Monero – and not Bitcoin – is the cryptocurrency of privacy and anonymity

Dash, Monero, and Zcash – Three altcoins created in January 2014, March 2014, and October 2016, respectively

It is a common misconception that Bitcoin is an anonymous payment network. Bitcoin transactions are pseudonyms, and since each transaction can be seen by any third party, there is a wealth of information available to anyone who wants to know who is behind certain movements. Unquestionably, someone who wants to use a currency to carry out an illicit operation would be more prudent using cash rather than bitcoin. With every transaction, bitcoin leaves a permanent fingerprint on the blockchain.

If privacy and anonymity is what you’re looking for, the three cryptocurrencies that prioritize those features are, in order of release, Dash, Monero, and Zcash. Of the three, Monero is perhaps the most relevant, with a sustained trading record, strong crypto, and a fair issuance model.

Monero is the descendant of a lesser-known cryptocurrency called Bytecoin. The latter was created in a very different way than Bitcoin, using a technology known as CryptoNote. Like the Litecoin code, CryptoNote’s hashing algorithm aims to avoid specialization and therefore centralization of the miners that support the network. In this sense, Bytecoin’s validation process favors general-purpose chips like CPUs over specialized chips like ASICs.

In addition to using a more egalitarian proof-of-work process, CryptoNote enables untraceable payments and non-binding transactions on a scan-resistant blockchain. In March 2014, Adam Back, considered the inspiration for Satoshi Nakamoto’s proof-of-work algorithm and president of Blockstream, one of the biggest companies in the crypto industry, tweeted that CryptoNote was one of the few ideas from the space outside of Bitcoin. that it had “a defensible reason for being.”

The question, then, is why Monero displaced Bytecoin from the market. The Bytecoin blockchain and the issuance of its currency, bytecoin, began operations on July 4, 2012, but the launch did not become widely known until almost two years later, when an announcement about the currency was posted on the bitcointalk forum. org on March 12, 2014. Unsurprisingly, people were confused as to why the Bytecoin team had taken two years to go public. While some argued that the developers wanted to make sure the technology was working properly before drawing public attention, others suspected that there was something more insidious at play called premine, o preminado.

Bytecoin had planned to issue 184.46 billion bytecoin through the mining process, but when it went public, 150 billion bytecoin already existed, more than 80% of the total supply. A classic pre-game, Bytecoin had quietly issued a large number of coins that put the wider community at a disadvantage. Bitcoin and the blockchain movement are based precisely on the principle of egalitarian transparency, which is why pre-films are very frowned upon. Although they still occur, many are scams that investors should avoid.

On April 8, 2014, bitcointalk.org user named “eizh”, who would later become a Monero developer, commented: “I’m surprised someone didn’t start a clone [de Bytecoin] with a fairer issuance model and an active development project. “On April 9, 2014, just a month after Bytecoin’s public announcement, an involved user known as” thankful_for_today “posted on bitcointalk.org a A statement titled “Bitmonero — a new currency based on CryptoNote technology — launched,” informing that the mining process would begin in nine days.BitMonero was quickly rebranded as Monero and often referred to as XMR.

The most distinctive feature of Monero is the use of ring signatures (circle signatures), a cryptographic technology that has been evolving since 1991. Monero signatures are best explained with reference to Bitcoin. In Bitcoin, to make a transaction, an identified person signs the bitcoin balance that he is trying to send. In Monero, a group of people sign the transaction, but only one in the group owns the XMR. The CryptoNote website puts it clearly:

“In the case of circle signatures, we have a group of individuals, each with their own public and secret key. The statement proven by circle signatures is that the signer of a certain message is a member of the group. The main difference With ordinary digital signature systems it is that the signer needs a unique secret key, but the verifier cannot establish the exact identity of the signer. Therefore, if you are faced with a circle signature with the public keys of [María, Pedro y Luis]It can only be stated that one of these individuals was the signer, but his identity cannot be specified. “

Although many are wary of this privacy, it should be noted that it has huge benefits for fungibility. Fungibility refers to the fact that any unit of currency must be as valuable as another unit of the same value ($ 1 = $ 1). One danger for bitcoin, especially currencies known to have been used for illegal activities, is that if an exchange or other service blacklishes that balance, then those bitcoins become illiquid and possibly less valuable than other balances on it. amount. Although subtle, the loss of fungibility could be the disappearance of a digital and distributed currency, which hurts the value of all units, not just those used for illegal activities. Fortunately, this is a problem that Monero does not have to deal with.

Monero’s issuance and distribution model can be described as a hybrid of Litecoin and Dogecoin. In the case of Monero, a new block is added to its blockchain every two minutes, similar to the 2.5 minutes of Litecoin. However, like Dogecoin, it will have a slight degree of inflation throughout its life starting in May 2022, when 0.3 XMR per minute, or 157,680 moneros per year, will be issued. At that time, there will be 18.1 million units of XMR in circulation, so inflation in that first year will be only 0.87%. Over time, that inflation will decrease as the monetary base of monero increases. Interestingly, in 2040 there will be almost equivalent amounts of bitcoin and monero in circulation, and in the period from 2019 to 2027, the inflation rate of the Monero supply will be lower than that of Bitcoin, but in all other periods the opposite will be the case.

Monero’s ability to create transaction privacy was a technological breakthrough that did not go unnoticed within the crypto asset community and markets. At the end of 2016, Monero was the fifth largest cryptocurrency in the world, and it was the best performing virtual currency that year, with an increase in value of 2,760%. The figure clearly demonstrates the level of interest in cryptocurrencies as protectors of privacy. Some of that interest undoubtedly comes from sources that leave a lot to be desired.

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Monero – and not Bitcoin – is the cryptocurrency of privacy and anonymity

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