What is Monero?
Monero appeared in April 2014 as a fork of ByteCoin. Initially, it was called BitMonero. XMR is an open-source cryptocurrency, the protocol of which implements a number of techniques for anonymous transactions: stealth addresses and ring signatures. Monero is based on the RandomX protocol, which provides a high level of anonymity for each transaction, and works on the Proof-of-work principle. From the above, it is clear that account privacy and anonymity are the main features that attracted clients to the Monero community.
For the first couple of years, the project stayed low-key. But then, in 2017, researchers highlighted three major threats, which the team quickly addressed. The new developments and technologies introduced at the time caught the attention of users and, most importantly, traders.
From that point on, the project entered a new, more exciting phase with drastic ups and downs. The highest point for the Monero price was 517.62 USD on May 07, 2021. The daily trading volume at the time was almost 825 million USD. The market cap for that period is hard to track, but it was already in the top 50 of the largest cryptocurrencies.
It’s also important to mention some of the controversies for historical context. Monero has been somewhat popular on the darknet (although not as popular as Bitcoin). One notable instance was a cryptocurrency ransomware attack in 2017 called WannaCry by the Shadow Brokers.
How Is the Monero Network Secured?
Monero’s cryptography is considered conservative, sound, and robust when you compare it to other altcoins. But if you compare it to major currencies like Bitcoin, some security mechanisms are more primitive, and some are more advanced. Some choices deliberately go against the standard - specifically, the CryptoNote protocol, which is covered in the documentation.
The security of the network can also be highlighted through comparison with Ethereum. There have been stories when Ethereum’s lead developers confiscated money from someone’s account. Not to mention, this didn’t even take much effort. In contrast, Monero devs cannot do that. Even if they wanted to, they wouldn’t have any data because of shielded addresses and some additional obfuscation.
The main privacy-enhancing technologies that the project utilizes are:
- RingCT (Ring Confidential Transactions) - hides transaction amounts;
- Stealth Addresses - obscure public access to the parties involved;
- Ring Signatures - an endorsement from any member of a particular set of users;
- Transactions over Tor/I2P - anonymous access to information and communications online
- Dandelion++ - lightweight and straightforward protocol, upgrade to the original Dandelion proposal
What Makes Monero Unique?
Monero doesn’t have a maximum supply, which means the total supply increases indefinitely through mining. The current circulating supply (end of 2021) is 18,047,655.14 XMR. But that’s not the most interesting thing about this network. Below are five unique characteristics that this project offers:
- Privacy: Monero became one of the most popular coins thanks to its ability to obscure user data on the blockchain, making its users private and more difficult to trace.
- Fungibility: It is the only fungible cryptocurrency. This means that its individual units are capable of mutual substitution, i.e., any tome XMR coins can be substituted with no difference between them.
- Dynamic scalability: The network has a block reward-penalty system. It ensures that miners won’t mine blocks excessively just for profitability, thus discouraging spam transactions.
- ASIC resistance: It uses an alternate hashing algorithm that can be used as efficiently on CPUs and GPUs as on ASIC mining gear.
- Multiple keys: Unlike most blockchain projects that use one pair of keys, this one uses a public view key, a private view key, and both public and private spend key.