Once considered the choice transaction method for the underworld, cryptocurrencies deals have risen above the negativity to become not only a preferred form of transaction online but also a profitable asset among enthusiasts. Most coins, however, do not offer adequate privacy…and that is where a Monero transaction comes in.
Sometime early in 2017, Wired published a post extolling Monero saying why it is the online drug dealers’ coin of choice. In the article, the revered online tech-related magazine highlighted how the obscure cryptocurrency had gained by more than 2,750% to outstrip both Bitcoin and Ethereum in growth.
Among the factors that hoisted Monero to the top, according to Wired, were the coin’s unique features that include its elaborate decentralization. According to the piece, Monero is wholly anonymous and virtually untraceable, which is true.
Anyone dealing in cryptocurrencies will tell you that these two characteristics are far more important in the space. However, are these two characteristics adequate? Does the coin have enough to ride the anonymity wave and come out as the best coin for private cryptocurrency transactions?
This narrative looks at the origins of the coin, the motive behind it and the reasons, well aside from anonymity and its untraceable nature that makes it the crypto users’ safe haven.
Overview of Monero
The coin is a secure, wholly private, and a completely untraceable currency system. The kind of cryptography it employs is advanced and programmed in a manner that keeps all transactions 100% untraceable. Moreover, it is not possible to link transactions even when you have the entire Monero blockchain to scour for clues.
Monero: The Origins
The currency traces its roots from the Bytecoin project that was launched in 2012. The project was the initial real-life implementation of CryptoNote, the application layer whose architecture supports several decentralized currencies. This application is similar in many ways to the application layer upon which Bitcoin is built. However, there are many differences too.
While Bytecoin held a lot of promise, it also came with several grey areas. Users realized that the project was all too shady, and that already, the platform had published more than 80% of the coins.
An agreement was reached, as such, to fork the blockchain. The new coins from the fork were named Bitmonero, which eventually became Monero, which loosely translates to coin in Esperanto.
The core development team of Monero consists of seven individuals. Five of these like to remain anonymous. The two that have admitted their participation in the project are Riccardo Spagni and David Latapie.
Among the unique characteristics that make the currency so on demand are:
It is interchangeable. You can interchange your Monero coins with others Monero coins. Here is an illustration: If you borrow 100 XMR from a friend, you can pay back in five transactions of 20 XMR each (if you and your friend are in agreement, that is).
The Monero platform grants you full anonymity. Your transactions are completely private and so it is impossible for anyone to see what you are spending your money on. In other words, your money is wholly yours.
ASIC is the short form of Application Specific Integrated Circuit. I say here that Monero is almost ASIC resistant. Well, I can qualify that. You see, the costs associated with manufacturing an ASIC that works on Monero is so ridiculously high that it is pointless doing it in the first place.
This is so because Monero runs on the CryptoNote system. The hashing algorithm used on this platform is called CryptoNight whose creation was motivated by the need for a fairer, elaborately decentralized currency system.
Cryptocurrencies that run on this hashing algorithm, as such, cannot be mined using ASICs. The reason why that is so is to prevent miners from creating pools. Essentially, the end result is a currency with a more even distribution.
One of the key challenges in the Blockchain circles is the scalability of Bitcoin. Because of the predetermined block size in the Bitcoin network, which is a measure against spam transactions, a few efficiencies have been compromised.
Monero, however, does not have this feature. But to deter malicious miners that may be tempted to scam the network by clogging it with insanely huge blocks, the network programmed a block reward penalty into the system. This program automatically reduces block sizes that are larger than the median of the last 100 mined blocks.
Whereas Bitcoin and Ethereum have only two keys; private and public, Monero has several. Aside from the private and public keys, the system also generates two spend keys. This feature makes a Monero transaction far more complicated.
As a matter of fact, a Monero transaction fulfills the three requirements of privacy and anonymity which are; electronic, decentralization, and privacy. To maintain complete opaqueness, Monero heightens privacy using ring keys for the sender, Confidential Addresses for the recipient, and Ring Confidential Transactions (Ring CT) for the transaction. In doing so, all the three parties to a transaction are concealed.
The above features make the cryptocurrency more attractive for privacy seekers, especially in an environment that is becoming more open by the day. Whereas Bitcoin allows users to spend or end money over the network without providing any real identity, any transaction is visible on the public ledger. If your Bitcoin address is linked to your true identity, then linking you to your past transactions will not require much. And, hiding such transactions may require a lot more effort; you know, such as routing them via a Bitcoin mixer.
Monero, on the other hand, not only conjures anonymity features, it also goes ahead to implement several privacy features such as the stealth address that Bitcoin does not offer.
The online space offers several Ecommerce conveniences. The modes of transaction, however, are not as private as many people would prefer them to be. One cryptocurrency that is bringing the much-needed privacy and anonymity is Monero. With the features it stacks, it will be the choice crypto for many people that trade online soon.