What is Monero (XMR)?
Monero, which means ‘coin’ in Esperanto, was launched in April 2014 as a cryptocurrency that would preserve users’ anonymity and privacy. Unlike most cryptos, including Bitcoin and Ethereum, Monero employs techniques to hide wallet addresses, transaction amounts, balances, and histories. These techniques include ring signatures, zero-knowledge proofs, stealth addresses, and IP obscuring.
As you can probably imagine, governments and tax authorities are not fans of Monero! Illustrating this, in 2020, the United States Internal Revenue Service went as far as offering a $625,000 bounty for anyone who could help them trace Monero transactions. On the other hand, the high level of privacy and anonymity offered by Monero (XMR) is appreciated by many users.
Monero (XMR) Basics
Monero can be subdivided to twelve decimal places as follows:
Like Bitcoin, Monero uses a proof-of-work blockchain. However, whereas Bitcoin isn’t, in the strictest sense, totally fungible, Monero is. This is because each Bitcoin has a public history visible on the blockchain, technically making each one unique. However, because Monero’s history isn’t trackable, each one is truly interchangeable, and hence completely fungible.
To maintain high levels of privacy, Monero uses stealth addresses – basically, brand-new random keys are generated for each transaction. Additionally, ring signatures are used to obscure the participants in transactions – these mean that only a pool of potential participants in transactions are visible to the public, but there’s no way of identifying which specific individuals have engaged in which specific transactions.
Monero (XMR) Mining
When it comes to mining, Monero is more decentralised than Bitcoin because it relies on CPUs and GPUs rather than specialised ASIC rigs – which are expensive, and tend to be run by large centralised companies. Indeed, Monero developers have actually made the crypto resistant to ASIC mining to prevent it from being taken over by large centralised operators.
Interestingly, unlike most blockchains, Monero doesn’t have a fixed block limit. Hence, block sizes can actually increase in size if there are more transactions needing to be verified. This means that individual transaction fees can fall to levels that could encourage network spamming. To discourage this, mining rewards are reduced if block sizes get too big.
Monero (XMR) Supply
Unlike Bitcoin, which has a hard cap of 21 million, there is no absolute limit to the amount of Monero that can be mined. Instead, XMR adopts a strategy of ‘tail emissions.’ An initial supply of 18.4 million was set, after which 0.6 XMR per block will be emitted infinitely to ensure miners are incentivized to keep the network secure.
Monero (XMR) Adoption & Usability
This is where things get tricky for Monero. Fundamentally, XMR is a very useful cryptocurrency that is ideal for quick, efficient payments that maintain privacy. However, since it launched in 2014, the world has changed a lot. As KYC (know your customer) and AML (anti-money laundering) requirements get stricter, some centralised exchanges have delisted XMR, and many businesses have stopped accepting it as payment.
Despite the majority of XMR transactions being perfectly legitimate, it is true that it is also one of the Dark Web’s most popular cryptos, and criminals do use it. But, it is important to keep this in perspective – after all, by far and away the most popular currency for criminal activities is the good old US dollar!
Monero (XMR) Fees & Speed
Because it doesn’t have a set block size limit, transaction fees on Monero are very low, typically amounting to less than 1 cent. However, when it comes to speed, the blockchain’s age shows, with transactions typically taking around 25 minutes to fully complete (based on tests carried out by monero.how).
Monero Security and Safety
Precisely because so many privacy safeguards are in place, Monero is in many ways one of the most secure cryptos. Its extensive, highly decentralised network of nodes and committed developer community also bodes well for security. However, as always, third-party platforms like centralised crypto exchanges can be vulnerable points.
Security and safety tips:
- Don’t leave your XMR on-exchange for longer than absolutely necessary. If you are not currently trading, transfer them to a local wallet for short-term storage or staking.
- For long-term storage or staking, keep your crypto in a hardware wallet.
- Always keep your wallet keys in multiple safe places – they cannot be recovered.
- Never tell anyone about your crypto holdings. No matter how secure your storage is, if you or your loved ones are physically threatened, you’ll probably hand over your personal keys.
Being one of the oldest cryptocurrencies, Monero has witnessed extreme volatility since launching. Whereas its price stayed relatively flat, at sub-$2 until mid-2016, its price exploded during early 2018, reaching an incredible $542.33, before crashing down again to under $100 for much of 2019 and 2020. Then, in the 2021 crypto bull run, XMR rocketed again, hitting nearly $480. At the time of writing, in late November 2022, it was trading at just under $135 (CoinGecko data).
Final Word on Monero (XMR)
Assessing Monero is difficult. Although it is a well-proven crypto with low fees, the thing that makes it most attractive, its privacy, has put it firmly in the crosshairs of authorities around the world.
Basically, if you’re looking for a great way to transact anonymously, and you are fine not using the big mainstream crypto exchanges, then it’s a solid choice. But, if you conduct most of your crypto business on regulated exchanges and use crypto to buy things from mainstream businesses, then it’s probably not the coin for you.