What is Monero (XMR) cryptocurrency?
Monero is a popular privacy cryptocurrency specifically designed to mask users’ identities and transaction details. Unlike most cryptocurrencies, where transactions can be publicly viewed on the blockchain, privacy coins use various cryptographic techniques to hide sender and recipient information. It also masks transaction amounts, making it difficult to track the movement of funds while maintaining user anonymity.
While this increased privacy offers benefits such as protecting financial freedom and combating surveillance, it also raises concerns about its potential use in illegal activities such as money laundering. Monero and other privacy coins remain a controversial topic in the cryptocurrency world, with ongoing debate about their advantages and disadvantages.
History of Monero (XMR)
Monero (XMR) is an open-source, privacy-focused cryptocurrency launched in 2014. The Monero blockchain is intentionally configured to hide the origin, amount, and details of transactions by masking the identities and addresses of senders and recipients.
The origins of Monero are shrouded in mystery, as its original developers chose to remain anonymous. The project’s launch in 2014 was initiated by someone known as “thankful_for_today” as a fork of Bytecoin. Bytecoin is a privacy-focused cryptocurrency launched in 2012 that aims to provide users with anonymous and untraceable transactions using features similar to those of Monero.
“Thankful_for_today” soon left the project, and a group of anonymous developers took over the development of Monero. The team, led by Riccardo Spagni, a South African software engineer known as “Fluffypony,” continued to improve the privacy features of the cryptocurrency and introduced additional improvements such as the CryptoNightV7 cryptographic algorithm.
How to mine Monero?
Monero uses a proof-of-work (PoW) consensus mechanism and incentivizes participation using a competitive problem-solving approach similar to Bitcoin mining. You can mine XMR (only) individually and receive full rewards on dedicated hardware, or join a mining pool to receive shared rewards.
Join the group
Pool mining is when you join a group of miners and pool your computing power to increase your chances and share the reward proportionally.
More powerful hardware usually has a higher hash rate (computing power). This way, you will contribute more to the pool, potentially allowing you to receive a larger share of the rewards.
Smaller mining pools, called micropools, offer lower minimum payout thresholds. Micropools can be beneficial for miners with less powerful hardware as they can more easily get paid even with a lower hashrate contribution.
You can also rent a cloud miner from a cloud service provider. This can be a good option for beginners or those who don’t want to invest a lot of time and money. You pay a fee to rent the hardware from the vendor, set it up, and activate it using the mining software. They care about the mining process itself. However, it is important to choose a reliable supplier and be aware of potential scams.
Monero vs Bitcoin
While all Bitcoin and Monero transactions are publicly viewable, BTC transactions are transmitted with a level of transparency that allows anyone to see the sender and recipient address. This allows stakeholders to trace every transaction and amount back to its source.
On the other hand, XMR transactions are more confidential and it is almost impossible to link a transaction to a specific sender or recipient. Monero uses advanced cryptographic techniques to hide transaction details, making the flow of funds much more difficult to track.
Scalability is the ability of a system to handle an increasing number of transactions without degrading performance. Bitcoin is not very scalable because it can only process a small number of transactions per second. Monero is more scalable because it can process more transactions per second.
How does Monero improve privacy?
Monero uses advanced cryptographic techniques to hide transaction details, making the flow of funds much more difficult to track. These methods include ring signatures, blind addresses, and ring confidential transactions (RingCT).
Ring signature is a cryptographic method that allows a group of people to anonymously digitally sign a message. Ring signatures hide the true sender of a transaction by creating a “ring” of potential senders, including the actual sender, which requires each member of the ring to sign the transaction. The signature itself does not indicate which ring member signed the message, making it impossible to determine the true sender.
To send XMR, the sender first selects a group of potential signers, including himself. Each ring member generates a unique key pair for the transaction. The private key will be used for signing, and the public key will be used to verify the signature. The sender then creates a transaction, signs it with his private key, and includes the public keys of all other participants in the ring.
Hidden addresses
Shadow addresses are unique addresses created exclusively for the recipient of a transaction. They further improve privacy by preventing a user’s public address from being linked to their transactions, unlike addresses used on other blockchains that are linked to a specific user’s wallet.
When a user sends XMR to another user, their wallet generates a unique shadow address for the recipient. This address is derived from the recipient’s public key, but is not directly associated with it. The sender then creates a transaction using the recipient’s hidden address as the destination.
Hidden transactions
RingCT hides transaction amounts, adding another layer of privacy by making it impossible to determine how much Monero is being sent in each transaction and preventing funds from being tracked.
RingCT creates a “ring” of potential transaction amounts, including the actual amount being sent, and shuffles the amounts, effectively hiding the financial details of the transaction. Before RingCT, anyone analyzing the Monero blockchain could see transaction amounts, even if the senders and recipients were hidden. This allowed for a level of transaction tracking and analysis, potentially compromising users’ financial privacy.
Is Monero illegal in the US?
Monero is not illegal in the US, but is banned in several other countries.
Is Monero blacklisted?
Due to its increased anonymity, Monero is banned in some countries due to concerns about illegal activities.
How much Monero is left?
There are approximately 18.42 million XMR in circulation and there is no maximum quantity. The blockchain uses a so-called issuance rate of 0.3 XMR per minute (0.6 XMR per block). Its developers argue that slowly reducing the rate over time will keep inflation low.