An introduction to Monero

Monero is one of the leading privacy-based cryptocurrencies available today

If you like your privacy, then there are a few altcoins on the market that can provide you with this. One of the main altcoins within the privacy sphere is the Monero cryptocurrency. Through Monero, your transactions cannot be traced like they are in Bitcoin, meaning that you can hide yourself from prying eyes. Privacy online is a key facet of crypto anarchy, which explains Monero’s popularity.

Beginnings of Monero

Monero originally began as a fork of the Bytecoin cryptocurrency. Bytecoin was one of the earliest coins to introduce what are known as ring signatures. This piece of cryptography groups public keys together during transactions, which allows you to hide who sent them. Whilst this new technique was interesting, there were issues with the launch of Bytecoin for some. 80% of all the coins ever to be mined were created when Bytecoin launched, and this led to the fork and creation of Monero.

Riccardo “FluffyPony” Spagni

One of the most famous faces of Monero is Riccardo Spagni. Hailing from South Africa, he is also one of the Magical Crypto Friends, a YouTube podcast series featuring Charlie Lee, creator of Litecoin; Samson Mow, Chief Strategy Officer of Blockstream; and WhalePanda, a long-time Bitcoin believer and trader. Whilst Spagni has become the face of Monero, there is a clear effort from him to not be seen as the kingpin. Fears of centralisation as a result of Spagni having too much power have been swiftly rebuffed.

Hard forks and upgrades

Monero is unusual in that it performs a hard fork once every six months, generally to perform upgrades on the network. According to Spagni:

“Having regular, timed hard forks forces users to update the very sensitive piece of security software they’re running, and benefit from all the patches, bug fixes, and reduced exploit vectors in newer versions. Being able to add functionality, and know that the whole network has access to it in-step with each other, is just icing on the cake.”

Such hard forks have another effect other than just upgrades. To ensure the decentralisation of the mining network, Monero has begun to hard fork to stop ASIC mining. The first fork for this was in April 2018, soon after Bitmain released a product suited to mining Monero. Whilst such hard forks can help ensure the decentralisation of the network, one drawback is that due to the loss of power in hashing, the network could become less secure.

Monero can also be seen as a testnet for Bitcoin. With the size of the network being much smaller than Bitcoin and with the main focus on privacy, Monero can introduce upgrades much quicker to its blockchain than would be possible on Bitcoin. This allows people to view the technology in real time and see whether such upgrades could be useful eventually for Bitcoin. One such upgrade was the introduction of Bulletproofs, which helped scale the Monero network and reduce transaction fees significantly.

With fears over extensive KYC and blockchain tracing companies affecting the privacy of Bitcoin users, the new technology being implemented in the Monero blockchain could prove to be influential for the evolution of Bitcoin in the future.

Fears and criticisms

With Monero being a privacy-based cryptocurrency, it is constantly facing backlash from the powers that be. Whilst Bitcoin initially was seen as a tool for money laundering and the purchase of illegal goods, the non-fungibility of Bitcoin has made this more difficult in recent years. With Monero being a fungible cryptocurrency whereby no one can know who is using it, then theoretically the cryptocurrency would be ideal for replacing Bitcoin in this market. This is where much of the criticism for privacy coins comes from. In much the same way that cash is difficult to trace, so too is Monero.

The privacy aspect can in effect make it difficult for Monero to be listed on cryptocurrency exchanges, especially exchanges operating in strictly regulated areas. With regulation of the industry still some way off though, it remains to be seen how Monero and other privacy coins will be viewed by states around the world.

Conclusion

Privacy coins have an interesting future ahead of them. How the regulators will view them could be a very important moment for the whole cryptocurrency industry. Whilst a ban would be limiting, it might not be enough to kill off the usage of privacy coins due to their privacy features. Also important for Monero is the new cryptographic techniques that it brings to the cryptocurrency industry. Being an open source network, its new implementations can be useful for many other cryptocurrencies. With a solid development team coupled with a healthy community, Monero is well placed to be a leader among privacy coins.

As many people argue, privacy is an essential tool of freedom in the ever-creeping surveillance state.

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