Monero Activity Halves After Hard Fork
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Monero (XMR) does a great job at hiding from prying eyes. It is a privacy coin, after all. But although expected to be one of the big winners in 2019, new evidence suggests Monero activity is decreasing, partly because of last month’s hard fork.
Data collected from Monero Blocks, a block explorer for the XMR network, found the blockchain’s rate of growth had slowed considerably. Whereas the network grew by around 3.2 GB in December 2017 – an all-time high – it only managed to reach slightly above 1.2 GB in October. It was also the slowest blockchain growth for Monero since February 2017, more than 20 months ago.
In the previous nine months of this year, Monero has normally managed to grow by a rate above 2 GB. The average blockchain growth rate has so far been at around 1.79 GB. February and March were the only two months – aside from October – where blockchain growth fell below 2 GB. Nonetheless, it grew at a rate of roughly 1.7 GB, nearly 400 MB more than in October.
A source familiar with the matter told Crypto Briefing that the decline in block growth indicated a “definite” decline in trading activity. Part of this, they explained, was due to the strong market corrections since the start of the year. Network activity is down because prices are down; no coin has escaped unscathed.
The source also suggested reduced activity may be a result of Monero’s continued hostility against ASIC mining rigs. Last month’s hard fork changed the hashing algorithm, preventing XMR ASICs from processing transactions on the network. “Monero’s forks to kick out ASIC miners dramatically reduce the network’s hashrate and often price follows hashrate,” the source said in an email exchange.
The XMR newsletter, Monero Moon, covered the decline in blockchain growth in this week’s issue, which was published on Monday. The issue also featured the milestone that Monero had exceeded 1.7 billion blocks, four and a half years after the chain first launched.
Monero Moon suggested that the “considerable” decline in growth rate was the result of Bulletproof, a protocol that simultaneously improves privacy and reduces the size of a transaction. This has helped cut down ‘blockchain bloat,’ meaning that individual transactions take up less space within a block.
Is Monero forked?
Another possible cause was ShapeShift’s decision in mid-September to introduce Know-Your-Customer (KYC) checks. The trading platform, popular with Monero users, was forced into implementing basic checks in order to continue operating in the States. “Monero is often the go-to coin for anonymity transactions and Shapeshift was a popular exchange to exchange value into Monero,” the source said. “However, Shapeshift is moving toward KYC and Monero users generally don’t like that.”
A move away from a popular XMR trading source will likely have a knock-on effect. A decline in ASICs activity that increases block growth, as well as the extended bear market, will also impact on the number of Monero users out there.
The block growth rate for XMR stands at 361 MB for the first half of November. At the current rate, the Monero blockchain could grow by just over 700 MB for the entire month: a far cry from where it was in December, and low even from last month’s performance.
Monero may well have been bloated prior to the hard fork, let’s hope it doesn’t become shrunken in November.
Disclaimer: The author is not invested in any cryptocurrency or token mentioned in this article, but holds investments in other digital assets.