What is Monero (XMR is the token) and what can it offer to the crypto scene not offered by other mainstream cryptocurrencies?
In one way Monero is similar to Bitcoin in that it is a cryptocurrency with the purpose of acting as a payment method.
“Monero is electronic cash that allows fast, inexpensive payments to and from anywhere in the world.”
Unlike normal everyday cash transactions via banks, Monero avoids “multi-day holding periods”, “chargebacks” and “is safe from capital controls.” When an individual makes a transaction via their bank they must wait for 3-5days for the payment to clear if they are sending money abroad and they are subject to “capital controls”. In Greece, for example, capital control, does not allow individuals to withdraw more than 300 euro a day and to transfer large sums abroad. With Monero this is not the case as it is not subject to these restrictions due to its decentralised nature. It is supported by a large community of 240 developers including 30 core developers. But so what? Bitcoin does that too and so do other cryptocurrencies, so what makes Monero any different?
Unlike Bitcoin, where all the transactions occurring are transparent and traceable, with Monero, they are not. Monero provides full privacy as both the sending and receiving address is anonymous and so is the amount being sent. “Monero uses ring signatures, ring confidential transactions, and stealth addresses to obfuscate the origins, amounts, and destinations of all transactions.” The Kovri project which is currently in development will further encrypt the network, as it “will route and encrypt transactions via I2P Invisible Internet Project nodes. This will obfuscate a transactor’s IP address and provide further protection against network monitoring.”
Block size:
Unlike Bitcoin, Monero does not have a fixed block size, the blocks vary in size based on demand. However, they are capped at a certain growth rate to prevent outrageous growth.
Blockchain function:
One could ask: If the transactions are completely anonymous, why can someone not just create Monero out of thin air? The answer lies in the way the blockchain functions. Every transaction output is associated with a key image that is generated by the holder of the output. Key images can only be used once, so when a miner sees an image that has already been used it is rejected from the blockchain. Miners must verify that a key image has not been previously used so as to ensure double spending does not occur.
Transaction fees:
The block reward for miners cannot drop below 0.3 XMR per block and the nominal inflation stays at 0.3 XMR per minute. This means it is both profitable for miners, encouraging network support, and allows for reasonable transaction fees. The highest Monero transaction fee is $12.5, lowest is $0.93 and the median or average as you like is $3.5. (These are for the last 100 transactions as of the time of writing this blog post)
Verdict:
Monero may seem like a great cryptocurrency to use since it is censorship resistant, allows for lower fees and instant transactions but it’s not all roses and love. Monero must be seen as a powerful cryptocurrency at our disposal but with great power comes great responsibility! Due to its private and secure nature, it can be used for illegal transactions on the web. Individuals can pay for illegal services without the risk of being caught as the transaction is untraceable. It’s somewhat like nuclear energy, you can use it for making electricity to provide for a whole country or you can use it in nuclear weapons to destroy a country.
Crypto lad over and out!
Disclaimer: This article expresses our personal opinions, predictions, and market speculations based on the way we interpret the information we have available to us. It is by no means to be considered expert advice. We take no responsibility/ liability for any actions taken by you based on anything we have mentioned.
We are in no way affiliated with any companies, sites, crypto-currency exchanges and crypto-currencies that we mention in these articles, these are simply the ones we choose to use due to our personal preference.
Sources:
https://www.monero.how/monero-transaction-fees
https://getmonero.org
https://twitter.com/monerocurrency
