This is how Monero works, one of the most private cryptocurrencies

Before the marvelous arrival of Zcash, It used to be said that Monero was the most private and secure cryptocurrency of all. However, perhaps what has made it famous is that it did not take long to attract the attention of the DarkNet markets, which began to use it as a means of payment much more anonymous than Bitcoin.

But, beyond all this, what is Monero and how does it work? Is it really only useful on the Deep Internet?

To begin with, it must be said that its birth occurred in April 2014 as a fork of Bytecoin, the first cryptocurrency to use the protocol CryptoNote instead of the one used for Bitcoin. This is a cryptographic system first described in late 2012 by Nicolas van Saberhagen, where transactions are also recorded on a blockchain, but without disclosing neither the sender nor the receiver nor the actual amount: it can only be known that the amount shown is always less than the true one.

At first, Currency (XMR) was born with the name of BitMonero, a union between ‘bit’ of Bitcoin and literally ‘currency’ in the Esperanto language. Until now, true to the philosophy of Privacy As a fundamental human right, of its group of seven developers only two have revealed their name: Ricardo Spagni, a software expert from South Africa, and Francisco Cabañas, a Canadian physicist; both also crypto enthusiasts.

Following the fork and name change, the developers took it upon themselves to improve their original code and integrate the CryptoNight algorithm for mining, where they vote on the order of transactions, new features in the protocol, and the fair distribution of money. On the other hand, specifically, Monero’s absolute privacy technology is called ring signatures (ring signatures). This is a group of cryptographic signatures in which only one of those that appears is real, but there is no way to indicate which one it is or where it came from, since when mixed they all seem valid. So when making a transaction anonymity is maintained except for the parties involved.

In addition to this, its developers are working on an additional protocol that will allow not only to hide transactions in the blockchain, otherwise also the IP address from where operations are carried out.

Decentralization, scalability and fungibility

A true decentralization is another of the main characteristics that Monero offers, alluding to this that no government, foundation or central body is in charge of the platform, and that the maintenance is the responsibility of its developers, who in turn have had various collaborators without any occupying a particular position. Likewise, it is emphasized that its mining algorithm will not allow the centralization of this by large companies, as has happened with Bitcoin, since until now it is not possible to develop dispositivos ASIC for your algorithm.

Scalability is another difference they focus on, as the block size has no predisposed limits. This is calculated automatically after a trial period, and there will always be enough reward for the miners with a subsequent inflation of 1% after their first emission curve. Also, a larger block size than Bitcoin means being able to handle a larger number of transactions per second.

Its last essential characteristic is fungibility, that is, all the currencies of this blockchain are identical and can be exchanged indifferently between them, such as fiat currencies. It is not just a token nor of a reward: it is real money.

Quantity and Blockchain

Unlike other cryptocurrencies, the expected cap amount for Monero is virtually infinite. Its main emission curve will occur during the next 8 years and will reach around 18.4 million coins. After that, a constant ’emission tail’ of 0.6 XMR per block every two minutes will cause 1% inflation that will continue to decline, although the system has been designed so that miners can always get at least 0.3 XMR per block. In this way, they will not be lacking rewards for them, which will keep the blockchain secure.

The latter, of course, is proprietary to the platform and is based on the already described CryptoNote protocol, much more opaque than the original Bitcoin blockchain.

How to get XMR

Apart from mining, which can be done from any CPU thanks to the CryptoNight Proof of Work (PoW) algorithm, It can only be obtained in exchange for other cryptocurrencies or even with fiat money, such as dollars. However, before doing so, it is necessary to have a Monero wallet in order to receive them.

For now, this cryptocurrency does not have its own portfolio software, so it is necessary to resort to a web client. The most popular for its functionality is MyMonero, which does not store private keys on its server. But there are three other options: LightWallet, a JavaScript-based thin client that works on most operating systems; the Monero Full Client, for those who have the ability to run a full node and thus cooperate in the maintenance of the network; and the offline wallet of MoneroAddress.

Once the client has been chosen and configured, you have to resort to the exchange houses. The main ones in which it can be purchased are Poloniex, Bittrex, Y Bitsquare. The downside is that these exchange houses usually request an email and some personal information, which can affect the main objective of obtaining this cryptocurrency: privacy. With ShapeShiftOn the other hand, other cryptocurrencies can be instantly transformed to Monero.

Additionally, the site MoneroForCash It allows the P2P purchase of this cryptocurrency in exchange for dollars. Regarding privacy, this is also a good option, since the terms of the purchase are agreed with the seller, an email is not necessary to register and it can be accessed using Tor.

Investment?

It is no secret to anyone that the rise of this cryptocurrency to currently being the fifth with the highest capitalization in the market was due to the fact that it began to be accepted in two large markets of the Deep Internet: Alphabay and Oasis. Thanks to this, he went from having rather little attention to increase its value by 100% in just one day.

But nevertheless, lately its price has fallen and continues in that trend. So from $ 16, his record so far, has gone to your current $ 7.5. Previously, we have already analyzed the reasons for this decline: The closure of Oasis, failures in the XMR withdrawals in Alphabay and inconveniences in MyMonero have made several users think that this impulse from the DarkNet was treated from the beginning of a kind of scam where they would raise the price of this cryptocurrency in the market and then sell it and take a profit.

Another concern that Monero raises, this time from the beginning, is the large capacity of resources it requires to run, much more than Bitcoin and most cryptocurrencies. And, on the other hand, perhaps the fall in its price is also due to the recent appearance of Zcash, which came to be sold for more than $ 2 million at launch.

In the legal aspect, his anonymity worries the authorities, although this is nothing new. Several members of Parliament in Italy have requested that anonymous cryptocurrencies are bannedSo, if others take the same example, this could limit its use in multiple countries.

But nevertheless, not the whole picture is dark for this cryptocurrency. Certain investigations show that it could be a good investment in the long term, and surely this is known by companies like Jaxx and Microsoft, who have allied with Monero: the first, to include it in your popular cross-platform portfolio, and the second, to offer tests to its clients on your Azure blockchain platform.

Also, one of its main developers, Ricardo Spagni, has admitted that there is still a lot to do to improve the structure of Monero: “We take the philosophy ‘first make it work, then make it work well’, and Monero is still very much in the ‘make it work’ phase’”.

If we are guided by the history of Bitcoin, we can say that it also began its rise through the Deep Internet while it stabilized in the market. Today, studies show that illegal exchange is no longer its main use, and, in fact, in several places in the world it is accepted to pay public services and much more. The Dash, another cryptocurrency focused on privacy, already has been accepted for the same.

So soon we will see if Monero manages to evolve or definitely lags behind in the race. For now, it remains at the top of the cryptocurrencies with the largest capitalization, leading the charge as the largest private cryptocurrency and surpassing even the Dash. Something that, without a doubt, is not due to chance.

Illustration by CoinIdol

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This is how Monero works, one of the most private cryptocurrencies

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