Many cryptocurrencies in the market offer fast and easy transactions. However, when it comes to secure and private transactions, Monero is one of the top choices. Read through the guide below to see why Monero should be the next cryptocurrency you invest in!
How Monero started
In 2012, Bytecoin was launched as the first cryptocurrency that used CryptoNote, a proof-of-work hashing algorithm. When Bytecoin gained popularity in 2014, there were not enough coins left to keep the network running since 80% of it had already been mined.
To solve this, Riccardo Spagni, David Latapie and five anonymous developers came up with a new currency that bears the features of Bytecoin and named it Monero. It is an open-source cryptocurrency that focuses on providing privacy in every transaction.
With the public ledger of Monero, anyone can make crypto transactions without revealing the amount sent, the source, or destination.
Key features of Monero cryptocurrency
Stealth address
Unlike other cryptocurrencies that reveal public addresses in transactions, Monero uses stealth addresses that allow users to generate random one-time addresses in each transaction.
Through this, the transactions in the public blockchain are obscured and a specific transaction cannot be linked to a destination address or a recipient’s wallet address. With a stealth address, the transaction is only accessible to the sender and receiver.
Monero uses multiple keys such as the private spend key, private view key and a public address. When receiving payments, you can simply provide your public address to the sender. Moreover, you can use your view key to display every incoming transaction to your account while your spend key is used to send payments.
Dynamic scalability
Unlike Bitcoin, Monero doesn’t have a block size limit that has been pre-programmed in the network. Instead, the network reviews the previous transactions and adjusts the size of the block to accommodate large volumes of transactions. This means that Monero can adapt quickly as more people use this cryptocurrency.
To prevent the system from being clogged with the huge blocks, the developers created the block reward-penalty system wherein the median size of the recent 100 blocks is taken.
Every time a new block is mined, its size must not exceed the median size of the recent 100 blocks. Otherwise, the reward is reduced accordingly. The reward is cut by 1% if the size is 10% greater than the median. Therefore, if the size is greater than 50%, the reward is reduced by 25%, and so on.
Ring signatures
Monero uses CryptoNote protocol, an application layer that allows the anonymity of transactions. It creates a one-time ring signature to ensure that a transaction cannot be linked back to anyone.
Developed by Gregory Maxwell, this ring signature is meant to hide transaction details in the blockchain. It is made up of a group of mathematical schemes to form a single unique signature to be used in a transaction.
With this protocol, it is extremely difficult to determine a particular transaction. This is because the amount transacted remains unknown and there are too many ring signatures to choose from.
How to mine Monero cryptocurrency
XMR is mined through a proof-of-work system called CryptoNight. It is similar to Bitcoin but it uses a different algorithm. Instead of requiring the use of Application Specific Integrated Circuit (ASIC), it works on the Central Processing Unit (CPU) and Graphics Processing Unit (GPU).
Monero’s CryptoNight is an egalitarian algorithm that aims to provide equal rights to all participants within the network. It makes the algorithm accessible to miners by ordinary personal computers.
Furthermore, CryptoNight is a memory-heavy algorithm that requires a large space in a device since it uses 2 MB for each process.
Aside from this, it is also latency dependent. Latency refers to the time it takes to process a calculation and receive a result. In CryptoNight, a new calculation cannot be executed until a result has been produced. This means that each new block is dependent on all the previous blocks. Some of the best software to use in mining Monero include XMR Stak, MinerGate and CC Miner.
Purchasing and storing XMR
How to purchase XMR
You can buy Monero using fiat currencies or other cryptocurrencies through trusted exchange sites like Binance, Exmo and Kraken.
How to securely store XMR
You can store your XMR through various types of wallets to easily receive, send or view the private history of your transactions. A hot wallet refers to a Monero account connected to the internet. This allows you to manage your transactions through a computer or mobile device.
A cold wallet lets you store your assets in a device that is not connected to the internet. On the other hand, a paper wallet provides a source code you can download and store on any media such as a CD/DVD, USB drive, paper or a hardware wallet device.
Why you should invest in Monero cryptocurrency
Offers the best privacy features
Monero is one of the best cryptocurrencies that focus on providing users with private transactions. Since it offers advanced encryption than any other digital assets, Monero transactions are significantly more secure and private.
Through the use of stealth addresses and ring signatures, a single transaction cannot be linked back to a specific wallet address or destination address. In this case, only the receiver and sender have information about the transaction.
Allows selective transparency
All transactions are private by default. However, users can make their transactions visible to specific users by giving them their private keys. This allows them to control who can view their transactions.
Presents promising opportunities to investors
Monero is on its way to the big leagues with Bitcoin and Ethereum as it lands a spot on one of the leading cryptocurrencies in the market.
You can read more about the latest news and updates in the crypto market here in Cryptoshimbun.