What Is Monero
Launched in 2014 as a hard fork from a privacy-focused cryptocurrency called Bytecoin (BCN), Monero (XMR) is a privacy coin and decentralized cryptocurrency. Monero uses CryptoNight protocol as its proof of work consensus algorithm.
Blockchains using CryptoNight for proof of work (PoW) are still mineable in 2021 using a PC CPU or GPU, as special purpose ASICs (application-specific integrated circuits) have not yet been developed and mass-produced to solve the CryptoNight algorithm's hashes in order to participate as nodes on the network. Such products are widely available, however, for solving SHA-256 based PoW algorithms in use for blockchains like Bitcoin (BTC).
The algorithm was developed out of the CryptoNote protocol to "mix" or fragment transactions on the blockchain, creating stealth addresses by making it mathematically difficult to determine where they originated from. Such products as Monero and other privacy coins serve to protect user and transaction anonymity by securing transactions on a network with even more anonymity than the pseudo-anonymity offered by other blockchains like Bitcoin.
Although pseudo-anonymity still offers more privacy for users than traditional fiat currencies by far. The obfuscation of a transaction's origins on the Monero blockchain is accomplished by means of ring signatures.
Essentially, previous transaction results are taken from the blockchain and improvised into a group of possible senders in such a way that it is possible to know an address from the group that signed the transaction but impossible mathematically to determine which of the addresses did.
New addresses are generated for each individual transaction and are only used one time. Monero price has risen dramatically since 2014. While market prices fluctuated around the USD $1 and $2 handles in 2014, XMR price rose to an all-time high of $483 in May 2021 at the height of the crypto bull market.
Monero Founders
While there have been unsubstantiated rumors that Satoshi Nakamoto, the inventor of Bitcoin, also invented XMR, what we do know is there were initially seven developers who got Monero off the ground. Five of them chose to remain anonymous, perhaps in keeping with the ethos of the project.
Monero started with Bytecoin, a privacy coin launched in 2012. Then in 2014, a member of the Bitcointalk forum only known by the forum handle, thankfulfortoday, suggested changes to Bytecoin that weren't accepted by the developer community around it. So thankfulfortoday initiated a hard fork from the Bytecoin chain to begin implementing the recommended upgrades themselves with the help of other developers interested in the project.
How Does XMR Work
The Monero blockchain holds many distinctions among its blockchain peers in order to provide its service of the most possible privacy for users while remaining as decentralized as possible so that no user needs to trust or even know any other user on the network for it to work.
In addition to using obfuscation methods to shield transactions origins from surveillance by third parties, the Monero protocol makes these a standard for all activity on the network. That differentiates XMR from rival privacy blockchain, Zcash (ZEC), which Monero advocates critique as "selectively transparent." Furthermore, unlike Bitcoin, in which every bit of coin has a unique digital signature that makes it uniquely identifiable from every other parcel of bitcoin on the chain, Monero is truly fungible.
Its chain keeps track of what amount of XMR coin is at every address on the ledger but does not track every parcel of XMR individually by serial number and its chain of custody through addresses on the chain. In addition to privacy, investors also buy, hold, and trade XMR to speculate for profits. Learn how to buy Monero (XMR) in our guide.
Monero price reflects the interest of the market in truly anonymous global remittances, though it has a price history roughly congruent to that of Bitcoin and the broader cryptocurrency industry's market prices. So when Bitcoin's price goes up, usually Monero price follows. And conversely, when BTC is down, XMR price drops with it. Although this should not be understood as investment advice, and past performance is not necessarily an indicator of future results.
Monero Network Security
Monero's purpose is to provide secure transactions infrastructure to the world in the most decentralized possible ledger and payments network while protecting users' privacy as much as possible.
Monero uses the CryptoNight protocol to maintain consensus and secure addresses and transactions on its blockchain. CryptoNight uses proof of work (PoW) to qualify nodes and protect the blockchain from double-spends or 51% attacks.
The algorithm also has advantages in the form of technical characteristics that prevent stratification of the mining ecosystem. The coin has had so much success in securing users' transactions and their privacy that it has not been hacked successfully at the base chain level despite bounties offered by the U.S. and other sovereign governments for any hacker who can crack the algorithm.
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