With the growing popularity of digital currencies, the number of cryptocurrencies is also increasing. Only in ten years, more than 1500 cryptocurrencies have created. Each crypto tokens serves a different feature. Some coins are focused on transparency and speed. A few coins are focusing on privacy with anonymity features. Monero is one of that cryptocurrency whose primary focus is to provide privacy-related features.
In this article, you will understand how Monero works, its features, applications, challenges, comparison with bitcoin, and so on. If you are a crypto investor or trade in the crypto market, this article will help you whether you will add Monero to your crypto investment portfolio. Now, let’s start with the basics, what is Monero?
In 2014, Monero was developed to provide a privacy-oriented financial system. As you know, most of the cryptocurrencies are run by blockchain technology; this also runs Monero. Blockchain technology allows users to send and receive money in a public distributed ledger securely and transparently.
However, Monero’s blockchain network focuses on providing privacy to users by hiding the identity and address. As a result, nobody can know who you are and how much you have sent to whom. Besides, Monero provides equal opportunities to everyone in the network. The exciting part is the developers have made it an open-source system for people to develop the digital currency.
Monero offers rewards to the miners, and the mining process can be done with a simple computer having Windows, Mac, Linux, or android. It does not require any specialized hardware like ASICs.
The Privacy Features of Monero
Ring signature and stealth addresses are the two main concepts that allow Monero to create such a privacy-oriented digital currency. Besides, RingCT, helps the users to conceal the number of transactions within the network. Let us understand both of these concepts, how they contribute to maintaining privacy.
- Ring signatures: This concept helps the user to hide the identity from other users in a group. With this concept, when one member of the group puts his/her digital signature for a transaction, nobody in the group can know who signed for the purchase.
In this way, the concept allows the sender to hide his/her own identity. The idea uses the account key of the sender and the group key in the blockchain network to make the transaction. But the transaction details can’t be identified by anybody computationally.
- Stealth Address: This is a temporary and random address created for the receiver, which can be used only once. This helps to conceal the identity of the recipient’s address.
- RingCT: RingCT is a concept that was developed late in January 2017. This enables us to hide the transaction amount in the Monero network. It is compulsory for every transaction in the Monero network.
Monero vs. Bitcoin
Bitcoin is the most valued and widely accepted cryptocurrency in the world. Bitcoin has gained so much popularity due to the growth in its value. This also offers anonymity features to every user with a false name, a combination of a few alphabets. But the problem with bitcoin’s privacy is; the fictitious name can be identified after several transactions. In terms of privacy, Monero provides a better private network than bitcoin.
Another benefit that Monero offers over bitcoin is the fungibility. This means two Monero units can be substituted with another, but bitcoin can’t be substituted. Further, the transactions in bitcoin can be traceable, but it is non-traceable in the case of Monero.
The major problem with the Monero is that the network is questionable due to the privacy feature it offers to the users. Because it can be used for gambling, drugs which restrict it from full adoption. Sue to the non-traceability feature, it provides a platform for the criminals to do illegal activities. So it’s hampering the reputation of Monero.
Monero, due to its privacy features, has become the 13th largest digital currency in terms of market capitalization. Everyone can invest in it by becoming a member and visit to know the technologies-that-will-change-the-world, which allows the users to invest in, Monero and other digital tokens. However, consider all the above factors into account before you decide to invest in Monero.