Story of the coin: Monero

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Story of the Coin: Monero

Monero, with its focus on privacy and decentralization, today is one of the ten most popular cryptocurrencies in the world by market capitalization.

What is Monero?

Monero (XMR) is a fork of Bytecoin built on the CryptoNote protocol. Its primary advantage over other currencies is its extremely high level of security and privacy. Lack of anonymity remains a serious problem for almost every cryptocurrency: when blockchains are transparent, everyone who has your wallet address is, in theory, able to trace your transactions, reveal the amount of money you own and even link the transactions back to your identity. It can impact your negotiating positions, draw hackers’ attention or even become a threat to your safety.

Privacy coins (and Monero above all others) appeared in response to this problem. Unlike Bitcoin, XMR guarantees the untraceability of your transactions. Nobody can detect the sources, destinations and other details about a transaction or link it to a real identity. To achieve this goal, Monero developers use ring signatures, ring confidential transactions (RCT) and stealth addresses to protect both senders and receivers. These security measures give one more advantage to XMR: it is completely fungible, and therefore cannot be blacklisted by exchanges because of its previous transactions.

When and how Monero appeared?

When and how did it appear?

XMR was first launched in April 2014 by a Bitcointalk forum user, Thankful_for_today. At first, it was named BitMonero (“monero” means coin in Esperanto) but was soon shortened to simply Monero.

XMR is a collaborative project: a huge team writes the code and develops it, including 30 core developers and 250 contributors. All decisions are completely transparent: the full developer meeting logs are even published on the Monero website, for all to see.

One of the core values of XMR, besides privacy, has always been decentralization. To prevent accumulation of the hashing power in small ASIC-miners groups, Monero’s April 2018 hard fork modified its Proof-of-Work algorithm. This decision was made in reaction to the recently announced ASIC hardware created specifically to mine XMR. The changes made all this ASIC hardware useless. More than that, the Monero team has promised to release new modifications of PoW algorithm twice a year.

Monero hard-forked coins

These changes caused some disagreement within the community. While a majority of users were pleased, a number of developers declared that ASIC mining promotes competition and that its evolution is healthy. After the hard fork, several groups of crypto enthusiasts continued supporting old version of blockchain creating four different chains: Monero Classic (XMC), Monero-Classic (XMC), Monero 0 (XMZ) and Monero Original (XMO), while the Monero main chain is continuing its commitment to ASIC resistance, remaining a key player in the world of privacy-mined coins. However, only two of four forked coins still alive after 5 months since hard fork date – Monero Classic (XMC) and Monero Original (XMO), while Monero-Classic and Monero 0 fade out.

Getting started with Monero is simple: after downloading one of the various wallets from its website, anyone can buy it on almost any major exchange platform (both with cryptocurrencies and fiat currencies) or use it to buy goods and services. It’s also easy to start mining XMR since it’s one of the MinerGate-supported coins.  

Features and important issues

Ring Signature Transactions

Unlike Bitcoin transactions, which are completely transparent and make it possible to connect a user’s IP address with their device, XMR protects every sender by using a ring signature, a  cryptographic key shared by a number of users on the network to process a transaction. Rings are automatically and continually re-organizing, making it impossible to trace which user is making a particular transaction.

Ring Confidential Transactions

RingCT is able to blur not only the sender but even the amount of funds exchanged in a transaction. Of course, to prove the validity of every transaction it is still crucial for the network to confirm that the sum of the input is equal to the sum of the output. XMR achieves this by applying a mathematical function to funds. Due to this solution, users are able to validate transactions without compromising privacy.

Stealth addresses

A stealth address prevents your funds from being linked with your wallet. The single-use addresses are not linked to the actual addresses of the sender or the recipient. All incoming payments go to separate stealth addresses, and it’s impossible to correlate them or see when and how the recipient spends their funds.

Decentralization and ASIC resistance

Decentralization and ASIC resistance

To prevent XMR mining from being controlled by ASICs, the Monero Proof-of-Work algorithm doesn’t give them any advantage over solo miners with home computers. This technology makes the entire process cheaper for individual miners. Due to a recent ASIC-resistant algorithm change, it’s even easier for individuals to start mining XMR without special supplies. ASIC rigs are no longer effective, and even if some ASIC mining rig manufacturers find a way to circumvent these changes, it’s obvious that with the algorithm updated twice a year the cost of investing in new rigs development will make them unprofitable.

Adaptive block size limit

XMR blocks are produced every two minutes (five times more often than Bitcoin blocks, for example). The automatically adapted block size limit provides flexibility because the size of blocks can expand to handle increases in transaction volume.

The Kovri Project

The Korvi Project, which is now under development, is the future of XMR security mechanisms. It’s a decentralized, anonymous network that will be able to hide your internet traffic and conceal that you are using Monero by encrypting and routing transactions with Invisible Internet Project (I2P) nodes.

Network stats of Monero

Network specs

As of time posted, the total XMR in existence is about 16 million coins, with a market capitalization of more than $2 billion, trading at a price of $128.02  USD. The current block time (average time between blocks) is 2 minutes 2 seconds, with a block size of 94.836 Kb. The block reward is 4.02 XMR ($514.64 USD).

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