secure.
However, even if the risk is mitigated, we still need to be sure parties do not collude or that the ceremony was set up correctly or was not backdoored which can be challenging.
For example, Zcash’s original Sprout MPC ceremony sparked controversy because of binaries that were not deterministically built and MPC transcripts that went missing (which turned out to be to prevent a flaw from being exploited until it was patched).
A zero-knowledge proof is a cryptographic method to prove that you know something without giving any other details about it, except that the fact that you know it. For example, zero-knowledge proofs could be used to show you have assets of more than a million dollars, without showing the exact amount you own or the transactions that make it up.
Zero-knowledge proofs are an ideal fit for providing privacy on blockchains. On a public blockchain, everyone has to be able to verify the authenticity of transactions and so every transaction is posted for everyone to see along with its entire history.
Zero-knowledge proofs allow others to verify that a valid transaction has happened without giving any other information thus providing privacy while retaining verifiability.
Firo uses zero-knowledge proofs in its privacy mechanism to allow people to burn their coins and redeem them later for brand new ones with no previous transaction history without showing which coins were burnt.
To best understand how blockchain-tracking software works, it helps to view Bitcoin as a kind of financial social network. The same kinds of mechanisms used to break privacy in social networks, by analyzing social network topology, can be used to break privacy in the Bitcoin network. By taking a pre-existing social network like Facebook, we can use that information to generate heuristics about who is transacting with whom on Bitcoin.
There is a relevant research paper that attempted to identify Twitter users by using data from Flickr. They took the twitter data, and stripped away all identifying information about the user such as name or username. Then, by looking at the social network topology of the anonymized twitter data and comparing it to the flickr data, they found that they could identify one third of twitter users, even though the twitter data was anonymized.
This research also applies to Bitcoin. If we take an anonymous network such as Bitcoin, and use data from a social network from Facebook or Bitcointalk, we can use topological analysis to identify a lot of users. A comprehensive study on Bitcoin’s privacy also shows that even with best practices, a significant proportion of users can be identified from their behaviour.
The converse is also true where Bitcoin’s network can also deanonymize TOR users.
Our testnet explorer can be found here: https://testexplorer.firo.org
The chances of not getting a block in blocktime * K is approximately e(-K).
This means that the chance of getting a ≥30-minute block (K=6) is ≈0.25%. So even though our target block time is 5 minutes, roughly 1 in 400 blocks can take more than at least 30 minutes to find.
Bitcoin and preceding alternative cryptocurrencies have attempted to solve this problem through the use of transaction mixers or ring signatures. But they score very poorly on the metric called the traceability set. The traceability set is a key metric to understanding how private a cryptocurrency is. The traceability set in formerly proposed solutions is limited by the size of the mixing cycle or ring signature. Each mixing cycle or ring signature is limited by the number of transactions per cycle, which is transitively limited by the block size of the cryptocurrency. Thus, the traceability set in previous attempts at privacy tends to only be a few hundred.
With Firo, the traceability set is on a dramatically higher magnitude. Instead of having a traceability set limited to a few hundreds, Firo has a traceability set that encompasses all minted coins in an accumulator. Thus, the magnitude of the traceability could be in the order of many thousands rather than hundreds. So its privacy level is magnitudes higher than cryptocurrencies that rely on mixing or ring signatures.
The other problem is that tumbling methods are only secure under the assumption of a lack of topological analysis and pre-existing network data, which is an incorrect threat model. There have been multiple research papers demonstrating that taking a separate network topology like Facebook can be used to de-anonymize a cryptocurrency as long as a long chain of transaction history exists. With all previous cryptocurrencies, a long chain of transactions is publicly viewable on the blockchain and prone to topological analysis.
With Firo, this long chain of transaction history simply does not exist, and there is zero information leakage about the sender and receiver of a transaction, so it is not prone to topological analysis and so the link between the sender and receiver disappears.
Masternodes in Firo are incentivized nodes that host Firo’s infrastructure and provide additional services such as 51% mining attack protection via LLMQ chain locks and instant sends
To prevent Sybil attacks, each masternode requires a collateral of 1000 FIRO backing it to prove skin in the game and encourages honest behaviour.
In return for hosting Firo’s infrastructure and their added services, they earn 35% of the block reward. As incentivized infrastructure, masternode holders can invest in hardware that have higher specifications and are motivated to keep the node updated and running. This helps Firo’s blockchain scale and ensures a robust network of nodes.
The recommended way to do this is to just purchase stakedFIRO which is a representation of a masternode on the Ethereum network and which will earn you masternode rewards automatically and allows you to participate in the DeFi ecosystem. Do note that as an ERC20 token, you won’t enjoy Firo’s privacy features though you can always redeem stakedFIRO back to native FIRO through Stakehound though we are working on more decentralized and private methods.
In the event people want to pool together their funds to make a masternode, please take note that you have to trust the person holding the funds for everyone.
This is because the 1000 FIRO needs to be sent to a new address in one transaction and the custody is with one person. We ideally do not recommend such arrangements unless you really trust the person holding the funds on behalf of you. There is nothing to prevent the person holding the masternode funds from running away with your share.
This is not a problem if you have 1000 FIRO as you can still keep those funds in your own local wallet. A masternode hosting provider in such cases only requires your operator key and the transaction ID of your 1000 FIRO deposit.
Masternodes do not hold any funds. They merely hold a masternode private key (not the same as your actual private key) which allows you to start and stop the masternode. There is a marker in your masternode configuration that links the masternode to your 1000 FIRO deposit. In the event of a masternode being hacked, all that will happen is that your masternode will go offline and you will lose your position in the payment queue.
Your local Firo wallet still holds the 1000 FIRO so it is that wallet that will need to be secured. Ensure that your wallet is frequently backed up and encrypt your wallet.
If you go with a masternode provider, all he requires is your masternode private key and the transaction ID of your 1000 FIRO deposit. The masternode provider does not need your private key to the funds. You also do not need to send any funds to him.
Please refer to this masternode setup guide.
There will also be a number of Masternodes providers who can simplify the process for you for a fee.
35%of the block reward is paid to masternodes. Masternodes are put in a queue and take turns to receive this block reward in return for hosting a masternodes that hosts a complete copy of the blockchain and helps store and propagate blocks to the network.
Once they are in the top 10% of the queue, there is a degree of randomness in being selected as it uses the block hash entropy to pick the winner deterministically.
The frequency of the block payout depend on how many active Masternodes there are. The more masternodes there are, the longer it takes to receive the masternode block reward.
To get a more in-depth understanding of the process, please read our article Understanding Masternodes Payments.
There are third party tools that estimate the frequency of masternode block rewards payouts and other masternode statistics:
A masternode requires
- 1000 FIRO (refundable at any time)
- A computer or VPS with a fixed IP address
- 1 GB of RAM
- Enough disk space to store the blockchain (50gb is recommended for the moment)
Typically a VPS of this specification costs around USD5 to run a month per node and you can head on to Amazon AWS, Google Cloud, Microsoft Azure, Leaseweb, Vultr, Linode, or DigitalOcean to obtain a basic VPS when masternodes are launched. There will also be masternodes providers who can assist you to set this up and/or maintain it for a small fee.
Nodes are computers that host a full copy of Firo’s blockchain and help to verify the validity of transactions.
Masternodes are a special type of node that earn part of Firo’s block reward (currently at 30% of the block reward) in return for hosting a reliable and powerful node that helps to support the network. Masternodes require a refundable collateral of 1000 FIRO to ensure masternode holders have a stake in the coin and are incentivized to keep it working honestly, updated often and have a high uptime.
In the future, it is intended that masternode serve as a building block for other services to be built on top of it including the delegation of Zerocoin transaction processing.