One gets the impression that new cryptocurrencies are created every day. However, not all cryptocurrencies started in 2017.
However, not all cryptocurrencies are created after 2017. Take Monero (XMR), for example, a cryptocurrency that emerged back in 2014 and was able to provide key privacy benefits.
In this article, we will discuss what Monero is, explain how Monero differs from bitcoin, how Monero keeps users private, the pros and cons of privacy, how new Monero coins are created and how to trade CFDs on Monero.
Monero: what is it?
Monero is a cryptocurrency that originated in 2014. It focuses on privacy and operates as open source based on blockchain technology.
Open source means that the technology and software are created, tested and improved through user collaboration. According to Monero, more than 240 developers have contributed to the project, 30 of which are the “core” group.
The logic of blockchain technology here is the same as that of most digital currencies: it is the logic behind cryptocurrencies, which provides a public registry for all transactions in the network.
Finally, lastly, Monero is famous for ensuring user privacy because it was specifically created without transparency. Monero is set up to hide the identity of senders and recipients as well as the amount of each transaction.
How is Monero different from Bitcoin?
Bitcoin is famous for its anonymity, but the privacy it provides is limited. Bitcoin keeps a record of both the bitcoin address and the transaction on the blockchain, making the data open to the public.
The key point is that addresses do not have complete privacy, although Bitcoin uses fake names and addresses.
Why? Simply because Bitcoin addresses and transactions are recorded on the blockchain, making them publicly accessible and traceable. Essentially, this means that, theoretically, transactions can be linked to the identity of a real person.
Monero offers users more privacy than bitcoin, as the cryptocurrency’s transactions, addresses and amounts are hidden by cryptography.
How Monero (XMR) Works: Ensuring Privacy
The Monero cryptocurrency is based on so-called ring signatures and hidden addresses that help hide the identity of the sender and recipient. Ring signatures combine a user’s account key with public keys from the Monero blockchain. Third parties cannot determine which key is public and which is the user’s, eliminating the possibility of linking the user and signature together.
With each transaction, all Monero coins are blended into each other, something you won’t find in other cryptocurrencies that provide user privacy, such as Dash (DSH) and Zcash (ZEC).
Dash blends transactions to reduce the likelihood of identifying a single user. Zcash also offers users the ability to hide their identity and does not mention the value of the transaction.
The main difference is that Zcash’s privacy settings are optional, while Monero’s settings apply by default.
Other cryptocurrencies do not mix coins by default, which raises suspicion when coins are mixed because the impression is created that something is being hidden. Monero removes any suspicion as all coins are mixed and information is automatically hidden. Users who want to remain anonymous are better off using Monero.
Monero cryptocurrency: privacy advantages and disadvantages
A high level of privacy offers many advantages.
Each Monero coin is interchangeable, just like the regular currency you use to pay at your local store. You don’t care if you get coin A or coin B because they are the same.
You may be wondering: aren’t ALL cryptocurrencies the same? Well, you might be surprised, but the answer is no.
Every Bitcoin is recorded in a blockchain where you can see the transaction history. This means that individual Bitcoins can be associated with certain events, including negative events such as theft. These coins will not be as desirable as others.
This is the key difference between the Monero cryptocurrency due to its emphasis on privacy. Thus, the two XMR coins cannot be distinguished from each other based on transaction history.
This is simultaneously a disadvantage of Monero, as such strong privacy protection has caused the popularity of this cryptocurrency in illegal markets related to illegal substances and gambling.
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Monero mining: how are new coins created?
The creation of new Monero coins, like other cryptocurrencies, is done through mining.
The time it takes to create one Monero block is approximately two minutes. Monero offers the ability to mine coins as well, but this process has key differences.
What can I mine Monero with?
Monero mining requires no special equipment and can take place on any leading platform, including Windows, Android, Linux and MacOS.
The mining uses a Proof-of-work consensus algorithm to enable mining on a wider range of processors.
That is, Monero mining is available to a variety of users, not just large mining pools that focus solely on coin mining.
This is one of the main advantages of mining Monero compared to other altcoins: the process can be performed on a standard computer, without the need for super-powerful systems.
How much is the reward for mining XMR cryptocurrency?
Miners receive a “fixed reward per block”: that is, the minimum reward will always be 0.3 XMR.
The main advantage of mining new coins is obvious: miners have an incentive, thanks to which there will always be a sufficient number of participants in the blockchain processes.
Conventionally speaking, 0.3 XMR is only a fraction of XMR in circulation, which means it is a disinflationary cryptocurrency. Inflation will be around 1% in 2022, after which it will probably continue to decline.
How many Monero coins are there in total?
Unlike bitcoin, there is no finite number of Monero coins. At the moment, the number of Monero coins mined is approaching 18.1 million XMR.
Monero exchange rate: how does the price of XMR change?
Monero also enjoyed a huge surge in 2017, as did bitcoin and other cryptocurrencies. In May 2017, the price rose to $65 before the next impulsive price move to the $150 mark in August.
The price of Monero cryptocurrency (XMR) has been extremely volatile in recent years. In early 2017, Monero was trading at $12. By August 2017, the cryptocurrency had risen to the $160 mark, and by the end of the year it had set a historic high of $469.
Unfortunately, the cryptocurrency collapsed sharply in 2018, as did many other cryptocurrencies. Monero (XMR) spent the year in a downtrend, ending the year at just $49.71, just a few dollars above $37.06, Monero’s 2018 low.
Now, in 2022, the price of Monero is trading around $180, a significant difference from the lows of 2018.