All you need to know about Monero

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Monero is a digital currency that offers it's users highest levels of anonymity in their transactions. Monero uses a special kind of cryptography which ensures that all its transactions are 100% untraceable and unlinkable. This quality of Monero makes it a highly desirable cryptocurrency. The currency symbol for Monero is XMR.

Breaking Down “MONERO”

Monero was launched in April 2014 by a group of seven developers as a fork of Bytecoin. A fork usually occurs when a single cryptocurrency is split into two, which is possible to create due to the open source formats prevalent in most cryptocurrency designs. Forks come into play to address the flaws of the original cryptocurrency, thus providing better alternatives.

Exceptional Properties of MONERO

So what are the unique qualities that make Monero the hottest currency to acquire? Let's check out these exclusive properties given to it by its CryptoNote algorithm.

Monero transactions are opaque

While dealing with Monero you have complete control over your transactions. This is because your identity is anonymous and private. No one can detect how and on what you are spending money on.

Advantage of fungibility

Unlike bitcoin or almost every other cryptocurrency, Monero is totally fungible. Investopedia defines fungibility as follows:

“ Fungibility is a good or asset’s interchangeability with other individual goods or assets of the same type ”.

To put it in more simpler terms, let me give you an example:
Suppose you borrowed $10 from a friend. Now when you return the money to him with ANOTHER $10 then it is absolutely fine. In fact, even if you return the money to him in the form of $1 to $10, even that is completely acceptable. That's because the dollar is known to be a fungible property (not all times though).

However, if you borrow someone's car for a trip and come back and give them some other car in return, then that person will probably punch you in the face. In fact, if you went away with a Red Mercedes and came back with another Red Mercedes, even that won't compensate. Cars, in this example, are a non-fungible asset.

Monero was built specially to address the problem of traceability and non-fungibility plaguing cryptocurrencies. With Monero’s complete ‘privacy of data’, it's transaction trail is non-existent. As a result of this there is no concept of ‘good’ Monero and ‘bad’ Monero and hence they are fungible.

ASIC (Application Specific Integrated Circuit) Resistant

Before getting into the complexity of ASIC, let's settle the notion that Monero is not exactly “ASIC resistant”. That is because the cost of manufacturing ASICs for Monero will be sky high which is simply not feasible.

ASIC resistance means your crypto is more fairly distributed as there is no centralization of mining due to ASICs bumping out the GPU miners.

Monero works on CryptoNote system and uses CryptoNight as a hashing algorithm. This action thus prevents the creation of mining pools and makes even distribution of the currency possible.

Ring Signatures

Monero uses a special ring technology to protect user’s privacy on the input side of a transaction. A ring signature is a digital signature in which a group of possible signers is merged together to produce a distinctive signature which can authorize a transaction.

How does ring signature work?

The actors included in a Monero signature are the actual signer, who is then combined with non-signers to form a ring.

The actual signer and non-signers in the ring are considered to be equal and valid. The actual signer is a one-time spend key that corresponds to an output being sent from the sender’s wallet. While the non-signers are past transactions outputs that are drawn from the Monero blockchain. These past transactions function as baits in the ring signature transactions by becoming a part of the inputs of a transaction. From a bigger picture, all the inputs appear equally likely to the output being spent in the transaction. Monero utilizes ring signature technology to help the sender mask the origin of a transaction by ensuring all inputs are indistinguishable from each other.

Dynamic Scalability

Scalability of cryptocurrencies has become a hot topic in recent times. Unlike Bitcoin, which has self-imposed block size limit of 1 megabyte, Monero has no such pre-set limit giving it the quality of dynamic scalability.

Future of Monero

There are too many coins on the market that aren't decentralized and do not have the privacy parameters like Monero. This aptly demonstrates that Monero is safer, faster and untraceable, which in near future will make it a more lucrative investment.

What are your thoughts on Monero? Share them in the comments below.

This post was originally published on CryptoGround.