You may have read a story on the Internet telling you how Bitcoin is used to finance shady businesses… Some of them were true, and some not.
The “problem” with Bitcoin is that it doesn’t offer full anonymity, and Bitcoin transactions could be traced from one side to the other. Capturing the wrongdoers is a bit different as they may be living in places that are hard to reach, but at the end of the day, the authorities can pinpoint people — or least locations — behind Bitcoin transactions. (related: Bitcoin Anonymity: Is It a Myth or What?)
Monero, which token is marked as XMR, is different. It is anonymous and virtually untraceable, the fact that made him popular on the so called “dark web.” But also other people have started adopting it, as they may not want the government to know what they’re doing with their own money. And so the cryptocurrency experienced a strong growth in 2016, and is seemingly poised to remain an important player on the market.
So we decided to prepare a special article about Monero – here are 5 things everyone should know about it…
1. A brief history of Monero
Monero was launched as the first fork of CryptoNote-based currency Bytecoin on April 18, 2014 under the name BitMonero, which is a compound of Bit (as in Bitcoin) and Monero (which means “coin” in Esperanto). Five days later, the name was changed to Monero.
At first, Monero was able to hide the sender and the recipient of the money. In January 2017, the privacy of transactions was strengthened further with the optional use of the Ring Confidential Transactions (Ring CT) algorithm, which introduced an additional layer of confidentiality by not displaying the amounts implicated in a transaction to someone who did not directly take part in it. By early February, over 95% of all non-coinbase transactions used the optional RingCT feature.
Which leads us to the next point…
2. Monero keeps transactions private
This is the key selling point of Monero. While it relies on a public ledger (blockchain), it makes all transactions private by using a set of tools, including Ring Signatures, Stealth Addresses and RingCT. These technologies are quite complicated, and in the following few paragraphs we’ll try to explain them in plain English:
- Ring signatures – this piece of technology bundles every transaction into a group with other seemingly identical transactions, making it virtually impossible for an outsider to tell which source of money is the real one. In other words, Ring signatures hide where the money is coming from.
- Stealth Addresses, on the other hand, hide who the money is being sent to by generating a one-time random address unique to the recipient. Whilst anyone can view these addresses, there is no way to make a link between this address (public key) and the recipient’s real address (private key).
- Last but not the least, RingCT (Ring Confidential Transactions), hides the amount being transferred. Implemented in January 2017, it was first optional and is about to become mandatory for every transaction.
To sum it all up, a Monero transaction can hide the sender, the recipient and the amount being sent.
3. Semi-strict monetary policy
Monero has a semi-strict monetary policy. Whereas Bitcoin will top at 21 million bitcoins, the Monero algorithm is set to stop at 18.1 million XMR in approximately 8 years. More precisely, there will be 18.132 million coins by the end of May 2022.
After that — and here’s the difference from Bitcoin — a constant “tail emission” of 0.6 XMR per 2-minutes block will create a sub-1% perpetual inflation. This ensures that coins never run out of supply while providing incentive for miners to continue “doing their thing.”
4. Where can you buy Monero?
Monero has been around since 2014, which actually makes it an “old” cryptocurrency. Therefore, it is available from quite a few exchanges, including Livecoin, Coincut, Bitfinex, Bitsquare, LiteBit, Orillia, Kraken and of course, Poloniex, which supports all cryptocurrencies. Plus, there is MoneroForCash which lets you buy into XMR with your “regular” money.
5. The future of Monero
Some people value privacy more than others. Because of the privacy features it includes, Monero is considered the drug dealer’s cryptocurrency of choice. That being said, we must add it is also used as a storage of value (like Bitcoin), but it was its strong security attribute that made it the fastest growing cryptocurrency in 2016, when XMR grew a whopping 2,760 percent!
Beyond dark web, more and more people are becoming aware of their lack of privacy online, and they too could turn to Monero to protect themselves from the prying eyes of various government agencies and big corporations.
For the regular folks, like you and me, we have one of those once-in-a-lifetime opportunities to cash in on the cryptocurrency craze. And with Monero, we also get to benefit from people’s desire to stay private online. So are you ready for the ride?