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What Is monero?
Monero is a peer-to-peer currency focused on privacy.
According to Monero’s website, the Monero currency uses a special type of cryptography that makes it completely untraceable and private.
This addresses one of the criticisms of Bitcoin, where coins are traceable or semi-traceable and with enough digging, people can find out where you are getting your money, and where you are spending it.
With Monero, transaction history cannot be traced, and therefore the privacy of the user is completely protected.
Monero was initially a fork of Bytecoin. After users learned Bytecoin had a questionable team and a pre-mine of 80%, they decided to continue the project on their own fork, which later became known as Monero.
According to one developer, the Monero white paper was written by a guy using the pseudonym Nicholas van Saberhagen, who remains anonymous to this day. He was never involved in the project, but simply wrote the whitepaper and disappeared. Monero was later launched by someone called “thankful_for_today”.
thankful_for_today tried to get Monero to merge mine back with Bytecoin. After most developers resisted, they completed a second hard fork to continue with their own coin. thankful_for_today eventually gave up on his fork and disappeared.
As of December 2018, Monero is the most valuable privacy coin on the market.
If you weren’t convinced enough that Monero takes privacy seriously, you might be convinced taking a look at their Team page.
Monero has been headed by 7 core developers from the beginning. All but two of those developers have chosen to remain anonymous.
We don’t know too much about Spagni, other than he’s well known enough on the crypto circuit and shows his face at events. He appears to be wealthy and lives in South Africa. He’s been developing Monero from its earliest stages, after first being involved with mining Bitcoin. According to Crunchbase, his background is in software development, and he owns an import/export businesss with his wife. You can follow him on Twitter.
This according to Monero’s blog: Francisco is based in Canada, and holds a PhD in Physics and brings extensive business and non-profit experience to the table. He has actively researched and invested in cryptocurrencies since 2011, and focuses on the economic, social, regulatory, and long-term viability aspects of cryptocurrencies. luigi1111 hails from the Midwestern United States and is a sysadmin by day.
While these two and five others lead the core team, Monero is officially open source. According to the Monero website, it has contributions on its code from more than 400 developers. Of course, many of them choose to remain anonymous in true Monero style. You can see the full page here.
Monero’s unique selling point is privacy.
The goal of the currency is that nobody, no matter what technology or information they have, can ever find out how much you own, how much you’ve spent, how much you’ve received, who you’ve received it from and who you’ve sent it to.
The entire blockchain is designed to remain completely anonymous for all users.
Why is this important?
Well, let’s use Bitcoin as an example.
Bitcoin is the opposite of Monero – it is transparent. When you give your Bitcoin address to people, generally they can see how much you own, how much you have received, how much you have spent, and where you have been sending to and receiving from.
In a real world sense, imagine your employer wants to pay you so you give him your Bitcoin address. Then, your employer passes your information on to somebody else, with or without your consent. Because your boss knows this address is yours, you’ve now linked your Bitcoin address with your real world identity. Anyone who receives this information can now see how much Bitcoin you have. Of course for people who own a lot of Bitcoin (or anyone, for that matter) they would probably prefer this information to remain private.
When you give your Monero address to someone, you can do it safely. If anybody tries to look up your address on the block explorer, they will see this page:
So how does Monero manage to achieve this?
It’s done through a rather complicated encryption process. Let’s take a look:
Let’s imagine you need to write a check. You write the details in, and then for the bank to approve the check you need to sign it.
Because it’s your name on the check, it’s very easy for the bank, and the receiver, and anyone else who sees the check, to know that it’s from you.
However, let’s say the check is for a million dollars, and you’re concerned about your privacy. If anyone sees the check with your name on it, they’ll know you’re a millionaire. Who knows who they might tell this information to, and what it might do to the security of you and your family?
So let’s say to increase your security, the bank comes up with a system. Instead of signing the check alone, you sign it and then get three other people to sign it as well.
Now there are 4 signatures on the check. The bank will know it’s yours because they can match your signature to the one in their records. But everybody else will never know if the check is from you or from one of the other three people.
This is how ring signatures work.
Whenever a transaction is sent on the blockchain, the sender needs to sign the transaction with their signature, or their private key (you can read about keys in my wallets guide)
This is the same as signing a check – you authorise the payment by confirming it came from you.
On a transparent blockchain like Bitcoin’s, this signature is public and anyone can see it.
However with Monero, the signature is signed by you and a “ring” of other random senders. Miners are able to validate the transaction because the software tells them the signatures are a match. However, nobody knows who the sender actually is, except for the bank itself, i.e. the blockchain.
You can get a more in-depth explanation of ring signatures in this video tutorial by Monero:
The second tool Monero uses to maintain privacy are stealth addresses.
I’ve spent a long time reading and trying to understand stealth addresses and it is rather complicated.
However, I will try and explain it in layman’s terms here.
Let’s say I’m sending money to Fred.
If I were sending Bitcoin, Fred will give me his address and I simply send to his address publicly. Obviously this is not private at all – everyone can see who is sending and who is receiving.
With Monero, Fred gives me his public address, but that is not the address I send to. Instead, Monero feeds that address some random data, which spits out a new encrypted one-time address, known as a stealth address.
Based on the encryption, only Fred’s private key is able to find and unlock this address. When the transaction is sent, Fred simply scans the blockchain for the address and withdraws the funds to his real public address.
You can almost think of it as sending something to a PO Box. Instead of having things sent to your home, you send it to a neutral place first, then go and retrieve it from there to maintain your privacy. Monero does something similar, only far more secretive. With Monero, nobody knows who owns the PO Box, what’s been sent to it, in fact nobody even knows where it is. Except you.
Learn more about stealth address with this Monero video tutorial:
Ring CT (Confidential Transactions)
While ring signatures protect the identity of the sender and stealth addresses protect the receiver, what about the transaction itself?
This is where Ring CT comes in.
With the transaction, it is not necessary to broadcast the actual amount of the transaction. All that is required is that miners can validate the sender has enough to send what he/she is requesting.
Therefore when you send a transaction on Monero, it broadcasts the full amount of funds available. Then it simply returns the unneeded amount back to the sender.
For example, if I want to send 1 Monero to Fred, and I have 10 Monero in my wallet, this is what happens: Monero generates a transaction to send out 10 Monero. Then it gives 1 Monero to Fred and 9 Monero back to me.
All the network needs to see is the input is 10 and the output is 10. That’s enough for the transaction to be validated, without revealing the actual amounts.
You can see this explained in Monero’s tutorial video:
Token (metrics and utility)
Monero has a mining cap of 18.4 million tokens. It is expected mining will continue until May 2022 for this to be reached.
After that, Monero will have a fixed inflation rate of 0.3 Monero per minute, or 153,792 Monero per year. Along with transaction fees, this inflation rate is supposed to serve as an incentive for miners to continue securing the network after mining completes.
Monero did not have an ICO and all tokens are backed by mining/proof-of-work.
Monero’s only intended utility is as an anonymous currency.
It is currently one of the standards in the industry for privacy coins. To date, there has not been one reported incident of somebody breaking Monero’s anonymity protocols.
Monero is extremely cheap to use. Fees average about 2 cents per transaction.
However, due to the involved nature of encrypting its transactions, a transaction takes around 25 minutes on average to arrived fully secured in a recipient’s wallet.
By the nature of the coin itself, Monero has an extremely supportive but also introverted community.
It does not have many public ambassadors in the same way Bitcoin and Ethereum and Ripple do, as most of its members value privacy and choose to remain anonymous.
However, the Monero reddit is one of the biggest in cryptocurrency and extremely active and the team updates the community constantly on new updates, mostly through the Monero blog, which is updated regularly.
The side benefit of such a reserved community is that instead of being in the public eye, they work.
Monero thrives on community contributions, and there are many wallets, contributions and guides to using Monero, including a community funded hardware wallet.
B Money Verdict:
I think Monero offers a lot of value.
The serve a niche and arguably do it better than any other privacy coin on the market.
The fact they are backed by proof-of-work since 2014, without a pre-mine, is a huge plus.
What adds a lot of value to Monero is the highly engaged community, which can resemble the Bitcoin community in many ways – maximalist, die hard fans that support the coin no matter what, many dedicating their work and lives to the coin.
The cryptography tech in Monero is very impressive, and has gained praise from many in the industry. People often cite Bitcoin’s stability of never being compromised, but Monero has never been compromised either, and has a lot more information to protect.
The biggest risk factor with Monero is intervention from the government. While it is doubtful the government could ever shut Monero down, any intervention is likely to affect the price significantly anyway.
The Good Stuff
- Arguably best privacy coin on the market.
- Good token metrics.
- Highly engaged community.
- Low fees.
- Industry leading tech.
The Bad Stuff
- Slow transaction times.
- Governments will not like it.
- Anonymous team (but results speak for themselves).
Difficult to say as most are anonymous. On a new project this would be problematic, but four years of industry leading development speaks for itself.
Cryptography is world class. Stable since 2014. Constant upgrades.
As a privacy coin it is world class, but slow transaction times reduce this score.
Unlikely to gain corporate or government support, but grassroots support is strong. One of the most loyal communities in crypto.
How To Buy monero In New Zealand
In New Zealand, the cheapest option to buy Monero is EasyCrypto. Rates are some of the fairest in NZ and transactions are fast. You can sign up for a free EasyCrypto account here.
Alternatively, advanced investors can try using the international exchange Binance.
WHITEPAPER: https://whitepaperdatabase.com/monero-xmr-whitepaper/WEBSITE: https://ww.getmonero.org/BLOG:https://ww.getmonero.org/blog/REDDIT:https://www.reddit.com/r/Monero/TWITTER: https://twitter.com/moneroBUY WITH NZD: EasyCrypto or Independent Reserve
- Riccardo Spagni article: https://mybroadband.co.za/news/cryptocurrency/261073-how-a-south-african-became-the-lead-developer-of-monero.html
- Riccardo Spagni Crunchbase: https://www.crunchbase.com/person/riccardo-spagni#section-overview
- Monero year in review: https://www.getmonero.org/2016/02/10/monero-missive-2015-year-in-review.html
- Blockgeeks Monero guide: https://blockgeeks.com/guides/monero/
- Blockonomi beginner’s guide: https://blockonomi.com/monero-guide/
- Understanding stealth addresses: https://steemit.com/monero/@luigi1111/understanding-monero-cryptography-privacy-part-2-stealth-addresses