We all want privacy, especially in our finances. However, that is hard to achieve in the crypto space.
If you’re a crypto enthusiast, you must have known that most cryptocurrencies like Bitcoin were established over a decade ago in order to create a new financial system, which is a transparent, censorship-resistant, and decentralized ledger.
Although blockchain technology brings forth such advantages, there are aspects that overlap one another that causes snag in anonymity and privacy. If someone knows your bitcoin address, they will be able to know every transaction you make, and where you send money.
Each and every time you make a transaction in Bitcoin, the amount, addresses, and time involved are forever recorded in the ledger for anyone to examine. As a matter of fact, companies can track down and blacklist cryptocurrencies coins that are involved in criminal activity.
The absence of anonymity has ushered in the creation of “privacy coins” that provide confidentiality. One of the most famous privacy coins right now is Monero.
What is Monero ?
Just like any other cryptocurrencies out there, Monero is decentralized, having no central authority to control it. Every user has sovereignty over how they will use Monero. Rather than having a middleman to facilitate transactions, it runs on a code that automatically executes transactions on the distributed ledger of Monero.
Monero (XMR) focuses on the privacy of peer-to-peer digital currency mapped out to be anonymous and untraceable. Any transaction made within the Monero blockchain is not linkable to any real-world identity given the cryptocurrencies are fungible.
Fungible currencies are mutually interchangeable and identical with every unit of their currency. For example, a Bitcoin that is purchased from the dark web can be distinguished from Bitcoin purchased on Coinbase by the transaction analysis of blockchain. The two Monero coins will appear to be exactly the same and cannot be broken apart.
When you use the Monero— given that it is a privacy coin— no one will be able to trace every transaction you make, how much you are sending money, or where you are sending money.
With Monero, the receiver, sender, and the amount of all transactions you will make are made safe through the technology and processes they possess.
How Does It Work?
To provide users anonymity and privacy, Monero follows two vital concepts: ring signature and stealth addresses.
Ring Signature
Ring signature is the conceptualization from general cryptography, alluding to a digital signature that is signable by any member of a group with private keys.
Every time you make a Monero (XMR) transaction, your wallet guise another user’s key that it pulls coming from the blockchain. In easy terms, there are “multiple” Monero addresses that sign each transaction, among the multiple addresses exist one real address, and others are just decoy addresses.
Hence, making it nearly impossible for anyone observing to tell which key was really used to sign. This is how the transactions in Money were made anonymous.
Monero launched the Ring Confidential Transactions (RingCT) back in January 2017, and this conceals the value of the transactions.
Stealth Addresses
A stealth address allows senders to create a one-time public address acting on behalf of the recipient for all single transactions. Yet, recipients can still use public addresses for receiving payments, like the first-ever cryptocurrency Bitcoin.
The Monero users should generate a private spend key and a private view key.
The private view key allows them to view the record of transactions associated with their account. On the other hand, a private spend key is used to authorize payments like the Bitcoin private key.
What Makes Monero Stand Out?
Even though the open-source code of Monero is similar to Bitcoin, the way updates are handled is different.
Bitcoin is hesitant about forks; even modest upgrades are demanding a long period of discussion prior to the implementation. The software is programmed to be refurbished every six months autonomously.
Monero was hailed in 2018 as the very first cryptocurrency to establish “bulletproof technology.”
The bulletproof technology greatly refined the efficiency of the transactions in Monero, which led to reduced costs for users and about an 80% decrease in the size of transactions.
Moreover, unlike some other alternatives like Zcash that is manually opt-in, Monero gives privacy by default.
Even though there are numerous privacy coins out in the crypto space, Monero remains the most popular, having the largest market cap among them.
Drawback of Monero
Although “privacy” is the greatest driver in the rapid adaptation of XMR, it also has quite a lot of drawbacks.
For instance, Monero could be used for criminal transactions without getting tracked. The privacy and non-traceability or XMR allow people to use them at notorious marketplaces, including the dark web, gambling, and drugs.
Markets like Oasis and AlphaBay, which are quite popular on the dark web, showed increased usage of XMR before getting shut down. There were also reports that there was malicious software that was created to infect computers to mine Monero and dispatch it to North Korea.
Monero is surely a good cryptocurrency, but the no traceability feature grants an opportunity for people chasing elicit activities. They give criminals a chance to evade law enforcement because it’s beyond the control of the capital.
Although it can be used for illegal activities, Monero (XMR) itself is not illegal.
Investing in Moreno
If you take interest in cryptocurrencies, Monero is a pretty good investment. The currency price of Moneo skyrocketed over 137% from January 15, 2020, to 2021.
Furthermore, there’s no need for you to have a big capital to start. You can buy XMR from a cryptocurrency exchange or you can find an individual seller or an ATM authorized for cryptocurrencies.
Monero Price
The market sentiment, project news, developments, and economy, generally affects Monero’s price. Monero isn’t scarcity-driven like Bitcoin. Instead, its inflation rate decreases over time, and this allows the preservation of the network.
Monero’s price is about 254 EUR. Its current ranking is in the 31st among all cryptocurrencies.
If the central authorities would continue to shrink the financial freedom of the people, Monero would probably increase in demand in the future.
Mining Monero
XMR runs on leading operating systems like Linux, Android, macOS, Windows, and FreeBSD. Monero supports the mining process where people get a reward for mining coins individually, or by joining Monero mining pools.
The mining doesn’t require certain hardware like application-specific integrated circuits (ASICs) and can be done on a standard computer. ASICs, which are commonly used in mining cryptos like Bitcoin, are expensive.
You can utilize your own GPU or CPU in mining Monero currency. On their official website, you can see the breakdown of hardware that can be used. There’s also an option of installing certain software. However, this costs a developer fee.
Monero depends on proof-of-work mining, which is an algorithm that furnishes security for certain cryptocurrencies like Monero. Proof-of-work fend of double-spending, which can blunder the supply.
XMRs are mine for about two minutes.
Monero (XMR) Cryptocurrency in a Nutshell
XMR’s capacity to mix transactions up guarantees the preservation of the anonymity of its users. Although the privacy it offers is often thought of as a hallmark for illegal acts, other people will surely disagree. Monero intended it to be used for the interest of their organization and to protect the privacy rights of law-abiding citizens.
Monero is traded on notable cryptocurrency exchanges like Kraken, Poloniex, and Bitfinex. If quite a good investment, but never forget that every crypto investment accommodates huge risks, so you need to be careful.
