Over the past few years, there have been hundreds of cryptocurrencies launched including Monero (XMR), and many were launched with the sole purpose of providing users with greater privacy. The success rate amongst these cryptos differ.
The first cryptocurrency to be able to private greater privacy for users is bitcoin. The designed protocol behind bitcoin attempted to give users a high level of anonymity by shielding them with protections such as pseudonymous addresses, randomly generated strings of numbers and letters. This approach though proved to be abortive.
How did Monero (XMR) perform in this regard?
The crypto coin Monero is an open-source, privacy-oriented cryptocurrency that was developed back in April 2014. The developers of this crypto designed the digital currency without allocation any for themselves, with the team relying on investors and donations from the financial world to develop their system even further.
The crypto utilizes ring signature and stealth addresses to hide the identity of both senders and recipients. The ring signature is unique as it combines a user’s account keys with public keys available on Monero’s blockchain. The two keys are combined to form a ‘ring’ of possible signers, thus making it impossible for an intruder to link a signature to a particular user.
The idea behind ring signature was first brought to light by academics from MIT and The Weizmann Institute in a 2001 paper. Monero has used that technology to provide security and legitimacy at a moment when the cryptography used in blockchains are new and aren’t durable.
It is very important to understand that while combining services for several cryptocurrencies are available; users do not often mix digital coins when they are aiming to hide something.
XMR differs in this regard as it mixes all coins used in transactions, eliminating the notion that cryptos are being mixed to conceal information the senders and recipients don’t want third parties to see.
Monero gives its users the unique ability to keep their transactions history private or decide to share the information selectively. Each XMR account comes with a view key that allows the holder of the key to look at transactions from that account.
In the beginning, the signatures hide the identities of the senders and recipients in a transaction without hiding the amount of Monero transacted. The team, however, rolled out a new design called that RingCT which has a new ring signature. The ring signature in this update can conceal both the value of individual transactions and the identity of senders and recipients.
In addition to using signatures, Monero also increases a user’s privacy using stealth addresses, which are generated randomly and are one-time addresses that are created for every transaction on behalf of the recipient.
Monero’s High Level of Adoption
Monero (XMR) offers its users fungibility be providing them with a high level of privacy. This means that every individual unit of XMR can be switched with another, thus giving the coins equal value.
With every transaction history of each bitcoin recorded on its blockchain, cryptocurrencies have been associated with events such as theft, drug sales and others. Monero has an untraceable design. Thus no two Monero coins are distinguishable from one another and hold equal value in the eyes of traders.
If Monero doesn’t offer this level of fungibility, then traders of the currency wouldn’t accept a unit of them due to its previous transaction history.
Owing to this, Monero’s has enjoyed a steady increase in acceptance and adoption since it was launched. Dark web platforms like the AlphaBay and Oasis have accepted the currency fully amidst high demand.
In their press release, they stated that “Following the demand from the community, and considering the security features of Monero, we decided to add it to our marketplace.”
Oasis implemented the use of XRM later that year, with the approval of those two dark web markets increasing the media coverage of the currency.
Monero (XMR) on Multiple Exchanges
The crypto market of Monero operates similarly to the other cryptos. Investors interested in investing in the crypto-coin can purchase the coins via exchange platforms like Poloniex, Bitfinex and Kraken.
Poloniex happens to be the first exchange platform to trade the currency, as it offered eight separate currency pairs in July 2014. The largest bitcoin exchange in terms of USD, Bitfinex launched their Monero trading pair in November 2016 as it listed XMR/USD and XMR/BTC trading pairs and allowing deposits and withdrawals of Monero.
Exchange platform Kraken started trading Monero pair earlier this year, listing pairs like XMR/USD, XMR/EUR and XMR/XBT. The platform became very fond of Monero, writing several articles about the currency on their blog and describing it as a currency that “trades with high volume and liquidity”.
Like the other cryptos, Monero allows those interested to mine their blocks. Individuals can join mining pools, or they can decide to mine themselves. Anyone that has access to a computer can take part in the mining process, and it doesn’t require any specific hardware unlike mining bitcoin and others that require the application-specific integrated circuits (ASICs).
Monero makes use of a proof-of-work (PoW) algorithm that was developed to become accessible to several processors. This specification was included in the algorithm to ensure that mining Monero becomes open to many different parties instead of just large mining pools.
The block time for Monero is roughly two minutes. The digital currency offers miners a ‘permanent block reward’ which the development team described as follows:
“The block reward will never drop below 0.3 XMR, making Monero a disinflationary currency: the inflation will be roughly 1% in 2022 and go down forever, but the nominal inflation will stay at 0.3 XMR per minute. This means that there will always be an incentive for miners to mine Monero and thus to keep the blockchain secure, with or without a free market.”
At the time of writing this report, according to bitinfocharts.com, the block reward for mining Monero is roughly 5.81 XMR, thus implying that the Monero network can produce approximately 31 XMR per hour and 746 XMR a day. The hash rate recorded by the network at the moment is 530 million hashes per second.
Volatility Surrounding XRM
The price of XRM has been extremely volatile this year, recording an increase of 70% last month while increasing by over 1,300% since the currency began trading on CoinMarketCap. From its inception to date, Monero has fluctuated between $0.25 back in January 2015 and around $60 in May this year.
While some analyst and observers will interpret this price volatility as making the digital currency less credible, the instant change in price though provides traders with opportunities. Traders can purchase Monero using both fiat currencies and other cryptocurrencies. This makes it easier for investors and traders to purchase and sell the currency as they aim to make a profit. This feature means Monero can also be used as a hedge for other cryptocurrencies.
Factoring in the fact that Monero has been accepted by several dark web markets and has become significantly visible due to its ability to provide users with a high degree of privacy, it has become a less speculative cryptocurrency compared to competitors such as Zcash.
Monero (XMR) Forecast
Moving forward, the price of Monero’s XRM will solely depend on its supply and demand. Supply is increasing, but the demand is still unknown. Some analysts believe that this uncertainty might draw in more investors, giving them the opportunity to speculate the future value of the currency in an attempt to make stronger profits.