One of the fundamental principles of blockchain technology is to provide users with unshakable privacy. Bitcoin as the first ever decentralized cryptocurrency relied on this premise to market itself to a wider audience who at the time needed a virtual currency that was free from government interference.
Unfortunately, Bitcoin has turned out to have several weaknesses along the way, including non-scalability and a volatile blockchain. All transactions and addresses are recorded on the blockchain, making it easy for anyone to connect the dots and discover a user’s personal information based on their existing records. Some government and non-government agencies are already using blockchain analytics to read data on the Bitcoin platform.
Such shortcomings have led developers to seek alternative blockchain technologies with improved security and speed. One of these projects is Monero, commonly represented by the XMR token.
What is Monero?
Monero is a privacy-focused cryptocurrency project whose main goal is to provide better privacy than other blockchain ecosystems. This technology protects user data through hidden addresses and ring signatures.
A stealth address refers to the creation of a single address for a solo transaction. No two addresses can be attached to one transaction. The received coins go to a completely different address making the whole process unclear to an outside observer.
Ring signature, on the other hand, refers to the mixing of account keys with public keys to create a “ring” of multiple signatories. This means that the monitoring agent cannot associate a signature with a specific account. Unlike cryptography (the mathematical method of securing crypto projects), the ring signature is not a new thing. Its principles were explored and documented in a 2001 paper by the Weizmann Institute and MIT.
Cryptography has certainly won the hearts of many developers and blockchain enthusiasts, but the truth is that it is still a nascent tool with a handful of uses. Since Monero uses the already tested Ring signature technology, it stands out as a legitimate project worth adopting.
Things you need to know before you start trading Monero
Monero market
The Monero market is similar to the market of other cryptocurrencies. If you want to buy it, Kraken, Poloniex and Bitfinex are just some of the exchanges you should visit. Poloniex was the first to adopt it, followed by Bitfinex and finally Kraken.
This virtual currency seems to be mostly tied to the dollar or other cryptocurrencies. Some of the available pairings include XMR/USD, XMR/BTC, XMR/EUR, XMR/XBT and many more. The trading volume and liquidity of this currency record very good statistics.
One of the good things about XMR is that anyone can participate in mining either as an individual or by joining a mining pool. Any computer with significantly good processing power can mine Monero blocks with few downtimes. Don’t bother choosing ASICS (Application Specific Integrated Circuits) which are currently mandatory for Bitcoin mining.
Price volatility
Despite being a formidable cryptocurrency network, it is not that special when it comes to volatility. Almost all altcoins are extremely volatile. This should not worry any keen trader as this factor is what makes it profitable in the first place – you buy when prices are down and sell when they are in an uptrend.
In January 2015, XMR cost $0.25, then ran up to $60 in May 2017, and is currently above the $300 mark. The Monero coin recorded its ATH (all-time high) of $475 on January 7 before starting to fall along with other cryptocurrencies to $300. At the time of writing, almost all decentralized currencies are in a price correction phase with Bitcoin hovering between $10-11k against a glorious ATH of $19,000.
Interchangeability and adoption
Thanks to its ability to offer reliable privacy, XMR has been adopted by many people making its coins easily exchangeable for other currencies. Simply put, Monero can easily be exchanged for something else.
All bitcoins in the Bitcoin Blockchain are recorded, therefore when an incident such as a theft occurs, every coin involved will be put out of business making them irreplaceable. With monero, you cannot distinguish one coin from another. Therefore, no seller can reject any of them because it is associated with a bad incident.
The Monero blockchain is currently one of the most popular cryptocurrencies with a significant following. Like most other blockchain projects, its future looks bright despite the threat of government repression. As an investor, you should do your due diligence and research before trading any cryptocurrency. Wherever possible, seek the help of financial professionals to get you on the right track.