Monero (XMR): an overview of the privacy coin

Many still confuse anonymity with privacy. On the one hand, wallet users are not required to record their personal information (name, ID number, driver's license, etc.) on the blockchain, so the only identifying information is the public key (i.e., a wallet address). On the other hand, the public blockchain is a decentralized and open ledger, so anyone can view transactions from the beginning of the network's creation (when the genesis block was established). The anonymity factor for cryptocurrency owners is maintained only because it is quite difficult to link a wallet address to a specific person. Additionally, since the public blockchain is decentralized and open to everyone, anyone can view the transaction history of a specific wallet address by conducting a search query using any relevant blockchain explorer.

Therefore, almost every sender or receiver of a transaction may be deanonymized by linking specific transactions to a particular address, whether it's Bitcoin or Ethereum. Under certain circumstances, it is even possible to identify a person if the owner of the crypto assets publicly acknowledges the address of a specific wallet or publishes it on social media or forums. Thus, privacy is maintained on the blockchain, but 100% anonymity is not.

Monero (XMR) is a project that addresses a critical shortcoming of most cryptocurrencies. It is one of the few coins in the market that offers complete anonymity for owners of any XMR wallets, be they custodial or non-custodial, as well as transactional privacy.

Monero’s history

Monero was created in April 2014 as a fork of Bytecoin (not to be confused with Bitcoin). The first listings on cryptocurrency exchanges took place in 2015.

It is known that the main developer of Monero is a participant in the Bitcointalk forum who goes by the pseudonym “thankful_for_today.” Given that the identity of the creator of Bitcoin, who goes by the pseudonym Satoshi Nakamoto, is still unknown, such a method of concealment is understandable and perhaps prudent, especially when it comes to an anonymous coin.

Monero has an open-source code that is available on GitHub. Over 500 programmers from around the world have participated in writing and improving the code over time. To implement developments and updates, Monero has established a dedicated research laboratory called the Monero Research Lab (MRL), which allows every member of the crypto community to submit proposals or join various working groups. Monero's core developers have formed a separate working group known as the Core team, which can only be joined by recommendation or invitation from one of the current members. Interestingly, the team has never received any financial support from outside parties or companies. The developers are idealistic crypto maximalists and supporters of decentralization and confidential transfers. Their primary motivation is to continue developing the project with the world's most anonymous cryptocurrency, to which each of them has personally contributed.

Monero anonymity solutions

Monero was created using the CryptoNote and CryptoNight (mining) protocols, which were later replaced by the more advanced RandomX algorithm in 2019. The technology behind its anonymity is based on several components.

Firstly, there's the ring signature mechanism, where the owner's signature is combined with 10 others, making it practically impossible to determine who signed the transaction. With the network update in August 2022, the number of participants in the ring signature increased from 11 to 16, making it even harder to track transactions.

Another important component of Monero's anonymity technology is the RingCT mechanism, which was added in 2017 to enhance privacy. Using a special algorithm, each transaction is broken down into several smaller ones that are logically linked together and only combined after the recipient's key is decrypted. As a result, the balance increases by the total amount of XMR coins sent by the sender, while the sums, addresses of senders and recipients, and transaction purposes remain hidden.

Lastly, Monero implements the mechanism of generating unique, one-time addresses for each transaction, known as Stealth Address. This is done seamlessly for users, with the blockchain automatically generating dynamic addresses while keeping static wallet addresses unchanged.

By utilizing all three anonymity mechanisms simultaneously, Monero achieves maximum confidentiality of XMR transactions, in which the sender and receiver addresses, transaction amounts, and their destinations remain hidden. All of this makes it practically impossible to identify the participants involved in Monero transactions.

Mining & Monero blockchain

The RandomX mining protocol is a version of the Proof-of-Work (PoW) consensus algorithm, which made industrial ASIC mining unprofitable. Monero is best mined on CPUs or GPUs in solo mode or by joining one of the many mining pools such as Monero Pool or Nano Pool.

To evaluate the profitability of Monero mining, special calculators like CryptoCalc, MinerStat, and Red-miner can be used. These tools allow you to adjust parameters such as hash rate, pool fees, electricity cost, mining difficulty, and more to estimate potential earnings per hour, day, month, or year.

New blocks are added every two minutes to the Monero blockchain, and over 18.2 million XMR has already been mined. Monero doesn’t have a set maximum supply. According to Coinmarketcap, Monero currently ranks 26th in terms of market capitalization, with a value of over $3 billion. Its daily trading volumes exceed $100 million.

Monero's ROI is currently over 6700%, making it an attractive investment option due to its unique competitive advantages: complete anonymity and leading position in the market among other private coins.

In addition to millions of retail investors, XMR is held in the investment portfolios of well-known venture capital funds, such as Galaxy Digital, Electric Capital, BoostVC, and others. 

How to buy & hold Monero

Monero (XMR) is available on many major centralized exchanges (CEXs), such as Binance, OKX, WhiteBIT, HitBTC, Kraken, Kucoin, and others. In addition, Monero may also be exchanged via a significant number of peer-to-peer (P2P) and decentralized exchanges (DEXs), such as SiennaSwap, 4swap, Bisq, Local Monero, Hodl Hodl, as well as numerous virtual asset exchangers. 

In May 2021, Monero reached its all-time high (ATH) of $518 per coin. Currently, due to a prolonged bear market, the price of XMR fluctuates in the range of $160-187. This is why there are enormous growth prospects if the trend shifts to bullish, which could happen fairly soon. 

It's worth noting that regulators can influence the price of Monero. With each wave of FUD attacks against anonymous assets, the price of Monero may decrease. Some major CEXs, such as Huobi, have decided to avoid unnecessary issues with regulators and have delisted the coin. As a result, they lost a huge number of investors and traders who moved XMR to other trading platforms or non-custodial wallets to continue trading with Monero.  

Monero can be stored on hardware wallets such as Ledger and Trezor. Additionally, Monero is supported by a significant number of mobile and desktop wallets such as MyMonero, Exodus, Monerujo (Android), Cake Wallet (iOS), Edge, and more.

Monero GUI Wallet desktop interface

Conclusion

Monero is a popular cryptocurrency among investors due to its fast transaction speed, low fees (less than 1 cent equivalent), accessible CPU mining, and confidential transfers. Despite regulatory attacks against anonymous cryptocurrencies, Monero's popularity is expected to grow, disregarding individual CEX exchanges' delisting of XMR. The coin has gained favor with the crypto community due to its anonymity, and the number of Monero supporters is expected to rise steadily.