What is cryptocurrency Monero (XMR) and how does it work?

What Is Monero (XMR)?

Monero (XMR) is a privacy-focused peer-to-peer digital currency, designed to be untraceable and anonymous. A transaction on the Monero blockchain can’t be linked to a particular user or real-world identity as the cryptocurrency is fungible. This term describes a currency in which every unit is identical and mutually interchangeable with every other unit of that currency. So while a Bitcoin bought from the darknet could be distinguished from a Bitcoin bought on Coinbase through blockchain transaction analysis, two separate Monero coins appear exactly the same and can’t be told apart.

This makes Monero a pretty unpopular currency with a lot of financial regulators as they can’t trace XMR payments or collect data on its users.

How Does Monero Work?

In order to provide privacy and anonymity, Monero relies on two important concepts: stealth addresses and ring signatures.

Stealth addresses enable a sender to generate a one-time public address on behalf of the recipient for every single transaction. However, the recipient can still use a single public address for receiving all their payments, just like Bitcoin. Every Monero user will generate a private view key and a private spend key. The private view key will allow them to see all the transactions associated with their account, while the private spend key is similar to a Bitcoin private key – it’s used to authorize payments.

Ring signatures is a concept from general cryptography and refer to a digital signature that can be signed by any member of a specific group of people with private keys. Whenever you make an XMR transaction, your Monero wallet forms a ring out of other users’ keys it pulls from the blockchain. To anyone observing, it’s impossible to tell whose key was used to sign, making the transaction anonymous.

In January 2017, Monero introduced Ring Confidential Transactions (RingCT) which also hide the value of transactions.

Who Are the Founders of Monero?

The origins of Monero start with the release in 2012 of the CryptoNote whitepaper – a cryptocurrency research paper by developer Nicolas van Saberhagen, whose true identity is unknown. It introduced the cryptographic methods described above and proposed a new form of electronic cash, called “CryptoNote”.

In July 2012, Bytecoin became the first cryptocurrency to launch based on the CryptoNote protocol, then in 2014, Bytecoin’s codebase was forked to create a new currency – Bitmonero, which we know today as Monero.

Monero has no single founder or CEO. There is a core team of developers working on it, most of whom choose to remain anonymous. One of the few developers who is known by name is Riccardo Spagni (aka FluffyPony) who was Monero’s lead maintainer until stepping down in December 2019. Spagni originally got involved in cryptocurrencies in 2011 by mining Bitcoin and went on to co-found Tari, a merge-mined sidechain of Monero focused on enabling and empowering non-fungible tokens (NFTs).

As an open-source project, Monero relies primarily on donations from the community to fund its development. Hundreds of people around the world have supported the project with proposals and funding through Monero’s Community Crowdfunding System (CCS).

What Makes Monero Unique?

Although Monero’s anonymous developers and open-source code base may sound similar to Bitcoin, there are some major differences – one being the way updates are handled. While Bitcoin is somewhat reluctant when it comes to forks, with even the simplest of upgrades requiring a long discussion period before implementation, Monero’s software is programmed to update autonomously every six months.

In 2018, Monero became the first major cryptocurrency to deploy what is known as “bulletproofs”, a technology that greatly improved the efficiency of XMR transactions and led to at least an 80% drop in the size of the average transaction and dramatically reduced fees for the end-user.

Although there are many other privacy coins, Monero is perhaps the most well-known and has the largest market cap. It also offers privacy by default, unlike some of the alternatives such as Zcash where it is a manual opt-in feature.

What Gives Monero Value?

For most users, the value of Monero comes from its privacy and anonymity. It offers people the chance to make a crypto transaction whenever they want for whatever reason without worrying about being observed by the government, hackers, or any other third party. XMR coins also can’t be blacklisted by companies for suspected criminal links, as there is no way of actually tracing them.

In addition to its utility as a medium of exchange, Monero may also have value to investors who believe that demand for privacy will increase in the future and drive up the price and overall market cap of XMR.

How Many Monero (XMR) Coins Are in Circulation?

Currently, XMR has a circulating supply of . Monero will have a total supply of 18.4 million XMR, expected to be reached in May 2022, but there is no true max supply as after this point Monero will continue to emit 0.6 XMR per block infinitely in a process known as “tail emissions”, in order to keep miners incentivized to power the network.

Monero XMR

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Other Technical Data

Monero was released without any pre-mine, ICO, or founders’ fund, and it has the highest market cap of any privacy coin. XMR hit an all-time high of 351.64 EUR on 8 Jan 2018 and although the price has not climbed that high at the time of writing, the volume of daily transactions is constantly increasing.

How To Use Monero

The increasing supply of XMR makes it less suitable as a hedge against inflation than other cryptocurrencies, and its main use case remains to be as a means of transacting anonymously. This could be useful in a variety of situations, including businesses wanting to keep their suppliers hidden, citizens trying to escape government oppression, and the average person who just wants to be free of any kind of scrutiny due to their personal purchases.

How To Choose a Monero Wallet

The type of Monero (XMR) wallet you choose will likely depend on what you want to use it for and how much you need to store.

Hardware wallets or cold wallets provide the most secure cryptocurrency storage option with offline storage and backup. Ledger, Trezor and the Monero community-funded Kastelo offer XMR storage solutions. Hardware wallets can involve a bit more of a learning curve and are a more expensive option, however. As such, they may be better suited to storing larger amounts of XMR for more experienced users.

Software wallets provide another option and are free and easy to use. They are available to download as smartphone or desktop apps and can be custodial or non-custodial. Software wallets deemed safe by Monero include MyMonero, Edge and Cake Wallet. While convenient, they are seen as less secure than hardware wallets and may be better suited to smaller amounts of XMR or more novice users.

Monero also supplies a GUI (graphical user interface) wallet which can be downloaded to your desktop and is recommended for less technically savvy people who want to quickly send and receive XMR.

Online wallets or web wallets are also free and easy to use. They are accessible from multiple devices using a web browser but are considered hot wallets and can be less secure than hardware or software alternatives. As you are trusting the platform to manage your XMR, you should select a reputable service with a track record in security and custody. As such, they are most suited for holding smaller amounts or for more experienced frequent traders.

Kriptomat offers a secure storage solution, allowing you to both store and trade your XMR tokens without hassle. Storing your Monero (XMR) with Kriptomat provides you with enterprise-grade security and user-friendly functionality.

Buy and sell XMR, or exchange them for any other cryptocurrency – it can be done in mere moments when you choose our secure platform as your storage solution.

Monero Mining

The Monero network is based on a proof-of-work (PoW) consensus mechanism, like Bitcoin and many other cryptocurrencies, which incentivizes miners to add blocks to the blockchain. The algorithm that manages this system is designed to be resistant to application-specific integrated circuits (ASICs) – specialized mining equipment that gives companies and wealthy individuals a significant advantage over other miners.

Over 65% of the hashing power for Bitcoin comes from ASIC mining farms in China, so clearly they risk the network becoming centralized. In 2019, Monero upgraded to the RandomX algorithm which is optimized for CPU miners (e.g. a laptop) and GPU miners (using standalone graphics cards), which should, in theory, keep the network more decentralized.

Conclusion

While Bitcoin may have taken the initial steps towards a more private digital cash over a decade ago, Monero has made significant advances towards true financial anonymity. Although it’s one of many privacy coins available on the market, between its advanced cryptography and features such as stealth addresses and ring signatures, coupled with ASIC resistance, Monero has secured its place as the biggest privacy coin by market cap.

Moreover, Monero is governed by a community that is driven more by ideals than profit and believes privacy is a fundamental right. As privacy rights become ever more eroded in the modern world, the value of cryptocurrencies like Monero becomes more apparent, and with a dedicated community and regular updates planned for the future, Monero looks to have carved out a spot for itself in the greater crypto markets – and it isn’t leaving.

Monero FAQ

How To Buy Monero

If you want to buy Monero (XMR), simply visit Kriptomat’s how to buy Monero (XMR) page, select your preferred method of payment, and your XMR will be in your wallet in a matter of seconds.

How To Sell Monero

If you already own XMR and hold it in a Kriptomat exchange wallet, you can easily sell it by navigating the interface and choosing your desired payment option.

Monero Price

Project news and developments, market sentiment, the flow of cryptocurrency on exchanges, and the economy, in general, all affect the price of Monero. Though its rate will be slow, the perpetual inflation of Monero means that its price and market cap aren’t driven by scarcity like Bitcoin. XMR’s inflation rate decreases with time, which should preserve the value of the network to some degree.

Ultimately, the price of Monero and its market cap are determined by the balance of supply and demand in the market at any given time, and although the supply will gradually increase forever, data shows that the number of transactions on the network is also increasing. Additionally, if authorities continue to diminish the financial freedom of people around the world, there is likely going to be a rise in the demand for Monero in the future.

The current Monero price is EUR.

The 24-hour trading volume of XMR is EUR. XMR is currently ranked of all cryptocurrencies by total market cap, with a market cap of EUR. It has a circulating supply of XMR and there is a “soft cap” of 18.4 million XMR, but no true max supply.

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