You may have heard that Monero is a decentralized digital currency with a focus on absolute privacy and security.
In particular, that it was designed to address the privacy issues with Bitcoin.
Well, Monero’s origins can actually be traced back to a project called Bytecoin.
Bytecoin was the first digital currency to use the CryptoNote protocol, a privacy-focused technology that groups public keys together into single transactions.
Public keys are used to verify who senders and receivers are, and grouping them helps hide who is making individual transactions.
And so, developers forked the Bytecoin blockchain to create a new currency called Bitmonero which was released on April 18, 2014.
This new currency focused on improving the transparency and distribution of Bytecoin while keeping its privacy focus.
The original name “Bitmonero” was a combination of “Bit” (short for Bitcoin) and “Monero” (the Esperanto word for “coin”).
However, the network dropped “Bit” and simplified the name to “Monero.”
While Bitcoin transactions are publicly visible on the blockchain, Monero transactions are hidden by using ring signatures, stealth addresses, and confidential transactions.
Let's Explore Monero's Features…
One of the key features of Monero is Stealth Addresses.
A Monero Stealth Address allows you to receive funds without revealing your public address to the sender or the public blockchain.
Generating a Monero Stealth Address is done by combining your public wallet address with a random one-time-use key.
As such, sending funds to a stealth address means everyone remains unaware of the user’s identity.
Essentially, the Monero blockchain records the transaction but no one can link the address used in the transaction to your public address.
Another significant feature of Monero is Ring Signatures.
Ring Signatures provide privacy to transactions by hiding the true sender of a transaction.
Monero creates the ring signature using private keys taken from across its network, but without revealing the key used to sign the transaction.
This makes it impossible for anyone to trace the origin of the transaction back to a specific user.
The ring signature also provides an additional layer of security by making it impossible for an attacker to forge a signature.
Anyone that wanted to hack you would need access to the private keys of all the outputs in the ring, which is virtually impossible.
The next notable feature of Monero is called Random X.
Monero Random X is a mining algorithm used by the Monero cryptocurrency to ensure fair and efficient mining.
It was introduced in 2019 as a replacement for the previous mining algorithm, CryptoNight.
Random X is ASIC-resistant.
This makes it less vulnerable to being dominated by specialized mining hardware such as ASICs.
An ASIC is just a type of hardware that can mine cryptocurrencies really well.
This is done by making Monero mining CPU-friendly but requiring a lot of memory.
This means that although miners need to have a large amount of RAM available to mine effectively, it is difficult for ASICs to compete.
And these aren’t the only privacy features for Monero either…
Let’s Dive Deeper into extra features Behind Monero’s Privacy
Bitcoin users can easily maintain their anonymity on the network, provided they never connect their identity to it.
However, once you engage in transactions that require you to reveal your identity, it becomes challenging to conceal your data.
Once this happens, other users can trace virtually all transactions you’ve made back to you.
This can be a real concern for users who use crypto to maintain their personal privacy.
To tackle this problem, Monero implements both the features you saw earlier, but also a few others.
In addition to its core features, Monero uses confidential transactions to hide transactions amount.
Even though the blockchain records transactions, the amounts involved can invisible if you want them to be.
It’s like having an invisibility option!
Now I mentioned Monero was unique before, but…
How does Monero Compare to Bitcoin?
Monero has several built-in features that help protect its users’ privacy, as you have seen.
Bitcoin, on the other hand, records transactions on a public blockchain.
As such, you can trace all transactions back to specific addresses - impossible for Monero.
Next, Monero uses an ASIC-resistant mining algorithm.
This mining algorithm makes it easier for individuals who want to mine Monero using a regular computer.
On the other hand, Bitcoin uses a mining algorithm which runs really well on specialized hardware such as ASICs.
As a result, it is more difficult for individual miners to compete with large-scale mining operations on Bitcoin, but much simpler on Monero.
Monero transaction fees are another aspect that separates it from Bitcoin.
Monero has a scaling fee system that adjusts the transaction fee based on the current state of the network.
However, Bitcoin has a fixed fee system based on the transaction size - in bytes. This can often make Bitcoin transactions more expensive than Monero.
Lastly, Monero has a faster block time of 2 minutes compared to Bitcoin’s 10-minute block time.
This means that Monero transactions can be confirmed more quickly.
There are the basic differences, but there are also many untruths about Monero out there too...
Moving on, Let’s Look at some Monero Misconceptions
Despite its mature age, several false beliefs about Monero still exist in the cryptocurrency community.
For one, some people believe only criminals use Monero for illegal activities.
They argue that Monero’s privacy features make it attractive to individuals who want to engage in illicit activities.
While this may be correct, the majority of Monero users are law-abiding individuals who simply value privacy and security.
Many businesses and individuals also employ Monero to protect their financial privacy.
Next, you might have heard that Monero is not as secure as Bitcoin.
However, one of the core ideas of Monero is to design a secure cryptocurrency.
As such, it comes with several built-in features that make it more resistant to attacks and vulnerabilities.
While no cryptocurrency is completely immune to security threats, Monero has a significant security rating.
Another misconception is that Monero is difficult to use.
Even if you are very familiar with public blockchains, Monero can look complex at first glance.
Fortunately, user-friendly wallets and exchanges are making it easy for you to buy, save, and send Monero.
Additionally, the Monero community is very active and supportive, providing tools, advice and resources for you.
A further false claim is that Monero is not widely adopted.
It’s true Monero may not have the same market volume as established crypto like Bitcoin or Ethereum, but it’s still widely used around the world.
In fact, Monero is one of the most popular privacy-focused cryptocurrencies and is likely to continue growing as more people learn about its benefits.
A final misconception is that Monero has high transaction fees.
Monero’s innovative bulletproofing technology, which came out in October 2018, reduced transaction size by more than 80%.
This resulted in a corresponding drop in transaction fees.
At present, Monero is cheaper per byte than Bitcoin and you can expect even lower fees in the future.
Conclusion
Well, that's all for this article!
From its humble beginnings as a Bytecoin fork to becoming huge in the privacy-focused crypto world, Monero has come a long way.
You learned about its unique privacy features like stealth addresses and ring signatures.
It's safe to say that Monero is really the leader in secure and private transactions.
You also saw that its ASIC-resistant mining algorithm, Random X, makes it easy for everyone to start mining, not just those with high-end mining rigs.
While there may be a few misconceptions swirling around the crypto community about Monero, you've seen today that these are pretty unfounded.
Whether you're a law-abiding citizen or a business, Monero offers great financial privacy that is hard to match in today's crypto space.
As Bitcoin continues to reveal its shortcomings in terms of privacy, more and more people are looking to coins like Monero to protect themselves financially.
Hopefully, you can see that there's every chance that Monero will continue to grow, changing the future of private transactions.
But, don't take my word for it!
I encourage you to dive deeper, do your own research, and discover how Monero could change the way you think about cryptocurrency.
And, hey, who knows? Maybe Monero is the privacy-protecting, untraceable crypto coin you've been looking for!
Good luck out there - catch you next time!
