Boasting security and privacy, including untraceable transactions, Monero (XMR) is among the most popular and controversial cryptocurrencies in an increasingly saturated market. Like other cryptocurrencies, Monero features an open-source blockchain that records transactions and creates new units through mining. What sets Monero apart is its opaque blockchain, which prevents transactions and their amounts from being traced to specific addresses — providing an extra layer of protection to the identities of its users.
In this beginner’s guide to Monero, we will go over:
The history of Monero starts in 2013 when a white paper outlining an application layer protocol for powering digital currencies called CryptoNote was released. The author of the paper used the pseudonym Nicolas van Saberhagen to protect their identity similar to Satoshi Nakamoto, the mysterious creator of Bitcoin.
Typically, white papers lay out a mission statement and then introduce technical plans for a technology’s implementation. The CryptoNote white paper, however, doubles as a thorough criticism of Bitcoin — citing major privacy and censorship issues.
Saberhagen quickly addresses their concern with the privacy of Bitcoin:
“Unfortunately, Bitcoin does not satisfy the untraceability requirement. Since all the transactions that take place between the network’s participants are public, any transaction can be unambiguously traced to a unique origin and final recipient. Even if two participants exchange funds in an indirect way, a properly engineered path-finding method will reveal the origin and final recipient.”
Not long after the paper was published, developers began working on realizing the platform’s mission, resulting in the creation of the transitory digital currency Bytecoin.
It didn’t take long for the controversy to start with Bytecoin as the founding team decided to “pre-mine” coins and distribute amongst themselves before the currency was available to the public. This, along with other questionable behavior, resulted in an eruption of drama that is chronicled here.
Some of the developers, led by Riccardo Spagni, decided to carry out a re-launch through a hard fork of the Bytecoin network. They decided to call it BitMonero (Monero is the Esperanto word for coin). Supporters of the digital currency decided on a shortened name of Monero.
Monero climbed the ranks of cryptocurrencies, with incredible growth in market capitalization throughout 2016 largely due to adoption by darknet marketplace AlphaBay, which has since been shut down due to illegal activity. The untraceability of Monero predictably lends itself to use among seedy individuals for illegal transactions.
The high-flying digital currency has been making its way into headlines for more than just a meteoric rise in market cap.
Recently, there have been a number of instances of hackers distributing malware that turn infected web pages into mining systems without the consent of users. Monero is uniquely susceptible to such problems because — unlike other cryptocurrencies like Bitcoin, which require specialty hardware — it is possible to mine Monero with normal CPUs.
Monero has a thriving community made up of more than 240 active developers contributing to the Monero project, including 30 core developers. Much of the Monero core team is made up of a group of pseudonymous developers who tend to stay out of the crypto limelight, the exception being the outspoken Riccardo Spagni also known by his twitter handle @fluffypony.
Spagni, the controversial face of Monero, is a South African resident who seems to thrive on disrupting the world, particularly the banking system. A self-described Twitter troll, Spagni is notorious for repeatedly claiming that he lost his private keys “in a series of horrible boating accidents,” while simultaneously flaunting his love for Rolex watches and elaborate wine racks.
Serious question: if you don’t have an LED wine rack are you even an altcoin developer? pic.twitter.com/Gdgray2cJG
— Riccardo Spagni (@fluffypony) April 13, 2017
In regard to the re-launch of Monero, Spagni was quoted as saying,
“I thought, ‘I’m going to pump it and dump it,’ because I was interested in taking the ideas and implementing them in bitcoin. The bitcoin code base was far more interesting to me than Monero, and I thought, ‘I’m not going to work on this codebase, it’s terrible,’”
Despite his initial disinterest in Monero, Spagni stuck around with the Monero team and remains the cryptocurrency’s loudest voice and lead maintainer.
Three different privacy measures are used in the Monero blockchain to maintain the anonymity of users.
Ring signatures allow the sender in the transaction to hide among a group of sending addresses on the network. Basically, when a transaction occurs, there is a group of possible senders represented by their keys but the actual sender is never revealed in the data recorded on the blockchain.
Here is a visualization of ring signature tracking.
Ring confidential transactions or RingCT, is how transaction amounts are hidden. It was implemented on the Monero blockchain in January of 2017 and after September 2017, all transactions on the network feature RingCT by default. This upgrade improved upon ring signatures and other transactional components by allowing for completely hidden amounts, destination and origin address, and trustless coin generation.
Stealth addresses allow the sender to create a one-time address for a transaction that is randomly generated. The transaction is recorded as taking place between these addresses, yet they cannot be linked back to either the recipient or sender.
Unsurprisingly, there are those who are concerned about the secrecy of Monero transactions. The obfuscating of senders, recipients, and transaction amounts are the perfect features for criminals looking to do business and avoid detection. But privacy is something that people hold dear. Everyone has things that they would like to be kept private and the vast majority of those things are perfectly legal.
Fungibility is an economic term that is used to describe individual units of a good or commodity that are interchangeable. The easiest example of this is to use something like US dollars. Two 10 dollar bills can be exchanged for a 20 dollar bill without any value being gained or lost on either end of the transaction.
Most digital currencies, including Bitcoin, follow the basics of fungibility, as one Bitcoin will typically be worth 1 Bitcoin. However, one of the weaknesses of Bitcoin pointed out by the creators of Monero is its transparency that leaves users open to censorship and other problems.
Say that there was an exchange hack and Bitcoins were stolen from users who left their funds in their exchange’s wallet (try to avoid doing this). Those coins could be given to unsuspecting users, not aware that the coins are stolen, and then be rendered useless by those with the knowledge and means to identify the stolen funds.
Imagine that you were given cash in exchange for an item or service sold to someone else. If some or all of that cash is found to be counterfeit, you lose out on that money and are potentially open to an investigation into how you obtained that illegal currency, despite you doing nothing wrong.
Monero’s privacy features protect users from something like this happening, but it has also earned Monero a bit of an unsavory reputation. The untraceability of Monero transactions undoubtedly attracts some as a way to conduct illicit activity, but its supporters would point to this being a natural side effect of the currency’s effectiveness as a form of digital cash.
Mining is the process in which transactions on a blockchain network are compiled and verified until a block of transactions and their data are completed. Using a proof-of work system, miners connected to the network are essentially volunteering the computing power of their hardware to solve puzzles that, when completed, deliver a reward in the form of the network’s currency. This is how new coins are created and how these systems incentivize people to maintain the network.
Monero is built around the CryptoNight proof-of-work hash algorithm — one of the features of CryptoNote that was designed to create a more egalitarian approach to cryptocurrency mining compared to Bitcoin.
Bitcoin started out as a currency that could be mined using graphics processing units (GPUs). As the system grew, the complexity of the puzzles that needed to be solved in order to complete blocks and earn rewards had to be increased. At this point, GPU miners did not have the power to mine in any sort of profitable way and they gave way to specialized hardware in the form of application-specific integrated circuits (ASICs).
Monero is designed to be ASIC resistant, meaning that the mining process can be carried out using a mixture of GPU and central processing unit (CPU) functions. This is possible due to the system’s proof-of-work mechanism. Instead of a standard proof-of-work hash algorithm, the network is really a voting system where users vote for the right order of transactions on the blockchain.
Every participant has equal rights using this method, and it was specifically developed to create a more uniform distribution of coins throughout the lifetime of the currency. ASIC resistance is bolstered further by regular hard forks with the explicit goal of keeping ASICs at bay.
While Monero’s egalitarian approach allows almost anyone with computer access to participate in the maintenance of the network, it does have some exploitable features.
Monero (XMR) is available for trading on many of the major cryptocurrency exchanges. A handful of exchanges allow Monero to be traded for fiat currencies such as the US dollar, Euro, and British pound. However, most exchanges only allow for trading pairs between Monero and other cryptocurrencies, most often Bitcoin and Ether, the Ethereum network’s cryptocurrency. For those interested in obtaining XMR, we recommend using Bitcoin or Ethereum to buy Monero on the Binance exchange.
Like all other digital currencies, Monero needs to be stored in a wallet which can be in the form of a desktop application on your computer or smart phone, a web wallet, or a hardware wallet. Despite the popularity of Monero, the wallet options are actually pretty sparse. This is because the security measures built into the Monero blockchain pose a challenge to many of the most common wallets. But due to its standing in the market cap rankings, a good portion of wallets are working on Monero integration.
For a comprehensive guide to the best Monero wallets, check out our guide.
Monero is an interesting digital currency that truly lives up to the term digital cash. Fast, cheap, and anonymous transactions are possible thanks to the unique technology that underlies the Monero blockchain. It was developed not to increase the wealth of the already wealthy, but as a means of transacting for the common person who wants to break free from the often restrictive practices of traditional financial institutions and their instruments.
Though Monero is not free from scandal, the use of the currency for illegal purposes is not encouraged by the underlying technology or caused by any flaws within its design. Monero was developed to be a truly disruptive force in the world of personal finance. “Be your own bank” is a phrase often uttered in cryptocurrency conversations, and while sometimes Monero is more like “A digital mattress stuffed with cash”, it definitely has utility in a market full of projects without much to offer outside of mere potential.
For Big Investors, the Recent Bitcoin Drop Presents More Buying Opportunities
Bitcoin has fallen deeply into a state of oblivion. Once trading for well over $64,000, the world’s number one digital currency by market cap has lost nearly $20,000 in value since last month and is presently trading for just over $47,000.
Bitcoin Is Still Being Bought Up
Among many analysts is an attitude of gloom and doom. Some consider the end of bitcoin to be near, while other largescale investors – such as Michael Saylor of MicroStrategy fame – think that this is the perfect opportunity to add more bitcoin to their private and company stashes and buy up.
Saylor has recently come out and admitted that not long after Elon Musk announced his company would not be accepting BTC payments for goods and services, his company purchased another $15 million worth of the digital asset. The recent dip can likely be attributed to Musk’s sudden dismissal of BTC payments, which a lot of people in the crypto space were relying on.
This was going to be a major push forward in the world of BTC. It would be seen as a legitimate and mainstream method of payment considering such a huge, billion-dollar company would allow its usage alongside fiat and credit cards.
Sadly, it does not look like this is going to pass, and bitcoin has suffered as a result, but for people like Saylor, the present conditions offer more opportunities to take advantage of. In a tweet, Saylor announced his company’s recent purchase:
MicroStrategy has purchased an additional 271 bitcoins for $15 million in cash at an average price of about $55,387 per bitcoin.
Thus far, the company has accumulated nearly $2.5 billion in BTC over the past nine months according to a filing with the Securities and Exchange Commission (SEC). MicroStrategy was one of the first major institutions to pledge public support to bitcoin and initially began buying the asset in August of last year.
While Saylor looks at the recent situation as something positive for men like himself, others are expressing disdain with Elon Musk and the fact that he is constantly saying things that have large effects on bitcoin and its competing altcoin cousins.
Maybe It’s Time to Think Before You Talk
Dennis Kelleher – CEO of Better Markets in Washington – explained to reporters:
The problem here is that a loose cannon CEO continues to shoot his mouth off about any number of potential market-moving events. It is clearly grossly irresponsible, but it may not be illegal.
For the most part, there is no evidence supporting the idea that Musk does what he does or says what he says on purpose. It could be that he just simply does not realize his power within the industry yet. However, perhaps it is time he takes a breather and really thinks about his next steps regarding crypto, as it clearly has an effect on the rest of us.
Litecoin Price Prediction: LTC/USD Goes Bearish on a Correctional Note
LTC Price Prediction – May 17
Currently, a downward correctional move is ongoing at a higher pressure in the LTC/USD market activities. The US currency forces its worth on the crypto since May 10 while the base instrument hit resistance around a high value of $400. With about a 10.07% reduction presently in the crypto market, price now trades at around the level of $266.
Resistance levels: $320, $360, $400
Support levels: $240, $220, $200
LTC/USD – Daily Chart
The LTC/USD daily chart showcases a heavy downward price correctional movement as most of the vital support trading levels breached to the downside. An intense bearish candlestick is being formed in the space between the SMAs. That has led to the breaking down of the bullish trend-line and the 14-day SMA trend-line to the south. The 50-day SMA indicator is being approached by current falling pressure at the immediate support value of $240. The Stochastic Oscillators are now in the oversold region slightly pointing to the south within it. That still calls for placing position with cautiousness as there may soon be a change of trend in no time.
Will the LTC/USD current fall-off reach for support of $240?
Going by the current pace at which the LTC/USD market operations as regards the downward correctional moves, it is most likely that bulls will await price to either closely average or briefly touch past the immediate support level of $240 before considering launching a pull-up. That said, a bullish candlestick formation is needed to back up a reliable return of an upward move at that trading zone.
On the account of contradiction, as regards the market’s upside, bears would now have to consolidate their stance in the market to forcefully break down the $240 support level in a continuation southward pushes to see through some lower support trading lines. The smaller SMA indicator may not play along with the furtherance of downswing at the first instance of heightening pressure.
LTC/BTC Price Analysis
As of writing, the comparison trading capacity outlook between LTC and BTC as shown on the chart depicts that the counter instrument has only been able to hold back the base tool in a convergent trading cycle at higher zones. Yet, the trend is having it to favor of LTC as placed with BTC. The 14-day SMA trend-line and the bullish trend-line are over the 50-day SMA. And, they are all underneath the cryptos’ trading point. The Stochastic Oscillators have slantingly moved into the oversold region with a brief-pointing posture to the south. That indicates that the possibility that the base instrument may soon begin a push further to the north.
Iranian government to penalize crypto miners using household power
The Iranian government has now warned of hefty fines for those who will be caught mining cryptocurrencies using power intended for domestic use.
This after authorities registered a significant spike in electricity consumption for digital currency mining, further straining the already stressed hydropower generation caused by insufficient rainfall in the country this year.
The government said the illegal mining operations for virtual currencies that rely on electricity intended for households cause transformers to be overloaded, damaging the power grid. According to Tehran Times, Iranian Ministry of Energy spokesperson Mostafa Rajabi Mashhadi said unauthorized miners “will be fined when identified and held responsible for the damages they cause to the electricity network.”
Mining rapidly expanding in Iran
Back in 2019, the Iranian government legalized cryptocurrency mining, classifying it as an industrial activity.
In 2020, over 1,000 mining licenses were issued by the Ministry of Industry, Mining, and Trade, and power companies were provided with an avenue to increase their profits through meeting the industry’s power demands.
Selling electricity to cryptocurrency miners was seen as an option to fill the gap between revenues and expenditures in the electricity industry. However, with the current energy crisis being faced by the country, this move is now also being questioned.
Power consumption through the roof
Per the latest available data, the cryptocurrency mining sector in Iran consumes up to 1,500 megawatts of electricity each day. Back in December, this figure only sat at 300 megawatts. Authorities revealed that only around 200 megawatts of the current average daily consumption are legal.
Chinese companies have taken advantage of low and subsidized electricity prices in Iran to establish mining operations in the country’s Special Economic Zones.
The Ministry of Industry, Mines, and Trade estimates around $660 million worth of cryptocurrency is mined annually by unlicensed facilities in Iran.
Image courtesy of Cointelegraph News/YouTube
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