By now, everyone is sure to have heard of high-profile cryptocurrencies like Bitcoin and Ethereum, but did you know that there are actually thousands of digital currencies available on the market today? Each coin is developed with particular strengths and advantages in mind to set it apart from others and attract investors. Some claim lower transaction fees, others faster transactions, and there are those with greater security features compared to other cryptocurrency coins. The digital currency Monero (XMR), meanwhile, is unique for being focused predominantly on privacy.
Launched in 2014 by a team of seven developers, Monero takes its name from the Esperanto word for “coin.” At its inception, it was one of the first privacy-focused digital currencies, and it’s still the most popular in use today. Monero promises fast and completely untraceable transactions between two parties anywhere in the world, as long as they have access to a Monero wallet and the currency itself.
If you’re curious to learn more about Monero’s characteristics or possibly interested in making it a part of your crypto trading strategy, read on. This quick look will tell you all you need to know about this fascinating coin.
Designed for Maximum Privacy and Anonymity
While many established coins make transaction records available on public blockchains, albeit anonymously, for transparency purposes, Monero works to keep buyer and seller information and transaction details completely private. The highly sophisticated cryptographic functions found in the coin ensure that transactions made with Monero can’t be tracked or traced. Buyer and seller information is similarly locked behind multiple complex privacy tools.
This privacy-focused approach makes Monero the go-to currency for individuals who may want or need to transact completely privately for whatever reason. In fact, the obfuscation protocols Monero employs have proven to be so effective that many investors even use these technologies to conceal their ownership of other coins besides XMR.
Fully Fungible
Monero’s fungibility is another major contributing factor to the coin’s extreme focus on privacy. When a good or asset is fungible, it can be interchanged with other goods or assets of the same type and still retain the same value. All $100 bills, for example, are worth the same regardless of which individual bills are being used at any given time. If you were to deposit $100 in a bank and withdraw the same amount later, you wouldn’t need to receive the exact same bill you had deposited previously.
While fiat money is fungible, as demonstrated above, physical bills are usually printed with serial numbers or other identifying markings. This enables governments and other institutions to trace the movement and history of particular bills if necessary. Monero elevates fungibility even further by eliminating serial numbers and any other identifying information from any transactions made with the coin. There is thus no way to tell which specific Monero coins were used for a particular transaction.
Scalable
Monero is a highly scalable cryptocurrency, which means Monero networks can grow easily in relation to demand. Demand, in this case, would refer particularly to the number of transactions being made on the network over a particular period of time. New blocks are created roughly every two minutes on the Monero blockchain, and there is no maximum block size, which means that the network can quickly accommodate a high volume of transactions at relatively low cost.
For a better appreciation of what this means, it helps to bear in mind that many blockchain-based cryptocurrencies work with limited block sizes. If a particular currency has, for example, a block size limit of 1 MB, then only that much transaction data can fit into the blocks that are mined on the currency’s network. If multiple users are trying to transact at the same time, those that can’t fit into a block must wait several minutes for more blocks to be mined. Many users then resort to driving up their transaction fees in order to incentivize miners to include them in the new blocks.
Easy to Mine
Many coins ask users to go through a complex, multilayered process to set up for coin mining. Some of these steps may include downloading dedicated mining software, linking up with a mining pool or network, and providing the software with their wallet details, among others.
Monero’s developers, meanwhile, have deliberately made it one of the easiest digital cryptocurrencies to mine. All necessary mining functions are concentrated in two possible wallet apps: the GUI wallet (recommended for most users) or the CLI users (for more advanced users who already have working knowledge of crypto mining). Monero can then be mined at home from any laptop or personal computer.
Limited Support on Multi-Crypto Platforms
While Monero comes with many clear advantages, one challenge potential Monero investors face is that not many wallets outside of dedicated XMR wallets have been developed to support it. It’s not compatible with any current hardware wallets or with digital solutions designed to accommodate multiple cryptocurrencies. Storing Monero securely is also much more difficult than most other coins, which may be another factor hindering its adoption by the wider crypto community.
In a digital economy, many believe that privacy is in many ways synonymous to freedom. Monero’s appeal lies in its promise that its transactions can’t be hindered, stopped, or even observed by outside parties. Supporters of the coin thus believe it affords them greater protection and more autonomy when trading.
