Boasting security and privacy, including untraceable operations, Monero (XMR) is among the most popular and controversial cryptocurrencies in an increasingly saturated market. Like other cryptocurrencies, Monero has an open source blockchain that records transactions and creates new units by mining. What sets Monero apart is its opaque blockchain, which prevents transactions and their quantities from being traced to specific addresses – providing an additional layer of protection to the identities of its users.
In this beginner's guide to Monero, we'll talk about:
The history of Monero begins in 2013 when a white paper An application level protocol has been released to feed the digital currencies called CryptoNote. The author of the document used the pseudonym Nicolas van Saberhagen to protect his identity in a similar way to Satoshi Nakamoto, the mysterious creator of Bitcoin.
Typically, white papers present a declaration of intent and then introduce technical plans for the implementation of a technology. The CryptoNote white paper, however, also serves as an in-depth bitcoin criticism – citing the main privacy and censorship issues.
Saberhagen quickly addresses their concern for Bitcoin's privacy:
"Unfortunately, Bitcoin does not meet the requirements of non-traceability, because all the transactions that take place between the participants in the network are public, any transaction can be unambiguously tracked by a single source and a final recipient. two participants exchange funds indirectly, a method of identifying the correctly designed path will reveal the origin and the final recipient. "
Not long after the publication of the document, the developers started working on the implementation of the platform's mission, with the consequent creation of the Bytecoin transitory digital currency.
It did not take long for the controversy to begin with Bytecoin, as the founding team decided to "pre-strip" the coins and distribute them to each other before the coin was available to the public. This, together with other questionable behaviors, has caused an eruption of the drama that is reported here.
Some developers, led by Riccardo Spagni, decided to re-launch the Bytecoin network through a hard fork. They decided to call it BitMonero (Monero is the Esperanto word for money). Proponents of the digital currency have decided a shortened name of Monero.
Monero has climbed the cryptocurrency ranks, with an incredible growth of market capitalization throughout 2016, largely due to the adoption of the AlphaBay darknet market, which has since been closed due to illegal activities. The non-traceability of Monero is predictably liable to use among squalid individuals for illegal transactions.
The high flying digital currency has caused a sensation for not only a dizzying increase in market capitalization.
Recently, there have been a number of cases of hackers distributing malware that transform infected Web pages into data mining systems without user consent. Monero is exceptionally sensitive to such problems because – unlike other cryptocurrencies like Bitcoins that require special hardware – Monero can be extracted with normal CPUs.
Monero has a thriving community of over 240 active developers contributing to the Monero project, including 30 major developers. Much of the core team of Monero is composed of a group of pseudonymous developers who tend to stay out of the limelight crypt, with the exception of the Franco Riccardo Spagni also known with his Twitter handle @fluffypony.
Spagni, the controversial face of Monero and self-proclaimed "Twitter troll", is a South African resident who seems to thrive to upset the world, especially the banking system.
Regarding the relaunch of Monero, Spagni said that,
"I thought," I'm going to pump it and download it, because I was interested in taking ideas and implementing them in bitcoins. "The bitcoin code base was much more interesting to me than Monero, and I thought," I did not I'm going to work on this codebase, it's terrible, ""
Despite his initial disregard for Monero, Spagni has stuck with the Monero team and remains the strongest voice in the cryptocurrency.
Three different privacy measures are used in the Monero blockchain to keep users' anonymity.
Ring signature allow the sender in the transaction to hide in a group of sending addresses on the network. Basically when a transaction occurs, there is a group of possible senders represented by their keys but the actual sender is never revealed in the data recorded on the blockchain.
Here is a visualization of the ring signature tracking.
Play confidential transactions or RingCT, it's how the amounts of the transactions are hidden. It was implemented on the Monero blockchain in January 2017 and after September 2017, all transactions on the network include RingCT by default. This update is improved with ring signatures and other transactional components, allowing you to obtain completely hidden amounts, destination and source address and coin generation without trust.
Stealth addresses allow the sender to create a single address for a randomly generated transaction. The transaction is recorded as having occurred between these addresses, but can not be linked to the recipient or sender.
Unsurprisingly, there are those who are worried about the secrecy of Monero transactions. The obfuscation of senders, recipients and transaction amounts are the perfect features for criminals seeking to do business and avoid detection. But privacy is something that people hold dear. Everyone has things that they would like to be kept private and the vast majority of those things are perfectly legal.
Feasibility is an economic term that is used to describe individual units of a good or commodity that are interchangeable. The simplest example of this is to use something like US dollars. Two $ 10 bills can be exchanged for a $ 20 bill without any value being earned or lost to either side of the transaction.
Now most of the digital currencies, including Bitcoin, follow the basics of fungibility since a Bitcoin is normally worth 1 Bitcoin. However, one of the weaknesses of Bitcoin underlined by the creators of Monero is its transparency that leaves users open to censorship and other problems.
Say that there was an exchange and Bitcoin was stolen from users who left their funds in the exchange portfolios (try to avoid doing so). These coins can be tracked on the blockchain and unsuspecting users can receive stolen coins that can be rendered unusable by those who have the knowledge and the means to identify the stolen funds.
A good way to say it would be to imagine that you were given cash in exchange for an item or service sold to someone else. If some or all of that money is considered counterfeit, you lose money and you're potentially open to investigating how you got that illegal currency, even though you did not do anything wrong.
Monero's privacy features protect users from events like this, but they also earned Monero an unfortunate reputation. The non-traceability of transactions Monero undoubtedly attracts some as a means of conducting illicit activities, but his supporters would point out that it is a natural side-effect of the currency's effectiveness as a form of digital money.
Mining is the process in which transactions on a blockchain network are compiled and verified until a block of transactions and related data are completed. Using a job-testing system, network-connected miners essentially volunteer the computing power of their hardware to solve puzzles that, when completed, provide a reward in the form of a network currency. In this way new coins are created and how these systems encourage people to maintain the network.
Monero is based on the CryptoNight proof-of-work hash algorithm, one of the features of CryptoNote that was designed to create a more egalitarian approach to the extraction of cryptocurrencies compared to Bitcoin.
Bitcoin started as a currency that could be extracted using graphics processing units (GPUs). With the growth of the system, it was necessary to increase the complexity of the puzzles that had to be solved to complete blocks and gain rewards. At this point the GPU miners did not have the power to extract profitable in any way and gave way to specialized hardware in the form of application-specific integrated circuits (ASICs).
Monero is designed to be ASIC resistant, which means that the extraction process can be performed using a combination of GPU and CPU (CPU) functions. This is possible thanks to the system's system test mechanism. Instead of a standard labor-proof hash algorithm, the network is actually a voting system in which users vote for the right order of transactions on the blockchain.
Each participant has equal rights using this method and has been specifically developed to create a more even distribution of coins throughout the life of the coin.
While Monero's egalitarian approach allows anyone with access to the computer to participate in network maintenance, it has some exploitable features.
Basically, when Coinhive is active on a web page, every visitor on the site is having its electricity and computer processing power used to extract Monero often without permission. Examples of illegal Coinhive operations have recently appeared on an alarming number of web pages.
Monero (XMR) is available for trading on many of the major cryptocurrency exchanges. A handful of trades allows Monero to be traded for legal currencies such as the US dollar, the Euro and the British pound. However, most exchanges only allow trading pairs between Monero and other cryptocurrencies, most often Bitcoin and Ether, the cryptocurrency of the Ethereum network. For those interested in obtaining XMR, it is recommended to use Bitcoin or Ethereum to purchase Monero on the Binance bag.
Like all other digital currencies, Monero must be stored in a portfolio that can be in the form of a desktop application on a computer or smartphone, a web portfolio or a hardware portfolio (currently Monero support is not available for the most common hardware portfolios produced by TREZOR and Ledger). Despite the popularity of Monero, the portfolio options are actually rather sparse. This is because the security measures incorporated into the Monero blockchain represent a challenge for many of the most common portfolios, but thanks to its position in the market cap rankings, a good portion of the portfolios are working on the Monero integration. MyMonero is the only web wallet available for Monero. As for a desktop portfolio, even the official Monero client is the only option, but it works well and acts as a complete node on the network, which means that you are contributing to the robustness of the network by using it.
Monero is an interesting digital currency that truly lives up to the term digital money. Fast, economical and anonymous transactions are possible thanks to the unique technology that is at the base of the Monero blockchain. It was developed not to increase the wealth of the already rich, but as a means of transaction for the common person who wants to get rid of the often restrictive practices of traditional financial institutions and their instruments.
Although Monero is not exempt from scandal, the use of currency for illegal purposes is not encouraged by the underlying technology or caused by any defects within its design. Monero has been developed to be a truly disruptive force in the world of personal finance. "Being your own bank" is a phrase often pronounced in cryptocurrency conversations, and while sometimes Monero is more like "A digital mattress full of money", it certainly has utility in a market full of projects without much to offer outside of simple potential.