Introduction to Monero
Monero is one of the most private and anonymous cryptocurrencies available on the market. When the idea for the project first surfaced, the founders wanted to offer a global anonymous transaction solution, which is why they chose the name “Monero.” The name Monero means “coin” in Esperanto language. With that said, it is important to mention that this cryptocurrency uses a list of different technologies to achieve its goal and make it nearly impossible to track Monero transactions. Monero offers a selection of unique features that make it stand out among other cryptocurrencies, which we will discuss below.
The History of Monero
The idea for creating Monero actually surfaced during a different project. In the summer of 2014, innovative developers launched Bytecoin, the first digital currency that was written with CryptoNote. CryptoNote is an extra layer that provides privacy and anonymity. Nowadays, Cryptonote is the backbone of most privacy-based cryptocurrencies out there. The privacy of coins that use CryptoNote is ensured by grouping public keys together. By combining several keys in a single transaction, it is impossible to track the initial sender. When CryptoNote launched, it turned out that 80% of the coins that would ever be mined were already in existence.
This led a group of seven developers to fork the Bytecoin blockchain. The new currency would be known as Bitmonero. After some discussion took place between supporters and developers, Bitmonero was eventually renamed into Monero, which means “coin” in the Esperanto language, known as the most popular international auxiliary language or the “world-language.” The cryptocurrency was launched on April 23rd of 2014. Riccardo Spagni, better known for his online alias “Fluffypony”, became the main public figure associated with Monero. He was responsible for the notable progress in the early stages of development.
The Importance of Privacy
In early 2017, the privacy of Monero transactions had been further improved by implementing the so-called confidential transactions mechanism in combination with ring signatures. This mechanism was created by developer Gregory Maxwell. It makes transactions harder to trace by obscuring the output of the true sender in a set of other similar outputs. On top of this, it hides the transaction amounts of those outputs as well. Monero also uses the concept of stealth addresses to improve transaction privacy. Thanks to ring signatures and stealth addresses, Monero’s initial sender and receiver are both equally anonymous.
Finally, Monero added bulletproofs, which are a form of short zero-knowledge proofs that require no trusted setup. Invented by Benedict Bunz and Jonathan Bootle, the technology decreases the weight of confidential/private transactions. Bulletproofs solve this inefficiency of private transactions, due to the fact that private transactions contain a lot of data. Because the blockchain gets congested quicker by all this data, the result is poorer efficiency. Once bulletproofs were implemented, it greatly reduced the required range proofs which are needed to prove the authenticity of a transaction, without revealing any details. Early testing led to an 80% reduction in transaction size and fees. Eventually, Bulletproofs led to a 95% reduction of transaction size and fee.
Specifications of Monero
|Founder(s)||Nicolas van Saberhagen|
|Date of Release||April 2014|
|Consensus mechanism||Proof of Work|
|Average Block Time||2 Minutes|
|Mining / Staking reward||+- 1.73 XMR|
|Next Block Halving||n/a|
The Price of Monero
Unique Aspects of Monero
Monero is a secure, private and untraceable currency system, which makes it different from other cryptocurrency options. In an increasingly transparent world, the need for an anonymous coin could become more desirable. Monero takes privacy seriously, it needs to be able to protect users in various circumstances so users cannot be held liable for their actions and maintain a level of privacy that is accessible to everyone. All Monero transactions are cryptographically secured by using the latest and most resilient encryption tools available. The Monero team argues that this cryptocurrency empowers the individual to complete ownership of their data, which is very much desired.
Permissionless and Anonymous
Monero is an open-source project that is entirely permissionless, which is a feature that makes it potentially revolutionary. Since Monero is permissionless, there is no authority that can stop you from using the cryptocurrency. The most important thing that gives Monero its value is its privacy feature. No one can link anyone to a Monero transaction. This makes it a go-to currency for people who is concerned about their privacy online. Another important feature of Monero that relates to its privacy, is that it is entirely fungible. This means that no one besides the sender can tell which transactions were previously performed with that particular coin. In other words, there is no public transaction history available for the Monero currency.
One of the developers’ goals was to use Monero to improve Bitcoin’s functionality and scalability. Most simply put, scalability refers to how well the network can grow in relation to its usage. While most cryptocurrencies have a set amount of data that fits in a certain block, Monero does not have a fixed block size. Instead, the Monero developers opted for a block reward-penalty system. The median size of the last hundred blocks is taken and if the next block which is mined exceeds this median, the block reward is reduced significantly. This discourages users to spam transactions since the miners will usually not mine these blocks.
Why Use Monero?
Monero is a suitable option for users who want to ensure privacy for their online payments. Those who most commonly use Monero believe that privacy is of utmost importance. Having access to a currency which is completely fungible is becoming more and more important nowadays. Thanks to Monero, you can have complete control over your transactions without anyone being able to tie you back to your activities. You are responsible for your money and, because your identity is private, no one will know what you’re spending the money on.