The importance of cryptocurrencies in our modern-day finance has not only been for their ease in facilitating cross-border payment or their role as a store of value; some people prefer to use digital currencies for anonymity. While Bitcoin and several other cryptocurrencies excel in the first two importance of crypto, no cryptocurrency ranks above Monero on the list of anonymous cryptocurrencies. What is Monero? How does it ensure privacy? And is there a Monero explorer?

What Is Monero (XMR)?

The Monero blockchain is a secure and private Proof-of-work blockchain that offers essential privacy advantages over other digital currencies. Created in 2014, Monero is based on the CryptoNote protocol and uses ring signatures to provide anonymity for its users. Additionally, Monero transactions are untraceable for third parties, meaning they cannot be linked to a particular user or account. This makes Monero a popular choice for those looking for privacy and security online.

Monero - Privacy Coin
Source:Medium

Using cutting-edge technology, Monero has created a currency that cannot be traced and is entirely anonymous. Every transaction on the blockchain leads to zero traceability for users, which makes it perfect if you want your personal information kept private or transaction details protected from prying eyes.

This opaqueness makes Monero a pretty unpopular currency with many financial regulators as they can’t trace XMR payments or collect data on its users.

What Is XMR?

XMR is the cryptocurrency of the Monero blockchain. It is the means through which payments can be sent or received. 

How Does Monero Work?

Monero, being a privacy protocol, uses many mechanisms to enhance privacy and anonymity. Two of the most important ones are stealth addresses and ring signatures. 

Stealth addresses are generated addresses that prevent outputs from being associated with the receiver’s public address. While the stealth address protects the receiver’s identity, the ring signature protects the sender. If we will answer the question of what is Monero cryptocurrency best known for,  it would revolve around these two. 

A ring signature is a digital signature in which a group of signers are fused into a distinctive signature to authorise transactions. 

The ring signature puts the actual signer and other signers in a ring to prevent anyone from knowing who the actual signer is. The other signers are past transactions pulled from the blockchain to act as decoys.

What is Monero
Source: DXLearn

Another technology to improve privacy is Ring Confidential Transactions (Ring CT). This technology allows only the parties in a transaction to see the amount being transferred. Any other person will not know how much is being exchanged. Moreso, to avoid false information and remove the risk of double spending, Monero uses range proofs to ensure that the balance is correct and no extra money can be printed while transferring Monero (XMR) cryptocurrencies. 

On how long it would take for a Monero transaction to be completed, the answer is 20 minutes. The average Monero transaction time is 2 minutes, but the block will need ten confirmations before the Monero can be spent. 

Who Founded Monero?

Shortly after Bitcoin launched, a new cryptocurrency with the name, ByteCoin, launched in 2012. Founded by a blockchain developer, Nicolas Van Saberhagen, Bytecoin’s first introduction to the crypto world was through a 20-page CryptoNote whitepaper. Although, like Satoshi, the identity of Nicolas is unknown, two years after its initial release, Bytecoin was forked, and Monero was formed. 

 Although Monero’s founder is unknown, the protocol has a core development team working on it. Most of them are anonymous, but one of the identities we know is that of Riccardo Spagni. 

Spagni was one of the early Bitcoin miners, and his contribution to Monero came through the development of a sidechain which helped the Monero blockchain accept NFTs. 

What Makes Monero Unique?

Monero has a lot of resemblance to Bitcoin, but the protocol has some unique differences. In terms of anonymity and open-source codes, both Monero and Bitcoin have a lot in common, but Monero is unique in how updates are carried out. 

Before an upgrade is executed on Bitcoin, a lot of discussions and votes go on. Monero, on the other hand, has been designed to auto-update after every six months.  

Another reason why Monero is unique is the Bulletproof technology. This zero-knowledge application helps to increase transaction efficiency and reduce fees by up to 80%

Why is Monero Valuable?

Being an inflationary cryptocurrency itself, Monero (XMR) cannot be used to hedge against inflation. Instead, its value comes from its anonymity. Unlike Bitcoin, which can be traced back to a wallet, Monero holders can initiate transactions without the fear of being watched by any third party. Also, the coins cannot be blacklisted because Monero coins are fungible. 

Also, unlike other blockchains that increase transaction fees once the network is congested, Monero uses an adaptive block size. This makes Monero’s scalability to be flexible and allows users to rarely prioritise their transactions.

Tokenomics

Monero has a Circulating supply of 18,147,820. (and will continue to emit 0.6 XMR per block infinitely in a process known as “tail emissions”)

Maximum supply – Unknown

Market dominance – 0.28%

All-time high – 517.62 ( May 7, 2021)

All-time low – 0.213 (January 14, 2015)

Block Size

There is no fixed block size on Monero. The block size can increase to accommodate increased transaction count. Although increased block size causes a decrease in transaction fees and increases the possibility of spam transactions, Monero counters this problem by offering fewer rewards to miners. 

Transactions

In typical cryptocurrencies like Bitcoin, the participants are represented by addresses. The history of a Bitcoin cryptocurrency is transparently seen by everyone on the network and traced to its past holders. Monero works quite differently. By using different technologies like Ring signature and Ring CT, the identities of the sender, receiver, and transaction are made opaque. 

Addresses. 

Monero uses two key technologies to conceal the identities of the sender and receiver. 

Stealth Address

For every new transaction initiated on Monero, the blockchain creates a new one-time address for the receiver. This gives anonymity to the receiver of the transaction as it cannot be linked to his main address. 

Source: Medium, Hackernoon

Ring Signature

The ring signature is a technology that conceals the sender of a transaction. Everyone outside can only see a pool of people from which the transaction possibly came, but no one can decipher who exactly initiated the transaction. Currently, Monero uses a ring size of 11 participants (one legitimate sender and ten decoys). 

Using Ring Signatures For An Anonymous E-Voting System
Source: Semanticscholar.org

How To Use Monero

As explained earlier, Monero’s relevance comes through anonymous transactions. It is an inflationary cryptocurrency with no maximum supply, making it unsuitable as a hedge against inflation. 

Nonetheless, it can be used by businesses to hide their supplier’s details or used to escape from government scrutiny. This has made Monero very popular on the dark web. 

To store Monero, a user will have to get a wallet. There are different wallets that support Monero. One is the Monero GUI (graphical user interface) – a beginner-friendly wallet that is downloaded on a computer and uses the Daemon to show new transactions on your wallet. Another is the Monero command line interface (CLI), a free, open-source wallet that is customisable and gives users total control over their nodes. The difference between the CLI wallet and GUI wallet is that while the GUI is beginner friendly, the CLI wallet can only be used by developers and adept traders.

Apart from these, you can use online wallets. They can be accessed from any internet-enabled device, but you should be careful when using them, as some online wallets do not have a track record of security. Online wallets are helpful for holding small Monero crypto and for traders. 

Hardware wallets seem like a good choice for users who want to store significant Monero cryptocurrencies. They are more expensive than other wallet choices, but their self-security feature makes them safer than the other types. 

The Monero community designed an open-source hardware wallet called Kastelo to ensure Monero storage, but apart from this, some other hardware wallets like Ledger and Trexor also accept Monero. Myonero and Cake wallet are two soft wallet providers that are compatible with Monero, and like online wallets, they are better suited for a small amount of Monero. 

Conclusion

Bitcoin’s contribution to offering a new approach to digital money cannot be underestimated, and Monero is one of those blockchains improving the digital currency space with privacy and anonymity. 

It is not the only privacy coin in the market. Still, its unique technologies, like stealth addresses and ring signatures, coupled with ASIC resistance, make it one of the favourite privacy coins.   With privacy fast eroding in our modern world, Monero’s community is one of the active voices supporting privacy as a fundamental human right. This has helped Monero carve out a niche for itself in the ever-busy crypto market, and it isn’t leaving soon. If you want to send receipts of your Monero transaction to another party, you can quickly look it up on its block explorer (https://xmrscan.org)