The advent of cryptocurrency has allowed users to make anonymous payments. However, later it turned out that with the necessary computing power, it is possible to track coins and determine the owner of the wallet. Such a vulnerability and open source code allowed enthusiasts to create an improved version of bitcoin, which later became known as Monero. Let’s consider in the article what kind of cryptocurrency it is and how it differs.
What is Monero and the history of its creation
Monero (XMR) appeared in 2014. It is based on the CryptoNote protocol, which was previously used to create Bytecoin. The main protocol was developed back in 2012. However, when Bytecoin was created, the founders of the project appropriated 80% of all coins at the pre-mining stage. The community members did not like this, and they decided to restart the project from scratch with a different name.
This is how the BitMonero cryptocurrency appeared. The development team includes Ricardo Spagna and Francisco Cabanas – the names of the other members are unknown. According to unofficial data, Monero is second only to Bitcoin and Ethereum in terms of the number of people in the team.
To ensure a high level of confidentiality, XMR currency uses several technologies at once.
By using a ring signature, the sender can confirm the transaction without revealing his address. The inputs and outputs are used to obfuscate the traces. In other words, the transaction will display the addresses of the previous owners of the cryptocurrency, so it is impossible to determine exactly where the transaction was made from.
The ring signature was practically not used. Because of it, the weight of the transaction increased, so the user had to pay an increased commission. As a result, analysts were able to de-anonymize up to 64% of transactions made before 2017.
Ring confidential transactions
To increase the level of confidentiality, ring-shaped confidential transactions have been implemented. This technology made it possible to hide data on the amount of payment, participants and time of sending. Its use has become mandatory since September 2017. 10 impurities are always added to the transaction.
The Monero cryptocurrency allows members to create multiple disposable Stealth addresses. In principle, there is no limit on the number of wallets in other currencies either, but the advantage lies in the symbiosis with other data protection technologies. If the user doubts the reliability of the ring-shaped confidential transactions, he can accept and send payments by creating a new stealth address.
Advantages and Disadvantages of Cryptocurrency
The benefits of Monero are usually:
- Low fees and fast confirmation. Unlike most other cryptocurrencies, XMR has a dynamic block. This allows the system to conduct transactions faster, adjusting to the network load. For this, the last 100 blocks are taken into account, if the number of transactions increases, the size of one block can be doubled.
- Tail emissions. XMR does not have a limit on the maximum number of coins, so it will always be profitable to mine coins. After 2022, participants The size of the remuneration will be fixed at 0.6 XMR.
- Multilingual SEED Phrases. Passphrases for restoring access are made up of different languages. This makes it harder for attackers to find this phrase if the user stores it on their computer.
However, cryptocurrency also has disadvantages. Among them are noted:
- Inflation. The miners’ work never ends as they are always rewarded. Bitcoin’s emission will eventually drop to 0, which, in theory, should be expected to affect the rate. Miners will be able to receive decent payment in the form of commissions.
- Delisting. Due to the high level of anonymity, some exchanges have removed the ability to buy and sell XMR to avoid problems with regulators.
What’s happening with XMR now. Dynamics
Monero has long been among the top cryptocurrencies in terms of capitalization. Now the coin is in 14th place with an indicator of $ 2 billion. One of the main reasons for the fall is associated with the onset of cryptozyme. After Bitcoin peaked at the end of 2017 and began to fall, many digital assets followed and fell quickly.
Then many exchanges announced delisting. Among the trading platforms were:
- BitBay and others.
Nobody knew what would happen to Monero next. Regulators are clearly not to their liking for a cryptocurrency with high privacy protection, which contributes to the laundering of criminal capital.
In early October, there was a significant increase. XMR started to rise simultaneously against the dollar and BTC. However, on October 12, bitcoin reversed and in 15 days the cryptocurrency returned to its previous level. This is most likely due to the support of BTC from the PayPal payment processor. Many traders and investors transferred part of their capital from altcoins to bitcoin.
Should I buy
Cryptocurrency Monero is still far from the historical maximum. Over time, the release of new tokens will decrease, which may become an impetus for another growth. While the coin can be purchased through exchanges and exchangers, users will actively use it.
The main advantage of cryptocurrencies is anonymity and it is difficult to find a worthy competitor to XMR among digital assets. As long as there are official exchanges and exchangers that support Monero, users should have no problems buying an asset.
The future of Monero and development prospects
The developers are planning to transfer data through anonymous nodes. A similar technology is already used in the Tor browser. Bitcoin users, for example, can also hide IP addresses, but not all wallets support this.
Receiving the new update will again attract the attention of both users and financial regulators. Perhaps then even more trading floors will refuse the coin. However, don’t forget about decentralized exchanges, which don’t really care about the opinion of regulators. XMR will definitely not disappear from the market in the near future, so the coin can be used to invest a portion of the base capital.