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What Is Monero Coin – The Beginner’s Guide

By October 17, 2017 No Comments

Perhaps you have heard about cryptocurrency from your friends or the news, or maybe you are considering investing some money into some alternative currencies – but did you know there is a whole world of digital currencies out there that are not Bitcoin?

Bitcoin seems to make the headlines for all of the wrong, and the right reasons, and with its volatile value and slightly uncertain outlook, it could be wise to explore, or at least get yourself up to speed on some other options.

In this article, we will explain what is Monero Coin, one of the most anonymous cryptocurrencies on the market. Offering traders and investors a wide range of benefits, as well as an entirely different concept to Bitcoin and Ethereum, Monero is the solution for those looking for something a little different.

Monero is an open-source cryptocurrency and offers high levels of decentralisation, privacy and scalability, and it runs on Windows, Mac, Linux, and Android. It was originally launched under the name BitMonero but keen to disassociate itself from Bitcoin, it was later shortened to just Monero, the Esperanto word for coin.

What sets it apart from other cryptocurrencies is that fact that it is based on the CryptoNote protocol and has significant algorithmic differences with regards to its blockchain obfuscation.

In a world where privacy is vital, especially when it comes to an individual’s finances, it is not hard to see why the security, confidentiality and untraceable nature of Monero have made it so desirable. If this cryptocurrency is something that piques your interest, read on to find out more.

The Origins of Monero

The origins of Monero Coin

Back in the early days of cryptocurrencies, in July 2012 a currency called ByteCoin was launched. The first coin to run on CryptoNote- an application layer protocol which powers a range of decentralised currencies- it initially showed promise. As time went on, individuals within the cryptocurrency community began to notice irregularities such as the fact that around 80% of the coins were already mined.

Due to this, it was decided that the blockchain relating to ByteCoin would be forked and all of the new coins in the original chain would now be known as BitMonero – a name which was eventually shortened. This new string allowed coins to be mined and added every two minutes.

Monero is the responsibility of seven developers – five of which are anonymous and two that chose to come forward and make themselves known. These two individuals are David Latapie and Riccardo Spagani – they are integral parts of the open source and crowdfunded currency.

Special Features of Monero

Monero is a cryptocurrency that is also known by the code XMR, and it was officially launched as such in April 2014- after its evolution from ByteCoin. It took a while for its popularity to pick up momentum and for it to become a market sensation, but with a capitalisation of a whopping $720 million, it is easy to see its appeal.

It is entirely different to ByteCoin, and many believe that it indeed has what it takes to take the crypto-world by storm and to become a leader in its field – but what is its appeal?

Some of the key and most enticing features of Monero are as follows:

  • Private – absolutely no one can have any indication of your balance by looking at the blockchain.
  • Secure – the feature of its irreversible cryptographic maths means that Monero transactions and wallets are entirely safe.
  • Untraceable – there is no way of tracing Monero coins through the blockchain due to the type of encryption that is used.
  • Decentralised – all nodes and wallets are equally able and eligible to verify Monero coins.
  • Fungible – all Monero coins have precisely the same market value, entirely irrespective of the time or place.

The main selling point, for want of a better word, of Monero is the level of privacy and security that it offers. Of course, all cryptocurrencies provide various levels of the points above, but only Monero does it to this extent.

This is what makes it the number one choice for those that wish to remain anonymous. It has been referred to as a more confidential version of Bitcoin by many industries and community insiders.

Another distinct feature and benefit of Monero is the fact that it is somewhat stable in comparison to Bitcoin. Its mining rate and rate of inflation are controlled and pre-programmed which makes it not as much of a volatile investment as its other crypto-counterparts.

Monero’s Cryptography Features

Monero special features

Let us discuss these in more detail – when you use Bitcoin; you reveal what is known as your “home address” when you send or receive the currency. With you use Monero, you use a “P.O. Box” as your address which allows you full anonymity.

Monero also uses something known as a ring signature to ensure that a specific transaction cannot be traced or linked to an individual. For example, imagine having 1000 $100-dollar notes, each with 1000 fingerprints on – it would be utterly impossible to determine the details of one single person to a note.

Monero works similarly in that as you make transactions throughout the network, it mixes and combines the information of hundreds of operations, without your money ever leaving your possession. This means that there is no way that anyone can trace the money that is yours, or that you have handled that money, meaning what you buy remains something that only you know.

Another feature that Monero benefits from is the public view key. This is a compelling feature and is also a solution for one of the critical faults of Bitcoin. Many say that Bitcoin is too open as people can trace transactions and this information could be used to poach clients. However, there are times and situations where having the blockchain auditable is a bonus. The public-view key allows transaction secrecy while enabling optional openness with regulators which is a necessity for operation and legalisation in some situations.

Monero has also considered the issue of supply and demand. Unlike traditional currencies, it has a supply rate and an inflation rate already programmed. This makes sure that the value and worth of Monero cannot be tampered with or diluted by the endless creation of money. With a set number of coins available, once they have all been mined, Monero will assume an annual inflation rate on the value of the currency of 0.86%. This ensures both a steady supply of coins, as well as a constant maintenance of the Monero network.

The Difference Between Monero & Bitcoin

When it comes to comparing Monero to Bitcoin, there are quite a few differences. One of the main differences that we have discussed already is the issue around privacy.

While Bitcoin does allow for a higher level of individual and personal privacy as opposed to a Visa card, it is still traceable, and you can always be identified through your transactions.

Regardless of what you are using a cryptocurrency for, many people wish to have a higher level of privacy free from the prying eyes of Big Brother. Monero offers that through various technological and cryptographical features that are coded into it. Quite literally, what you use Monero for and how much you use is entirely and utterly private and secure – no one else can gain access to that information without your expressed permission.

On another level, this also allows you to pay for goods and services without revealing how much Monero, or how little you have. This is particularly useful when trying to combat price discrimination methods employed by suppliers, or by vendors trying to take a peek at your last transactions to poach a client or two.

Another thing that sets Monero apart from Bitcoin is its superior mining algorithm. Mining is the word used to describe a program which runs on a computer and verifies and processes various cryptocurrency transactions which individuals announce on the network.

Many believe that the creators behind Bitcoin made terrible decisions when it came to choosing their Bitcoin algorithm – mainly due to the speed limitations it has, mainly when an individual is using a PC or a laptop. This means that to mine Bitcoin, individuals need to buy expensive software and hardware to make the mining effort worthwhile.

With Monero, it runs quickly and smoothly, and anyone can access the mining network, regardless of their technological capabilities.

Monero also implements an adaptive block size limit process for its transactions– another benefit that puts it above Bitcoin. When a transaction is announced to the cryptocurrency network, they appear as a part of what is known as a “block”.

Monero produces these blocks roughly every two minutes whereas Bitcoin blocks are created every ten minutes. Blocks corresponding to Bitcoin have a maximum size which means if there is no room on the network, your transaction can encounter delays – should you wish to make a deal urgently, you must pay higher fees to your Bitcoin network.

With Monero, it features an automatically adaptive block size limit which means it can easily handle increases in higher future transaction volumes- without incurring costly fees.

Best Exchanges & Wallets for Monero

When it comes to storing or exchanging your Monero, there are a few wallet options on the market. Not all wallets are created equally, so be careful to choose a reputable one before you part with your dollar! There are several options available to you, and it is worth doing some research beforehand.

Most Popular

MyMonero web wallet has a slick, well designed, and easy to use interface and is perhaps the most famous web wallet on the market. By choosing to use MyMonero you are putting your trust in a well-known name that has managed to build itself a good reputation.

Safest

Cold Storage is the name given to the concept of storing your Monero offline. When it is placed into cold storage, it means that as it is offline, it cannot be hacked or stolen by any third party with nefarious intentions. When you wish to trade or to use it again, you just upload it to your online web wallet, and off you go.

For optimum security, we would advise using a combination of the two options above, because while security for Monero is very high, when it comes to the internet, it is better to be safe than sorry!

The Future of Monero

The future of Monero

All we know about Monero is that it appears to have a very bright future. From its top-notch privacy and security features to the team of 180 developers working tirelessly on improving it and planning great things for the future – it is sure not to disappoint.

While relatively underground regarding its popularity at the moment, and especially when compared to Bitcoin, this is expected to change. One thing that Monero has that Bitcoin doesn’t is stability – it is not as volatile, and it has not attracted the same level of wrath from regulators, lawmakers, bankers, authorities, and governments that its more famous counterpart has.

This puts it in a superb position to become the cryptocurrency of the future as it can both satisfy regulators and compliance specialists while keeping the customer happy regarding privacy.

Of course, in the world of cryptocurrency, you can never really predict what will happen, but from where we are standing, Monero looks like a pretty safe bet for your investment.

 

Have you ever invested in the Monero Coin or planning to? Has this beginner’s guide helped you? Let us know in the comments below!

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Megan Frydel

Author Megan Frydel

Megan is a self-thought blockchain enthusiast. She enjoys combining finance with technology, from a less-techy perspective. BiteMyCoin is her most recent project underneath the umbrella of an international digital marketing agency ANCHOVY.

More posts by Megan Frydel

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