Table of Contents
Monero, the key facts you need to know:
- Monero is a digital currency that is characterized by offering private and anonymous transactions.
- He was born in 2014 and his name means “coin” in Esperanto.
- XMR is Monero ticker
- To function, it relies on innovative tools, such as: CryptoNight PoW, Ring Signatures, Ring CT, Bullet Proof and Stealth Address.
- Being a totally private virtual currency, no one can find out the number of Moneros there are in a wallet.
History
The birth of Monero occurred during 2014 on the Bitcointalk.org forum. A user known as “thankful_for_today” published the first version of the project under the name BitMonero (translation of Bitcoin into Esperanto), and five days later its name was changed to Monero ( literally, “coin” in Esperanto) at the request of a group of enthusiasts of the initiative.
Officially, in 2014 the project proposal was first seen in the crypto community. However, the first draft of Monero was presented a year earlier; sketch shown by an unknown user (who used the alias “Nicolas van Saberhagen”), who was the first to publish the underlying protocol, known as CryptoNote, which contemplated interesting changes associated with the privacy of transactions.
Since its launch, Monero has had a focus on privacy, thanks to the use of the CryptoNight algorithm. In 2017, the project included a new cloaking algorithm – called Ring Signatures – to make transactions even more private. Shortly later in the same year, the Ring Confidential Transactions was added, which hides the transferred amounts.
In 2018, Monero implemented improvements in its cross-platform capacity and ease of programming, as well as an update that reduced the cost of transactions by 97%, thanks to the use of Bullet Proof technology (a very special type of cryptographic proof, specially designed to be fast and secure, and provide enormous privacy and anonymity).
A year later (2019), Monero was updated to the RandomX algorithm, which is optimized for CPU and GPU miners . This action, in theory, should keep the network more decentralized.
By July 2022, the Monero privacy protocol underwent a hard fork, where improvements were made to network security areas. The update involved increasing the size of the rings (which we will talk about later) from 11 to 16, which strengthened security, preventing operations from being traced.
What is Monero?
Monero, whose ticker is XMR, is an open-source cryptocurrency. It is a privacy-focused cryptocurrency with a Peer to Peer (P2P) format. Its design has two priorities: that it is an anonymous cryptocurrency and that it cannot be tracked. Due to these characteristics, many merchants choose it to carry out their transactions, since the operations will be impossible to trace and totally confidential.
In addition to providing a higher level of security and anonymity for users and their transactions, Monero distinguishes itself by offering untraceable payments and unlinked transactions.
The Monero blockchain is based on the Proof-of-Work ( PoW ) consensus protocol , like bitcoin and many other cryptocurrencies that incentivize their miners to add blocks to the blockchain. The algorithm that drives the system is designed to be resistant to applications that run on integrated circuit systems (ASICs), which are specialized mining equipment that give the companies and individuals that use them a significant advantage over other miners.
One of the characteristics of Monero is decentralization, which thanks to its mining algorithm does not allow its development on ASIC devices. This avoids the centralization of mining in large companies.
In that sense, unlike most cryptocurrencies, which require large investments in ASIC systems and powerful cards for mining, Monero can be mined from conventional CPUs that have any processor, video card or GPU, and with CPUs on Windows, Macintosh, Linux or Android. This is because Monero’s mining algorithm is intended to support “small” nodes. Which allows mining individually or in mining groups.
It is important to mention that the algorithm that was used to make this possible is CryptoNight, which was recently replaced by RandomX (we will detail this a few lines later).
To mine Monero, the following must be taken into account:
- Download the software provided by the company (the most popular are XMRig and XMRig NVIDIA CUDA), which consists of an application that helps connect the mining hardware with the blockchain or currency pool.
- Different CPUs support different mining software. An important detail: using unsupported software will make the CPUs work, but without reward.
- Have a wallet address to receive deposits from mining activity. You can use the full node of an external wallet or the one used on your favorite cryptocurrency exchange, such as Binance and Coinbase.
Ways to mine:
- XMR Solitaire Miner – is a miner that interacts directly with the blockchain. As an advantage, a solo miner can keep all the block rewards, working alone from their PC. However, these types of miners may not be able to earn rewards as frequently as miners organized in groups.
- Mining Pools – Individual rig owners who combine the power of their teams to increase their chances of finding new blocks on the Monero blockchain. Rewards go to those who contributed mining power to finding a particular block. Most XMR mining pools charge a fee between 0% and 2%.
- Monero Cloud Mining Services – This uses computing power hosted in the cloud to mine XMR. Often, cloud mining service providers operate data centers that host computing devices. Users do not need to invest in mining hardware and rigs and pay a fee to use processing power; and the data center does the heavy lifting. Reliable providers of these cloud mining services for XMR include Minergate and CCGMining.
In general terms, Monero is the leading cryptocurrency when it comes to private and censorship-resistant transactions – and it also has a particular mining model.
Monero Tools
To guarantee its operation, Monero has the following tools:
- CryptoNight PoW: Ancient consensus protocol designed to be especially CPU efficient and resistant to the demands of ASIC equipment. This with the aim of allowing greater decentralization, but also to make it possible for cryptocurrencies that adopt it to provide advanced privacy and anonymity options.
- RandomX: the new algorithm that has been designed to replace the well-known CryptoNight PoW, which offers a high level of cryptography and is focused on privacy and anonymity. It was designed to be resistant to ASIC mining. Additionally, it presents an improvement in the mining capacity for CPUs, which drives the currency towards greater decentralization of mining. RandomX is premised on randomness.
RandomX has two mining modes: 1) The most powerful and resource-demanding mode is Fast Mode, which requires at least 2 GB of memory. 2) Light mode, which only requires 256 MB of RAM and whose mining performance is six times lower than Fast Mode, and therefore very limited, which means that mining profits will be scarcer.
- Ring Signatures: A system that mixes the sender’s address with a group of other addresses. This makes it exponentially more difficult to track each new transaction.
- Ring of Confidential Transactions (Ring CT): a functionality that improves that of Ring Signatures, since it allows you to hide the amount, origin and destination of all transactions.
- Monero Bullet Proof: protocol implemented with the purpose of improving its level of privacy. It focuses on hiding the addresses of a transaction.
- Stealth Address: technology that guarantees that “secret addresses” (generated by each transaction) will not reveal the authentic destination addresses of a transaction – by anyone other than the sender or receiver.
Advantages of Monero
- Since they are all private, Monero transactions cannot be traced.
- Its development is focused on guaranteeing a high level of security, privacy and anonymity.
- Transactions are not linked in any way to any Monero user.
- Decentralization: Monero is not run by a central instance. Development is merely meritocratic and completely community-based.
- The Monero blockchain has no block size limit and is dynamically scalable.
- According to the above, scalability is a factor to take into account, which due to its large block size, has a greater number of transactions per second, close to 1,000 TPS at full performance.
- Monero’s popularity is driven by a particular group: the large number of individuals who do not want to be surveilled or monitored by governments, cybercriminals, and corporations.
- Mining availability: Unlike most cryptocurrencies, which require large investments in ASIC equipment and powerful cards for mining, Monero can be mined from conventional CPUs. Therefore, mining XMR is a profitable activity that does not involve a large outlay to acquire the necessary mining equipment.
Disadvantages
- The ease of Monero mining (which can be achieved with basic CPUs) allows a malicious actor to covertly distribute miners, which are embedded in malware programs.
- Criminal entities and black market agents have shown interest in the asset. Digital security agencies point out that cybercriminal organizations and groups are turning to this cryptocurrency – with increasing frequency – to perpetrate crimes.
- “Heavyweight” transactions: The use of Signing Ring technology leads to the average block size on the Monero network being eight times larger than the average block size on the bitcoin blockchain.