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What is Monero?
Monero; Secure, Private, and Untraceable
The term ‘Monero’ means ‘coin’ in Esperanto. Monero is a secure, private, and untraceable cryptocurrency; it is the leading cryptocurrency that focuses on privacy and censorship-resistant transactions.
Cryptocurrencies are digital or virtual currencies produced to work as a means of transacting business. Cryptocurrencies use cryptography to secure and verify transactions; this is a technique of storing and transmitting information, in such a manner that only those in the sending and receiving ends can process and read the information.
Bitcoin was the first cryptocurrencies to be introduced into the market. Other forms of cryptocurrencies such as Ethereum, Ripple, Litecoin, Dash, among many others that came after the successful launch of Bitcoins are referred to as altcoins.
The brainchild behind Monero is a group of seven developers, two are known to the public (David Latapie and Riccardo Spagni), and five have chosen to remain anonymous.
How does Monero work?
- Most cryptocurrencies such as Bitcoins and Ethereum have a transparent blockchain. A blockchain can be best termed as ‘the network under which a given cryptocurrency’
- In an open blockchain, all transactions are open and verifiable by everyone in the world. In fact, the sending and receiving addresses of all transactions in this kind of blockchain can be linked to a person’s real-world
- Monero is different from other cryptocurrencies in that all its transactions are 100% unique, and untraceable. The monero blockchain shields sending and receiving addresses, as well as the amount sent in a given transaction.
- Obscure transactions privatize every Monero user’s activities in the blockchain.
What are the origins of Monero?
- In the year 2012, Bytecoin was launched. It was the first implementation of CryptoNote, which is an open-source technology and concept that is used to run various decentralized currencies.
- In the course of time, Bytecoin users realized that the currency was not transparent enough. Some affirmations arose, indicating that more than 80% of coins in the Bytecoin system (blockchain) had been pre-mined.
- As a result of the distrust between different stakeholders and disparity in its blockchain, Bytecoin was split, given birth to Monero in April 2014.
What is the technology behind Monero?
- Monero utilizes ring signatures and private addresses to make unknown the identity of senders and recipients in any given transactions.
- The ring signatures merge and jumble a user’s account keys with other public keys secured from Monero’s This creates a ring of possible signers in a given transaction, eliminating the chances of linking any transaction to any specific user.
- Despite Monero’s users having the potential to keep their transactions untraceable, they can choose to selectively share the information. This is because every Monero account has a view key, which when shared by the owner, permits anyone in its possession to view the account’s
- Apart from the ring signatures, Monero uses randomly generated addresses for each transaction. The one-time addresses create a scenario whereby transactions cannot be linked to either the senders or recipients.
What are the advantages of Monero technology?
- Untreacability: Since the use of ring signatures shuffles users’ public keys, the possibility of identifying a particular user is eliminated.
- Unlikability: The one-time addresses generated by Monero can only be linked to the payment received but cannot be revealed through blockchain analysis.
- Security: The Monero blockchain is robustly secured from any hacking capabilities through firmly established algorithms running it.
- Privacy: Anonymous transactions which form the foundation of Monero’s blockchain create high levels of privacy enjoyed by users.
- Analysis Resistance: Since transactions made in the Monero’s System are unlinkable (i.e, the one-time generated addresses cannot be associated with any transaction), they are consequently analysis resistant.
Despite the significant number of advantages, Monero Coin has a number of disadvantages facing its use with the most prominent one being geographical limitations. The currency has not been largely adopted in some parts of the world such as South America, Asia, and Africa. Additionally, the currency enjoys limited merchant tools.
Another strong critique of the currency is mining centralization. Monero can be mined via four pools. With the introduction of ASIC Monaro Mining, the original ethos which was based on a principle of ‘one-CPU-one-vote’ is threatened.
On a different note, Monero Coin has been facing quite some development difficulties especially in how to incorporate it with multi-coin wallets. There are also other inventions that could have created room for its widespread use which has yet to be met.
Fungibility and its relationship to Monero
Suppose you loaned me $1000 and I gave you $500 dollars in return based on the fact that you inherited the money but didn’t work for it, you surely would feel unfairly treated. Or, suppose I borrowed your lawn mower to level the grass in my compound and give you a different lawn mower from what you had initially offered, you could punch my face out of anger.
The above two scenarios bring out to us the clear definition of fungibility, which is the equivalence of a given commodity with other units of the same commodity. One ounce of gold mined in North America should equal one ounce of gold mined in Asia, after all, they are all gold.
Many cryptocurrencies such as Bitcoins are founded on an open ledger; meaning that everyone can see and follow up on their transactions. Supposed I owned Bitcoins that were once used in illegal transactions such as drug trafficking, my Bitcoins will be tainted with a dark past, even if I didn’t any whatsoever way take part in the transactions. Such kinds of ‘tainting’ are popular in some cryptocurrencies exchange platforms which kill fungibility.
Part of the reasons why Monero came into the cryptocurrency market is to offer fungibility to both the senders and the recipients. Since all transactional data in Monero’s blockchain are private and analysis resistant, no one can relate what kinds of transactions the currency has gone through. This makes the cryptocurrency fungible, compared to other types such as Bitcoins.
The Monero Market
Since its inception into the cryptocurrency market, Monero has witnessed a steady growth in its adaptation, and stood as the 14th most popular cryptocurrency in January 2018, with an estimated value of $6.14 billion.
With the levels of privacy Monero offers to users, the Monero market is likely to consistently witness a positive growth in demand. Back in the year 2016, the currency’s market capitalization and trade volume increased as dark web market utilized it for payments.
Individuals are increasingly becoming comfortable with Monero. Nevertheless, we might not know what the future holds for the currency, as a result of the large security risk it presents through possibilities of hiding illegal transactions, which might force governments to limit its use.
Monero mining; can Monero be mined?
- Just like most other currencies such as Bitcoins, Monero is a proof-of-work currency, hence can be mined with computational power from CPU or GPU.
- You can either choose to mine Monero solo or do so using a pool. The latter usually requires a fee but promises huge benefits.
- In case you want to mine Monero solo, you first have to consider the computational power and hardware at your disposal, since they are the two most important determining factors to profitability.
- After considering the computational power and access to hardware, you can install a CPU or GPU Monero mining software and start the mining process as per the instructions.
Monero mining pools
Instead of miners going solo in mining Monero, they can pool their resources together and share their hashing power. They will then split their rewards equally in accordance with the number of shares they contributed to their solving block. There are several Monero mining pools including minergrate.com, minexmr.com, pool.monero.org, among many others.
Several factors worth considering before joining a mining pool include:
- The pool size: Larger pools pay a relatively higher hash rate compared to smaller pools. Joining a pool with a higher hash rate will, therefore, result in more Monero coins per day.
- The payout strategy: Pools that pay per share of work and make disbursements as soon as possible serve better.
- The reputation of the pool: Before joining any mining pool, it is worth considering the reputation it bears among its users. Avoid pools that promise overnight fortune as they could turn out to be scams.
- You should also consider the joining and maintenance fees of different pools, in comparison to their returns.
Monero Wallets; where to store your coins
Just like you use your physical wallet to store your notes and coins, Monero Wallets are either software or hardware platforms where you can store your Monero Coins. Currently, there are few options for storing Monero compared to other currencies such as Bitcoins.
Here are some of the most common Monero wallets that have the highest reputations:
Monero is not supported by many hardware wallets, in fact, Trezor and Ledger are the main types of hardware wallet for Monero.
- Trezor is one of the best hardware wallets.
- It is very secure as it works without Internet connection (therefore less risk of being hacked and theft).
- The wallet is portable and can be carried around easily.
- Along with its high reputation, Trezor has high prices too.
The other secure Monero coin wallet appears to be Ledger Nano S. This European product, despite being new to the market, managed to gain a rather high reputation.
- These Monero wallets are supported with different types of software.
- Keeps Monero offline, thus unbreachable and very safe
- Has a small size and convenient design.
- The device does not have a screen.
- Not cheap.
- You have to have a USB port in order to use it.
Since the 12th of November, 2017, Rahakott Wallet has joined the cryptocurrency wallet market and now it supports Monero coin as well. Rahakott wallet is created by Akke Svenson and his professional team who did everything possible to deliver the greatest value to their users.
- The wallet lets its users sign in simply with a mnemonic phrase, which is a random set of words.
- Allows its users to monitor their balance from anywhere.
- The wallet uses 2FA aka two-factor authentication type of protection.
- Users get a chance to use one account for creating multiple wallets.
- Supports subaccount users.
- Very simple “Sign up” and “Sign in” processes.
- Currently, Rahakott wallet is not built into any cryptocurrency exchange platforms.
- Mnemonic phrases for the users are set by the company.
- The transfers to external addresses are charged for 0.0005 BTC. Also, there is a minimal network transaction fee which is 0.0006 BTC.
MyMonero is an Internet-based – online Monero wallet, which enables its users to exchange and make transactions with each other. The website itself does not buy, sell or store Monero.
My Monero is a good example of a software wallet.
To use it, you have to create an account; write down the private keys used in validating your transactions, keep the keys in a secure place, and re-enter them whenever you need to confirm any transactions.
- Constantly accessible.
- Getting an account is free.
- The website charges a fee for each transaction.
- Not very safe as it is online and may be vulnerable to hacks.
Moneroaddress provides its users with a paper wallet that acts as a cold storage wallet.
- Very easy and simple to use.
- A cold storage wallet, therefore no risks typical for the online/software wallets.
- The keys can be stolen by someone if they are not kept safe enough.
- Not a very common website.
As a precaution, It is not recommended storing large amounts of your Monero Coins on online wallets since they are prone to cyber attacks by hackers. Instead, hardware wallets such as Trezor and Ledger nano S are more secure for storing large amounts of Monero.
Monero Hardware Wallets separates the private keys from hackers, thereby making it impossible for them to validate any transactions in case they infiltrate any of the cryptocurrencies networks.
You can also generate Monero Paper Wallets from platforms such as moneroaddress as they are even much more secure than other mentioned types since they have no internet access at all.
When it comes to offering privacy needed by users while carrying out transactions, Monero is the best cryptocurrency to opt for since it offers untraceable transactions in its blockchain. As its developing team fights to solve some of the challenges stagnating it from being embraced in different parts of the world, Monero will still see a rise in an adaptation based on the level of privacy it offers its users.
Apart from Monero, there are many other altcoins that you can learn about in our other posts. Thanks for checking the various paragraphs as they unfolded; we hope that they significantly contributed to the knowledge you were looking for. Also, check out other posts to learn more concerning cryptocurrencies. Thank you.