Quick Facts

Approximate Market Cap$3,986,367,851
Year Established2014
FounderNicolas van Saberhagen, Ricardo Spagni
Symbol/Abbreviation XMR
UtilityAsset

An open blockchain directly contradicts any fundamental notion of privacy. All validated currency transactions are recorded on the blockchain, which acts as a public ledger. The system discloses the complete transaction history of its users.

To overcome the issue of anonymity, its users might use temporary addresses to hide transactions. But, with the right tools, it is feasible to assess flows and connect senders and recipients.

Monero tries to address the issue of anonymity. Its blockchain only keeps stealth single-use addresses and validates trades via ring signatures. As a result, there is no effective means of connecting senders and receivers or tracking the source of payments.

What is Monero – Definition

Monero (XMR) is a relatively new cryptocurrency created in 2014.

It is a popular privacy-focused cryptocurrency that runs on Cryptonote technology.  The platform prioritizes transaction secrecy and untraceability.

Monero is one of the first cryptocurrencies to use encryption. It is the only cryptocurrency in which all users are anonymous by default. This provides significant improvements in privacy and fungibility over existing alternatives.

The sender, receiver, and amount of each transaction are concealed using three key technologies: 

  • Stealth Addresses 
  • Ring Signatures
  • RingCT

Monero employs RandomX, a PoW method developed by members of the Monero community. It is intended to make the usage of mining-specific hardware impractical.

Pros and Cons

Pros

  • Robust encryption techniques
  • Decentralized
  • Fungible

Cons

  • Not user-friendly
  • Limited use
  • Supported by few wallets

The History

To find out where Monero came from, we need to look at another cryptocurrency called Bytecoin.

Bytecoin was first introduced in 2012. It was the first digital money created utilizing a technology known as CryptoNote. The codebase that would potentially serve as the basis for Monero was later introduced as “Bitmonero” 2014. This was subsequently reduced to Monero, which is the Esperanto word for “coin.”

Today, CryptoNote serves as the foundation for the majority of privacy-focused cryptocurrencies. Monero is one of them.

Monero has achieved many significant advancements since its inception. To improve efficiency the blockchain was moved to a new database structure. Minimum ring signature sizes were also established in order to keep all transactions secret by mandate. The use of  RingCT allowed concealing transaction quantities.

Almost all upgrades have improved security or privacy, or they have made usage easier.

How Monero Works

Monero’s technology is open source and based on the CryptoNote concept.  To conceal transaction information, Monero employs ring signatures, zero-knowledge proofs, and “stealth addresses.” These capabilities are built into the protocol. Users can also exchange view keys for third-party audits if they choose.

Transactions are verified by the miner network using the RandomX proof of work method. The method generates new coins for miners.

Monero is using three information concealment mechanisms:

  • Stealth addresses

Stealth addresses are unique addresses that may be used to send money to a receiver while concealing their identity.

  • Ring signatures

Monero’s CryptoNote protocol uses ring signatures to secure the sender’s identity. The sender creates a signature, but also a series of additional keys. Externally it’s impossible to determine which key accomplished the unlocking.

  • Ring Confidential Transaction (RingCT)

RingCT conceals the amount of money exchanged by users in blockchain transactions.

Advantages & Disadvantages

Advantages

Security

Transactions using Monero are safe because they are encrypted. The system uses the most advanced and robust encryption techniques available.

Decentralization

The PoW algorithm keeps the specific mining devices from dominating the network. It ensures that block rewards are fairly distributed.

Fungibility

Due to the nature of the coin, there is no way to connect transactions together or track the path of any individual XMR.

Disadvantages

Complex user experience

Monero has fewer wallet options and a more complex user experience.

Low market adoption

Monero’s use is limited since it is not as extensively embraced as other cryptocurrencies such as Bitcoin.

Monero in the Global Crypto Market

Unlike Bitcoin, there’s never been a set amount of Monero tokens produced. The currency is mildly inflationary.

Monero will have a total supply of 18.4 million XMR.  Its supply increased by 0.87 per cent in the first year.  There are now 16,659,407 XMR available.

Monero will continue to generate small 0.6 XMR block rewards indefinitely beyond 2022. This characteristic is known as “tail emission.”

FAQ

What is the difference between Monero and Bitcoin?

Bitcoin has a transparent system in which anybody can see how much money is being transferred from one user to another. Monero conceals this information in all transactions to safeguard user privacy.

Are there any upgrades for Monero?

Monero used to undergo two network upgrades. every year, but this is no longer the case. The biannual hard forks were chosen in order to implement significant consensus changes.

Is there a block size restriction in Monero?

No, Monero has no fixed block size limit. Instead, depending on demand, the block size might rise or decrease with time.