Why Monero? - Privacy Focused Cryptocurrency
At the Moment of Writing (AMOW) there are 1381 cryptocurrencies listed on a well known coinmarketcap. Most of these players are either trying to make different use-cases for blockchain, create new technologies and features or enhance existing cryptocurrencies. Most of them will probably fail and vanish -- lack of experience, financial resources, community support, bad marketing, major security issue or a critical bug. But those who stay, shall lead the way to a technological revolution...
Monero (XMR) in brief
ByteCoin - ancestor of Monero - started as a first actual implementation of CryptoNote protocol back in July 2012. CryptoNote is a protocol built on some of the Bitcoin founding principles, adding anonymity and privacy features.
Immediately after release of ByteCoin, several suspicious issues and red flags arouse, linking the discovery of security vulnerabilities, and of a fact that 80% of coins were premined. This facilitated the outrage of the community, resulting in a need of an authentic, privacy focused and anonymous coin.
Monero inherited the original CryptoNote code, but started with the fresh block, target block time and emission speed resulting in a solid launch in April 2014. It is not pre-mined and block rewards do not go to developers.
After initial launch the anonymous founder, thankfulfortoday, proposed controversial amendments, met with disagreement from community, the Monero Core developers forked the project and established a new Core Team consisting of 7 developers.
Since than the cryptocurrency witnessed thousands of commits by hundreds of contributors from around the world.
AMOW - Monero is #13 altcoin with the value of $480.01.
Monero has many interesting features and I will try to outline some of them below:
- Privacy by Default
- All transactions are confidential by default, users are not required to "enable" privacy features as in case of Zcash.
- Stealth Addresses
- Wallet address is not displayed in a public blockchain, therefore there are no "rich lists" and nobody can learn about your spending or assets.
- Confidential Transaction Amounts
- Monero makes it impossible for someone wants to trace you by analyzing amounts of the transactions, by encrypting the figures.
- No Traces
- Monero utilizes ring signature technology, facilitated with the need of trusted setup, to help the sender mask the origin of a transaction by ensuring that all inputs are indistinguishable from each other.
- Dynamic Block Size
- Transactions are not limited with a cap, allowing a quick processing.
- Voluntary Audits
- Dual key system allow desired users and/or machines to observe transactions.
- Being developed by Monero - Kovri is based on I2P’s open specifications, uses both garlic encryption and garlic routing to create a private, protected overlay-network across the internet. This overlay-network provides users with the ability to effectively hide their geographical location and internet IP address.
- Research Lab
- Leading researchers and scientists are participating into the project aiming to explore new possibilities for privacy and security.
- ELI5 - What does the fungibility stand for?:
- Example 1: In case of other coins, if John Doe makes a coin by illegal activities (cyber attacks, selling/buying drugs and etc.) authorities might demand from exchanges and markets to block/freeze any assets or transactions from a specific address. This means that if you would receive a coin from John Doe, your transactions and address might also be affected, because it is linked to illegal activities. In case of Monero this is impossible, because no one can know where the coins came from.
- Example 2: You have been HODLing 10 XMR for couple of years and out of the blue your country makes Monero trading illegal. In theory you should not be able to trade those coins anywhere in your country or outside, because government will issue requests to exchanges and markets. But the thing is that no one knows where the coins come from (country, IP, activities) therefore this theory cannot be enforced in practice.
- Fungibility guarantees that if you have 10 XMR it will always keep the ratio of 10 XMR= 10 XMR no matter who you are, where you are, or what you are doing.
- ELI5 - What does the fungibility stand for?:
Monero vs Zcash vs Verge
While there are other coins claiming security and privacy features, in my opinion most of them fall short in practice. You can have a look a brief comparison of Monero vs Zcash vs Verge:
|Privacy||✔ Privacy by default||✘ Private transactions are optional
✘ AMOW - only 3% of transactions are hidden
|✘ Public rich list
✘ IP Addresses are hidden via TOR and I2P, but does it make sense if anyone can see how much money your address has?
|Traceability||✔ Ring CT makes transactions untraceable||✘ According to Matt Green - Founder of Zcash: "Zerocoin would give you this incredible privacy guarantee, then we could add on some features which let the police, for instance, to be able to track money laundering. A back door." Security folks will know what this leads to...||✘ Traceable - Since anyone can explore addresses in public blockchain|
|Security||✔ 25 mnemonic seed for wallet
✔ Mandatory requirement to use a hardened password on top of the seed
✔ Wallet files encrypted by default.
✔ High security ED25519 cryptography
|✔ Transactions are secure but not all of them are encrypted||✔ Transactions are secure|
|Fungibility||✔ Fungible by default, nobody can ban your coins because of its origin||✘ Since only few number of transactions are hidden, there is a high risk that authorities will freeze or blacklist coins. This risk is also facilitated by the "backdoor" as mentioned by the founder||✘ Since there are no private transactions, there is a high risk that authorities will freeze or blacklist coins.|
Commitment * - Average commitments per day. Github Commits / (Date of this Article - Launch Date of the Coin)
How to Buy Monero
There are different way to buy Monero, both with fiat currencies (USD/EUR) and other cryptocurrencies including Bitcoin.
Monero with USD
You can buy Monero with USD via exchanges below (organized in alphabetical order):
Monero with EUR
You can buy Monero with EUR via exchanges below (organized in alphabetical order):
Monero with BTC
You can buy Monero with BTC via exchanges below (organized in alphabetical order):
- Tux Exchange
You can learn more about Monero project on following resources:
- Official Monero website
- Marketing managers of Monero (Reddit community)
- Unofficial resource for Monero tutorials and guides
Interesting users to follow on Twitter:
Storing cryptocurrencies on exchanges or in an online form is associated with different risks that may compromise your investment partially or fully. Follow the link below to setup a Monero wallet in a more secure fashion:
Threats that may lead to problems or loss of cryptocurrency investment: cyber attacks, account breach, service outage, bankruptcy of an exchange, exchange scam and etc.
You can learn more about my top threat expectations for cryptocurrencies for 2018 below:
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