Monero’s Main Features Focus On Privacy And Anonymity.

What Is Monero? (XMR)

Monero (XMR) was among the first cryptocurrencies to feature cryptography that offered real advances in privacy and fungibility over available alternatives.

Its key differentiator was its ability to allow users to send and receive transactions without making this data available to anyone examining its blockchain.

As such, Monero is often classed with other privacy cryptocurrencies such as Zcash (ZEC) that have sought to address privacy weaknesses in Bitcoin (BTC). (On Bitcoin, transactions reveal the amount exchanged as well as data about the sender and receiver by default.)

This, in turn, enables bitcoins to be traced, making them less fungible, as companies are able to identify and blacklist coins involved in suspected criminal enterprise, as an example.

However, while projects like Zcash enjoyed media fanfare and backing from venture capitalists, Monero’s origins are more comparable to Bitcoin’s, involving a small online tech community that grew quietly over time as the project gained credibility and market share. 

But Monero has also differentiated in other areas apart from just privacy. 

For example, Monero’s software is programmed to update every six months, a regular schedule that has helped it more aggressively add new features without much controversy.

This has meant that Monero has been able to continue to introduce cryptographic advances like stealth addresses (which allow users to create one-time addresses) and ring confidential transactions (which hide transaction amounts).

Given its willingness to pioneer such advances, Monero continues to attract interest from cryptographers and researchers looking to push the limits of what’s possible in cryptocurrency.

Understanding Monero (XMR) Cryptocurrency

Monero (XMR) is an open-source, privacy-oriented cryptocurrency that was launched in 2014. It is built and operates on the concept. These blockchains, which form the underlying technology behind digital currencies, are public ledgers of participants’ activities that show all the transactions on the network.

Monero’s blockchain is intentionally configured to be opaque. It makes transaction details, like the identity of senders and recipients, and the amount of every transaction, anonymous by disguising the addresses used by participants.

Along with anonymity, the mining process for Monero is based on an egalitarian concept. This is the principle that all people are equal and deserve equal opportunities. Its developers did not keep any stake for themselves when they launched Monero but they did bank on contributions and community support to further develop the virtual currency.

As of Aug. 26, 2021, Monero was trading at $295.05 and had a market capitalization of $5.3 billion.2 That’s a stark difference from the closing price of $89.12 on Aug. 26, 2020. The market cap on that date was $1.58 billion.

Who Are The Founders Of Monero?

Seven developers were initially involved in creating Monero — five of whom decided to remain anonymous. There have been rumors that XMR was also invented by Satoshi Nakamoto, the inventor of Bitcoin.

XMR’s origins can be traced back to Bytecoin, a privacy-focused and decentralized cryptocurrency that was launched in 2012. Two years later, a member of the Bitcointalk forum — only known as thankfulfortoday — forked BCN’s codebase, and Monero was born. They had suggested “controversial changes” to Bytecoin that others in the community disagreed with and decided to take matters into their own hands.

It’s believed that hundreds of developers have contributed to XMR over the years.

What Makes Monero Private?


Not all privacy cryptocurrencies achieve privacy in the same way, and as a result, users should not consider them equal offerings or interchangeable.

XMR, for example, should be viewed as a tool that, when used correctly, obscures user data on the blockchain, making its users more difficult to trace.

Ring Signatures

The technology that makes this obfuscation possible, Monero uses Ring Signatures to mix the digital signature of the individual making an XMR transaction with the signatures of other users before recording it on the blockchain. This way, should you look at the data, it would appear as if the transaction was sent by any one of the signers.

Over the years, Monero has experimented with altering the number of signatures involved in this mixing process, at one time even allowing users to specify a desired number. 

As of 2019, however, a default monero transaction is now set, adding 10 signatures to every transaction group and mixing 11 signatures in total.

Stealth Addresses

Yet another feature contributing to Monero’s privacy is Stealth Addresses, which enable users to publish one address that automatically creates many one-time accounts for every transaction.

Using a secret “view key,” the owner can then identify their incoming funds as their wallet can scan the blockchain to identify any transactions with that key. 

RingCT

Introduced in 2017, Ring Confidential Transactions hide the amount users exchange in transactions recorded on the blockchain. In effect, RingCT makes it so transactions can have many inputs and outputs, while preserving anonymity and protecting against double spends.

How Is Monero Different From Bitcoin?

As mentioned above, Bitcoin is the most popular cryptocurrency on the market. It works on a protocol that attempts to shield the participant’s identity using pseudo name addresses. These pseudo names are randomly generated combinations of alphabets and numbers. 

But this approach offers limited privacy as both Bitcoin addresses and transactions are registered on the blockchain, opening them to public access. Even pseudonymous addresses are not fully private. A few transactions carried on by a participant over time can be linked to the same address, allowing the possibility of others to become aware of an address owner’s trends and their identity.

Another advantage of Monero over bitcoin is fungibility. This means that two units of a currency can be mutually substituted with no difference between them. While two $1 bills are equal in value, they are not fungible, as each carries a unique serial number. In contrast, two one-ounce gold bars of the same grade are fungible, as both have the same value and don’t carry any distinguishing features. Using this analogy, a bitcoin is the $1 bill, while a Monero is that piece of gold.

The transaction history of each bitcoin is recorded on the blockchain. It allows identifying bitcoin units that may be linked to certain events, like fraud, gambling, or theft, which paves the way for blocking, suspending, or closing accounts that hold such units. Imagine receiving a few bitcoins today that were previously used for gambling, and they are banned in the future, leading to a loss.
Monero has a non-traceable transaction history, which offers participants a much safer network where they don’t run the risk of having their held units be refused or blacklisted by others.

Choose A Wallet

To use Monero, the first thing you are going to need is a wallet. Visit our Downloads page and get the right wallet for you. The Monero wallets are available for a variety of platforms and contain everything you need to use Monero immediately.

Get Some Coins

After you install a wallet, you need to get some Monero. There are multiple ways to acquire some coins to spend, like mining or working in exchange for Monero, but the easiest way is to use an exchange and convert your fiat money into XMR. Many exchanges, centralized and decentralized, list Monero (XMR).

It’s A Currency: Use It!

Monero is a currency and can be exchanged for goods, services and other currencies, privately and with very low fees. Many entities will gladly accept XMR for payments; take a look at our ‘Merchants’ page.

Key Features And Takeaways Of Monero

As a popular and reputable cryptocurrency, Monero has the following key features and takeaways:

Monero is an open-source project that can be used by anyone, with its development based on various donations and a dedicated, solid community.

Transactions done with Monero are not visible to others and users are often their “own bank” as no one else can see or control the user’s transactions.

Monero aims to address several other issues faced in cryptocurrencies including the demand for privacy in transactions.

In addition, Monero also aims to achieve high levels of decentralisation and to be a different type of cryptocurrency as it is energised by the Proof-of-work consensus method, which allows for XMR to be mined.

There are no imposed limits on blocks in the blockchain, questioning the concept that block size limitation creates market value for coins.

Monero works to create a permanent block reward for miners which will not fall below 0.3 XMR.

Monero uses a security feature referred to as “Ring Signatures”, creating transaction mixing. With this feature, when sending or receiving Monero, no one will be able to pinpoint where funds are coming from. It also gives the impression that there are many small transactions are being executed instead of one large one.

Monero is also busy developing Kovri which is a decentralised anonymity technology that is based on I2P. This is an anonymous network that allows for secure and anonymous communication via the Internet. The goal that Monero wants to achieve is for Kovri to be a lightweight and faster version of I2P.

For each transaction in Monero, there are stealth addresses generated, enabling improved anonymity as only the sender and receiver will know the actual address from where payment was sent.

Monero Mining

Overview

Monero uses a Proof-of-Work (PoW) consensus method which means that it is possible to mine XMR. Monero mining does not depend on specialised application-specific integrated circuits (ASICs) like Bitcoin, for instance, and it can be run on any CPU or GPU.

Without ASICs it would be pointless to attempt to mine Bitcoin, however, the Monero PoW mining algorithm does not favour ASICs as it was designed to attract smaller nodes instead of relying on farms and mining pools.

Block Boundaries

One other notable difference in mining Monero is that Bitcoin’s blockchain has a block limit of 1Mb while Monero blocks do not have a specific size limit. Therefore, Bitcoin transactions, for instance, will often wait longer, especially when transaction fees are low.

Why Do Many People Mine Monero?

XMR can be exchanged for fiat currencies and mining is also based on the CryptoNote algorithm which uses significantly less electricity and computational power than Bitcoin, Ethereum, and several other coins.

Requirements For Mining Monero

Some of the basic requirements to mine Monero include the following:

Hardware – either AMD or Nvidia model graphics cards are the best on the market.

Monero compatible wallet.

A reliable internet connection without risk of interruptions.

Power capacity – which will depend on the wattage consumption of the hardware that the user chooses in addition to the power grid to which they are connected.

Pros And Cons

Transaction Fees

Should You Buy Monero?

There are numerous reasons why investors are considering Monero, including, but not limited to:

There are wide fluctuations in price, and this makes it ideal for currency trading.

Monero is untraceable and this is a significant selling point for institutions as well as political government systems.

As more companies start adopting cryptocurrencies such as Ether and Ripple for faster and larger transaction sizes, XMR’s anonymity may also be used more often, leading to greater and more rapid adoption.

XMR is set to appreciate in market value.

There is no maximum supply and there is a consistent reward for miners.

Monero, along with other cryptocurrencies, are in constant competition for the top slots to lead the world to acceptance of cryptocurrencies. Monero is ahead of the competition where security, anonymity, and other factors are concerned, but blockchain technology is constantly evolving, leading to an overcrowded field. However, investors have their eyes on Monero as one of the top cryptocurrencies in the industry.

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