Monero (XMR)
5 minutes
Advanced
Monero is a fully anonymous cryptocurrency, unlike Bitcoin, which is only pseudo-anonymous. Monero is one of the most controversial cryptocurrencies on the market, not so much because of its price or popularity, but because of its focus on privacy. This is great for users who want to protect their identity, but also makes it a potential vehicle for illegal activity. However, you can still buy Monero on many popular exchanges.
Monero by default hides everything about the transaction, from the amounts sent to the two parties involved in the transaction. Monero has achieved complete anonymity using other types of cryptographic methods than the types of cryptography used by Bitcoin. Since Monero debuted in 2014, several protocol updates have been released that have improved privacy guarantees.
Monero attracts a lot of attention because it is used for various Internet hacks. Monero has also been used to collect ransomware because of its anonymity. Monero is also used in "botnets" that use infected computers to mine cryptocurrency.
As privacy becomes increasingly scarce in the world of social media, marketing and advertising, anonymity services such as the messaging app Signal, or money transfer protocols such as zCash or Monero, will inevitably attract more and more attention. This view is shared by some of the biggest names in cryptocurrency, such as Coinbase CEO Brian Armstrong.
History of Monero
Monero was launched in April 2014 by a member of the popular bitcoin forum bitcointalk.com. BitMonero cryptocurrency was originally renamed Monero five days after its creation by the development team, which officially took over the project. In 2017, Monero received an update that increased its security and anonymity, making transaction amounts private to viewers. This means that passive observers of the blockchain can no longer see the amount of money used in each transaction. This, in addition to Monero's hidden account balances and disposable transaction addresses, makes Monero perhaps the most secure transaction processing system in existence.
What makes Monero an anonymous cryptocurrency?
Monero has combined several technologies to make transactions completely anonymous. Monero has introduced a cryptographic technique called Ring Signatures. Monero uses Ring Signatures to mix the digital signature of the user making the XMR transaction with the signatures of other users before writing it to the blockchain. That way, if you look at the data, it will appear that the transaction was sent by any user.
Monero has experimented with changing the number of signatures involved in this blending process, and at one time even allowed users to specify a desired number. However, as of 2019, the default Monero transaction is now set, adding 10 signatures to each transaction group and mixing a total of 11 signatures.
Monero also hides transaction amounts within any given transaction. This hides the balances of all Monero addresses from public view, as well as the transaction amounts within the network. Thus, even if you are discovered on the Monero network, the amount of money you transfer will still be hidden from public view.
Popularity of Monero on the darknet
Monero has played a role in certain organized crime activities, such as the WannaCry attacks that took place in 2017, as well as general darknet transactions. During WannaCry, after collecting ransoms in bitcoins, attackers transferred funds into Monero to further conceal their identities. Monero is a popular payment method on the darknet because the protocol provides more privacy than other popular cryptocurrencies.
While a cautious Bitcoin user can hide or conceal their identity, it still does not come close to the level of protection afforded by using the cryptographic techniques built into Monero. To this day, many darknet merchants prefer and even insist that their patrons use Monero instead of Bitcoin for transactions.
How does Monero work?
Monero uses the Proof-of-Work (PoW) mining algorithm, just like Bitcoin. That said, Monero is significantly different. Monero is completely anonymous thanks to various cryptographic methods used to mask the identity and actions of network users. These methods are called: circular signatures, confidential transactions and hidden addresses.
The consequences of confidentiality are as follows:
- The amount of the transaction in any particular transaction on the network is unknown.
- Sender of any transaction is not known
- Recipient of any transaction is unknown
- Balance of any Monero address is unknown
The above facts make it difficult for law enforcement agencies to determine the cash flow of the Monero network. Therefore, traditional blockchain analytics tools cannot collect statistics about the movement of Monero in the network.In addition to the improved privacy mechanisms unique to Monero, a transaction with this cryptocurrency is very similar to a transaction with any other cryptocurrency. You have a wallet that consists of a public key and a private key. You sign transactions with your private key and send money to your public key. If you really want to see your Monero balance, in an online blockchain browser like xmrchain.net, you can use a special Monero key called a "private key viewer". This can be useful when checking your Monero transactions on exchanges.
Economic data of the project at the time of writing:
In circulation: 18,147,820
Market capitalization: $2,284,648,015
Price: $125.85
CoinGecko.com data
