What is Monero? Comprehensive Guide to XMR

Monero is a fully anonymous cryptocurrency. This is in contrast to Bitcoin, which only pseudo-anonymous. Monero is one of the more controversial cryptocurrencies on the market, not so much for price, or popularity reasons, but because of its secure and identity protection mechanisms.

The Benefits PRO's
  • Monero invariably preserves the privacy of the users of the network
  • Monero has a strong development community
  • Monero wallets exist for all major operating systems and platforms
The Downside CON's
  • Monero is a go-to choice for organized crime
  • Monero makes it difficult for law enforcement to detect the identity of criminals
  • Larger technical barrier has advanced key management is needed

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Monero Overview

Monero by default hides everything to do with a transaction, from the amounts being sent, to the two parties involved in the transaction. Monero has achieved its full anonymity through different types of cryptographic techniques than the types of cryptography that Bitcoin uses. After Monero’s initial release in 2014, several protocol upgrades have made improvements on the privacy guarantees that originally were provided by the Monero team.

Monero gets a lot of attention for being used in various internet hacks. Monero is used to collect the ransom due to its anonymous nature. Monero is also used in botnets that use infected computers machines to mine cryptocurrency.

As privacy becomes ever more scarce in the world of social media, marketing, and advertising, privacy preserving services such as the messaging app Signal, or money transfer protocols like zCash or Monero are bound to receive ever more increasing amounts of attention. This is an opinion that is shared by some of the largest names in cryptocurrency such as Coinbase CEO Brian Armstrong.

 

Monero Ratings

Price

Low: $0.212967 USD (Jan. 14, 2015)
High: $495.84 USD (Jan. 7, 2018)

Market cap

Low: $1,279,606 USD
High: $7,154,336,651 USD

Supply

Current Supply: 17,412,830
Total Supply: 17,412,830

Network speed:

Rating: Low
Transactions per second: 4tx/s

Disbursement

Rating: Unknown
Reason: Balances are hidden

Developer Engagement

Rating: High
Reason: Monero developers have created wallets for all major operating systems. Furthermore, any bugs or vulnerabilities discovered on Monero have been fixed in a timely manner.To top it all off, the Monero team regularly works on new features, either on the core protocol, or the supporting applications. this keeps the users engaged and excited to see where the core developers take the technology next.

Liquidity

Rating: High
Reason: Monero is consistently within the top 20 cryptocurrencies in the world. With many of the major exchanges offering several XMR trading pairs, you won’t have a problem with liquidity when buying and selling XMR.

How is Monero Completely Anonymous?

Monero combined several technologies to make its way of transacting completely anonymous. Monero has implemented a cryptographic technique called Ring Signatures. Technical Explanation Disclaimer: Monero bundles your transaction with a random selection of other public keys, such that any public key can be used to check the validity of the transaction, wherein only one of the corresponding private keys was actually used to produce the transaction. The ring signature ensures that it is computationally infeasible to find out which public key was used to produce the transaction.

Simply put, Monero builds plausible deniability into every transaction. There is no way to tell whether ornate you participated in any given transaction.

Monero also hides the amounts that are being transacted within any given transaction. This keeps the balances of all Monero addresses hidden from public view, along with the amounts that are transacted on the network. So even if you were to be discovered using the Monero network, the amount of money that you have been transferring would still be hidden from public view.

Where to Buy Monero (XMR)

Most major exchanges allow you to purchase Monero. Head on over to our guides for the following cryptocurrency exchanges if you would like to purchase Monero.

History of Monero

Monero was started in April 2014 by member of the popular Bitcoin forum bitcointalk.com. Originally BitMonero, the cryptocurrency was renamed to Monero five days after its establishment by the team of developers that formally took over the project. Monero received an upgrade in 2017 that strengthened its security and anonymity, making the amounts being transacted confidential to viewers. This means that passive observers of the blockchain could no longer see the amount of money being transacted in each transaction. This on top of Monero’s hidden account balances, and single use addresses for transactions makes Monero arguably the most secure transaction processing system ever invented.

Monero currently is rewarding miners at a rate of 2 XMR per block, or 2 XMR every 2 minutes. This boils down to 1 XMR created every minute. Monero will continue producing blocks at this sort of rate until around May 2022, when the amount of new Monero entering the system will be a constant .06 XMR per block.

Monero is instrumental to certain organized crime movements such as the WannaCry attacks that occurred in 2017, or general dark web transactions. During WannaCry, after ransom was collected in Bitcoin, the attackers would move the funds into Monero, to further hide their identity. Monero is a popular dark web payment method, as it inherently has more privacy built into the protocol than other popular cryptocurrencies. While a careful user of Bitcoin can disguise or mask their identity, it still doesn’t come close to the level of protection gained by using the cryptographic techniques built into Monero. To this day, many dark web merchants prefer, and even insist on their patrons using Monero instead of Bitcoin for transactions.

In terms of endorsements by privacy advocates, it really doesn’t get much better than Edward Snowden himself declaring that he’s used Monero. Edward mentions that in order to securely transfer and secure the documents he released to the public in 2013, he “may” have had to use Bitcoin in order to pay for anonymous server infrastructure. Edward thinks that zCash is the most interesting cryptocurrency project out there right now due to its unique privacy aspects. had Monero or zCash been around in 2013, Edward may have found himself using these digital currencies to aid ins disclosure. This is to say that Monero being a privacy coin is often hailed by criminals and terrorists as being a safe haven for their digital presence, but sometimes there is a real need for ordinary people to protect their information and transactions online.

How Does Monero Work?

Monero uses a proof of work mining algorithm, just like Bitcoin or Ethereum. That being said, Monero is significantly different than the aforementioned cryptocurrencies. Monero is completely anonymous due to different cryptographic techniques used to disguise the identities and activities of the users of the network. These techniques are called Ring Signatures, Confidential Transactions, BulletProofs and Stealth Addresses.

The privacy implications are as follows:

  • The amount transacted in any given transaction on the network is not known.
  • The sender of any transaction is not known
  • The receiver of any transaction is not known
  • The balance of any address on Monero is not known

The above facts make it difficult for law enforcement to determine what the flow of money is on the Monero network. Traditional blockchain analytics tools are therefore unable to compile statistics about the movement of Monero on the network.

Other than the enhanced privacy mechanisms unique to Monero, transaction with this cryptocurrency is much like transaction with any other cryptocurrency. You have a wallet, which consists of a public and private key. You sign transactions with your private key, and send money to your public key. If you really would like to look at your Monero balance on an online block explorer such as xmrchain.net, you can use a special Monero key called the private view key. This could be useful when checking your Monero transactions to and from exchanges.

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About the Author

Keegan Francis, CryptoVantage

Keegan Francis

Keegan Francis is a cryptocurrency knowledge expert and consultant. He recognized the opportunity in cryptocurrency early in his career and has been invested in it since 2014. His passion led him to start the Atlantic Blockchain Company which consults on blockchain technology and cryptocurrency know-how.