What Is Monero? Introduction To XMR
What Is Monero?
Monero (XMR) is a cryptocurrency which focuses on being untraceable and private. Its design differs from Bitcoin’s in a few key ways, but it should be understood as a cryptocurrency similar to Bitcoin – it can be used to buy and sell things, and can be exchanged for other coins or tokens.
So Monero XMR is a cryptocurrency focused on privacy and anonymity. Bitcoin is actually pseudonymous and BTC transactions are still traceable, but XMR transactions can be fully anonymized like physical cash. It is a fork of Bytecoin, the original privacy coin.
Of course, each physical dollar has a serial number on it that’s traced by FDIC-insured banks and governments. But it’s not necessary to see someone’s bank account balance to accept their dollar bill. In the same way, retailers only need to verify you have enough to cover your transaction when you use a debit or credit card.
Monero uses ring signature cryptography to reduce the amount of information used in cryptocurrency transactions. This gives the sender and receiver of XMR transactions the ability to verify the transaction in privacy.
Strong encryption, a streamlined blockchain, and infinite supply make Monero a strong privacy coin with a solid future ahead of it. Before diving into the nuts and bolts of the project, let’s look at the crypto market performance of the Monero XMR crypto coin.
XMR’s Crypto Market Performance
The peak price of XMR so far was $494.16, which occurred on January 6, 2018. As mentioned above, there’s no total supply cap, but over 16,500,000 XMR are in circulation.
Like BTC, XMR is a Proof of Work cryptocurrency. Unlike BTC, however, it uses a variation of the CryptoNote cryptocurrency mining algorithm, which making it more CPU-friendly. In fact, Monero continues updating its blockchain protocol to be ASIC resistant, much to the chagrin of ASIC rig manufacturers like Bitmain. It hard forked in both 2017 and 2018 in its war on ASICs.
Monero opposes ASIC mining because of its centralization of cryptocurrencies like Bitcoin and Ethereum, which are now moving toward Proof-of-Stake. It spent much of 2017 and 2018 continuously upgrading both ASIC resistance and privacy on the network. These are great signs of development support in a blockchain market filled with vaporware.
This caused a lot of Monero forks, including Monero Original (XMO), Monero 0 (ZMR), Monero Classic (XMC), and MoneroV (XMV).
Monero is traded on a variety of cryptocurrency markets, including Bithumb, Binance, HitBTC, Poloniex, Bitfinex, and CoinEx. It has a ton trading pairs, including BTC, BCH, USDT, LTC, ETH, EOS, DASH, and even fiat currencies like USD and EUR. Over $25 million worth of XMR is traded on a daily basis.
The Monero community built wallets for pretty much every OS, and a hardware XMR wallet is on the way. In addition, third-party wallets like Cake Wallet, Monerujo, My Monero, and Ledger’s hardware wallets support XMR.
Behind the Veil of Anonymous
Anonymity online is a hot-button issue that’s important for everyone. Every time you log in to your Samsung device using Google’s OS to connect to AT&T’s network and browse Amazon’s app, a lot of hands are touching, monitoring, and even selling your data and habits. Tech-savvy people use VPNs, proxies, and TOR networks to avoid being traced.
However, financial transactions and other personal information were used to track people centuries before we walked around with the internet in our pockets.
Using XMR for dark-web transactions, you have the best chance at anonymous online transactions…at least that’s what they say.
Monero aggressively defends its platform’s privacy, pointing out a CryptoNote bug that affects privacy coins like Bytecoin. But privacy and anonymity online are never guaranteed, even with Monero’s dedication.
Monero still uses a similar two-key authentication method for transactions on other blockchains. It just adds an extra step. Your public key is used by the sender to generate a random one-time key, and the receiver uses a private key to receive. Brute-forcing such a system would be difficult, even with quantum computing, but no matter how much you encrypt an individual transaction, metadata holds answers.
This is where ring signatures come in to make things even more difficult. Essentially every output also has multiple false outputs to trick the system. Picture the most complicated bank vault you ever saw in a major Hollywood movie, multiply by ten, and this is what Monero promises.
Tor traffic has long been monitored by government watchdogs like the NSA using the Navy’s powerful networking tools. And even reducing transactions to minimal data hasn’t stopped researchers from reportedly using big-data analytics to trace over 80 percent of XMR transactions on the Monero blockchain.
While the actual transaction itself is being veiled, all the contextual information around it can help pinpoint transactions. In addition, if your private key is compromised, someone could trace all your individual transactions, so it’s vital you keep your private Monero key secure.
Still, the anonymous core development team led by Riccardo “fluffypony” Spagni and David Latapie built a lean, secure, and efficient blockchain-based cryptocurrency. He’s also quick to point out shortcomings in other crypto projects like BAT.
Disparaging the security of a system like Monero isn’t exactly fair, as it’s still more secure than most blockchains and at least as secure as systems used by Bank of America, Visa, Wall Street, and other financial institutions. It’s using government-grade encryption, and that’s good enough for now.
Privacy coins are in the crosshairs of regulators, and even though transactions can be secure on their blockchains, most market trades are required to be logged.
Monero XMR is a privacy coin that forked from Bytecoin to become one of the highest ranked cryptocurrencies by market cap. It’s widely used in darknet marketplaces instead of Bitcoin because it promises anonymity instead of pseudonymity. Monero’s success depends on these key factors:
- Monero XMR uses ring signatures to mask randomly-generated authentication keys and keep transactions both secure and slimmed down to only pertinent information.
- Mining XMR can still be done on home PCs. In fact, the Monero community aggressively upgrades its network to remain ASIC resistant.
- Monero has a lot of trading pairs, making it easy to get into and out of. This accessibility will help it maintain high trading volumes for years to come.
So long as Monero and privacy coins like it don’t come under regulatory fire, XMR is a solid cryptocurrency that’s seen a lot of use since its inception. An active development team and community make this privacy coin one to watch for years to come.