Zero (ZER) Currency Review

By Gregory Cheng
Lehigh University
Computer Science and Business

Basic Facts

Site: https://zero-currency.com/

No premine present

Circulating Supply:

2,684,820 ZER

Overview and History:

Zero was founded in February 2017. Very short history without any known forks or significant events.

Development Team

Unknown developer. Zero is maintained by its community.

Technology

For the purposes of mining, Zero utilizes the Equihash algorithm, also found in Zcash and Bitcoin Cash. This form of mining is primarily used with GPUs and is purposed to prevent centralization. The problem with centralization is seen with Bitcoin and Litecoin. With the development of ASIC chips that are optimized for mining with a specific coin, individuals or companies can accumulate large amounts of ASIC miners and gain control of a large portion of a currency’s computing power.

This presents an issue: if any one entity were to control 51% of all computing power, a Sybil attack (also known as the 51% hack) would be possible. In order to combat this, the Equihash algorithm constantly changes the form of computation needed, making specialized ASIC mining unfeasible. This algorithm is optimized for a GPU (Graphical Computing Unit), which is present in many household computers and laptops. Because many more people have access to GPU chips than compared to specialized ASIC chips, the Equihash algorithm helps present cryptocurrency centralization.

However, the main selling point to Zero is that it is more than a coin; it is a framework that can be built on top of any cryptocurrency that performs a zero-knowledge proof. A zero-knowledge proof is a protocol that enforces that the payer does not need to identify themself in a cryptocurrency transaction, nor do they need to know the payee. Instead, they only must provide proof that they have made the payment. This means that cryptocurrency transactions can be completely anonymous. Large governments and corporations can track the movement of bitcoin or any other coin that possesses a public blockchain, but are unable to do so with Zero. While a government can identify public addresses in the bitcoin blockchain and link them to specific transactions, it cannot track specific Zero transactions but can only be aware of the total network volume.

Outlook

Due to Zero’s relatively small market cap, I find it unlikely that Zero will grow to any substantive level. However, zero-knowledge proof framework has previously been integrated into ZCash, which also uses the Equihash algorithm under the Zero protocol. ZCash has proven itself to be a large player in the space is consistently rated as a well-regarded and viable cryptocurrency.

Looking forward, I see ZCash as the primary competitor to Monero (XMR), which also markets itself as a private, untraceable cryptocurrency. The main difference between these two is the use of algorithm; XMR uses the CryptoNight algorithm, which is most useful for CPU computing. Because CPU computing is generally more available than GPU computing, CryptoNight mining is a more effective attempt to subvert centralization than Equihash. Whether this is truly necessary is up to debate. However, Monero’s ease of CPU-based mining also make it viable towards web-based mining, unseen in any other cryptocurrency to date (see CoinHive). Recently, rumors have arisen regarding the development of an ASIC miner developed for the CryptoNight algorithm (if true, this is very bad news for XMR due to the reasons explained above).

Due to the nature of ZCash’s and Monero’s technology, each currency could potentially position themselves as the market leader for anonymous transaction cryptocurrencies. There are plenty of legitimate scenarios where an individual or entity would want to facilitate anonymous payments and purchases. Individuals may wish to engage in large transactions without drawing attention to their wealth. Corporations who seek to enhance consumer privacy or prevent competitors from gaining information would also find value in anonymous currencies. However, ZCash and Monero may also find themselves being used for nefarious purposes to avoid government tracking. Both groups of users should drive up demand for the currencies, increasing price. Due to the potential for abuse, ZCash and Monero can also attract government scrutiny, leading to regulatory risk. As the cryptocurrency markets crashed amidst false rumors of a South Korean ban, regulatory uncertainty can also exert downward pressure on price.