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The Capital

Monero, the Most Private Cryptocurrency

By CoinEx Institution on The Capital

Written by the CoinEx Institution, this series of jocular and easy to understand articles will show you everything you need to know about major cryptocurrencies, making you fully prepared before jumping into crypto!

Monero, or XMR for short, is an open-source cryptocurrency that is safe, reliable, private, and untraceable. It can run on Windows, Mac, Linux, and FreeBSD, and is known as one of the most private cryptocurrencies. In 2018, Monero already ranked 10th in terms of trading volume, with its market value beyond 1 billion US dollars, an evidence for its great fame in this field.

By a special method in cryptography, Monero ensures that all transactions remain 100% irrelevant and untraceable. Perhaps after reading this article, you will understand why it is so special and popular in the increasingly transparent and traceable cryptocurrency circle (After all privacy comes first!).

In fact, many large cryptocurrencies in the world are not anonymous. All transactions on Bitcoin and Ethereum are made public and traceable, which means that anyone can eavesdrop on transactions flowing into and out of the wallet. That has given rise to a new type of cryptocurrency called “privacy currency!” These “privacy currencies” hide encrypted transactions by adopting specific types of passwords. One typical example is Monero, one of the largest privacy cryptocurrencies in the world.

Monero was created on April 18, 2014, under the name BitMonero, literally the combination of Bit (Bitcoin) and Monero (the “coin” in Esperanto). In five days, the community decided to change its name to Monero.

Interestingly, Monero’s creators valued personal privacy and tried to behave in a low-key manner with pseudonyms instead of real names. It is said that the Monero major contributor’s nickname is “thankful for today,” yet this guy has gradually disappeared from public view as Monero developed day by day.

Unlike many cryptocurrencies derived from BTC, Monero is based on the CryptoNote protocol. It is also the first branch based on the Bytecoin of CryptoNote currency. Here is some information about Bytecoin: BCN, for short, is a decentralized cryptocurrency with a high degree of privacy; it has open-source codes that allow everyone to contribute to the development of the Bytecoin network, and the Bytecoin network provides global users with instant private transactions that are not traceable and at no additional cost.

Yet, as a branch of BCN, Monero outshines its parent in reputation by being different in two ways. First, Monero’s target block time was reduced from 120 seconds to 60 seconds; second, the issuance speed was cut by 50% (which reverted to 120-second residence later, with the issuance time maintained and the reward for each new block doubled). By the way, during the fork, the Monero developers also found a lot of low-quality codes and then refactored them. (That is exactly what geeks will do)

Monero’s modular code structure was also highly appreciated by Wladimir J. van der Laan, one of the core maintainers of Bitcoin.

Monero values privacy, decentralization, and scalability, and there are significant algorithm differences in blockchain fuzzification, which sets it apart from its peers. How private is it? Here are more details.

1. Safe and reliable

For a decentralized cryptocurrency, decentralization means that its network is operated by users; transactions are confirmed by decentralized consensus and then recorded on the blockchain irrevocably. Monero needs no third party to guarantee the safety of funds;

2. Privacy protection

Monero confuses all transaction sources, amounts, and recipients through ring signatures, ring confidential transactions, and invisible addresses. Apart from all the advantages of a decentralized cryptocurrency, it is by no means inferior in safeguarding privacy;

3. Unable to track

The sender, the receiver, and the transaction amount of all Monero transactions must be anonymous by default. The information on the Monero Blockchain cannot be matched with physical individuals or specific users, so there is no trace to track;

4. Scalable

Everyone knows that Bitcoin’s ability to process transactions has always been limited by the scalability issue; as we have mentioned before in the introduction of Bitcoin, the block size of 1MB makes things difficult. But Monero’s developers have created a system that allows the network to process more transactions when needed; what’s more, Monero does not have any “pre-set” restrictions on block size.

Of course, this also means that some malicious miners may block the system with large blocks. To prevent this from happening, Monero has worked out countermeasures: the block reward penalty of the system.

On October 18, 2018, Monero’s latest hard fork changed the consensus mechanism algorithm to CrypotoNight V8. In this hard fork, it introduced the BulletProff bulletproof protocol, which can also effectively reduce the transaction fee of miners without disclosing transactions

It is said that Monero will issue about 18.4 million XMR in around 8 years. Moreover, it eclipses its counterparts in distribution — with no pre-mining or pre-sale, all block rewards will be left to miners by means of the POW mechanism.

Here is the reward scheme of Monero in two stages:

1. Acceleration: mine 18132000 XMR before May 2022;

2. Deceleration: Deceleration starts right after 18132000 XMR is mined, and there will be a reward of 0.6XMR for each block mined afterward. In this way, the overall supply will be kept on a small scale and decelerated.

Monero is also excellent in its development concept that is designed to be anti-ASIC from the very beginning. Here is a brief introduction to ASIC (Special Application Integrated Circuit).

Due to the specificity of ASICs, specially designed ASICs can usually have much higher hashrate than general CPUs, GPUs, and even FPGAs — that makes hashrate excessively centralized and makes it vulnerable to the monopoly of single centralized institutions. Yet the cryptonight algorithm used by Monero allows most CPUs and even FPGAs to get involved and get mining rewards, instead of making GPU the only one that can efficiently mine.

In other words, Monero’s core development team will modify the consensus mechanism algorithm and have a hard fork after some time to ensure its strength against ASIC and the monopoly of hashrate.

However, although Monero has been designed against ASICs to avoid centralization, nearly 43% of its hashrate is still owned by 3 mining pools; in addition, it is not a BTC-based currency, making it even harder to introduce some elements. Of course, Monero is not that newbie-friendly and thus has not been widely accepted.

Yet each cryptocurrency has its own features. As long as Monero keeps improving its privacy, it will definitely attract increasing followers. If you are interested in Monero, welcome to CoinEx for exchange or trade.

About CoinEx

As a global and professional cryptocurrency exchange service provider, CoinEx was founded in December 2017 with Bitmain-led investment and has obtained a legal license in Estonia. It is a subsidiary brand of the ViaBTC Group, which owns the fifth largest BTC mining pool, which is also the largest of BCH mining, in the world.

CoinEx supports perpetual contract, spot, margin trading, and other derivatives trading, and its service reaches global users in nearly 100 countries/regions with various languages available, such as Chinese, English, Korean and Russian.

Website: https://www.coinex.com/

Twitter: https://twitter.com/coinexcom

Telegram: https://t.me/CoinExOfficialENG

Click here to register on CoinEx!

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CoinEx Institution

CoinEx Institution

CoinEx Institution provides you everything you need to know about cryptocurrency, trading and blockchain, and is completely free.

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