Monero Crypto Currency: Overview and Investment Outlook

2021.03.16 2021.03.16 Monero Crypto Currency: Overview and Investment Outlook

Oleg Tkachenkohttps://www.litefinance.org/blog/authors/oleg-tkachenko/

Monero crypto currency: overview, advantages and disadvantages of the startup. Analysis of prospects and evaluation of investment efficiency, recommendations for traders

Monero crypto currency is referred to as the best coin for darknet due to its ring signature algorithm. It is very different from similar projects (bitcoin, litecoin, ripple) and has a serious advantage - an almost flawless system of ensuring security and anonymity. But this is also the problem of the crypto currency, which is under pressure not only from competitors (Dash, Zcash), but also from the state authorities. What is Monero, what are the strengths and weaknesses of the project, and its investment prospects - read about all this in our review!

Monero – anonymity on guard of transactions

Crypto currencies from the TOP-20 can be loosely divided into two camps: decentralized networks for the creation of applications based on blockchain (Ethereum, NEO, Lisk, EOS) and start-ups representing payment systems (Bitcoin, Ripple, Litecoin, etc.). The task of the first camp is to optimize the internal structure of the network and protocols, making the applications on their basis even more convenient and reliable. The task of the second camp is to make transactions in the system safe, fast and practical (with a minimum commission). Each crypto currency project is unique in its own way and Monero, which belongs to the second camp, is no exception.

Even at the moment of its appearance, the crypto currency was given the status of the most anonymous coin, for which a number of accusations followed immediately. In particular, the public was concerned about the high probability of using Monero to finance questionable transactions. But this did not prevent the crypto currency from entering the TOP-15. If you want to know about the unique feature of Monero and its difference from other payment systems, its competitors, and whether it is worth investing in, then keep on reading.

Monero overview and peculiarities

Monero (XMR) is a type of electronic money used to make confidential payments. Like Bitcoin, this is a type of payment system, but this is where their similarity ends. Unlike bitcoin, Monero uses the relatively rare CryptoNote protocol (Proof-of-work principle), developed for a family of anonymous crypto currencies. Each user's wallet has cryptographic protection and is known only to its owner.

• Reference: The CryptoNote protocol was developed in 2012. The technology is based on the use of ring signatures and one-time addresses that hide the address of the sender and the recipient. Transactions that are signed with a ring signature refer to several other operations in the block chain. It is believed that, based on the bitcoin block chain, it is possible to identify the data of some bitcoin adresses. The use of one-time addresses in Monero excludes this possibility.

The first crypto currency launched on the basis of the CryptoNote protocol was Bytecoin, which gave rise to the Monero coin as a result of the fork in 2014. Unlike bitcoin, where the data on transactions and addresses can be transferred to the state, Monero uses the principle of block chain entangling. Personal data of users, the balance - all this information remains unavailable even to network owners.

Almost a quarter of Monero's turnover falls on the Bithumb exchange, but you can only exchange the crypto currency here for the South Korean won (KRW). You can buy the crypto currency for US dollars on HitBTC, for bitcoins - on Bitfinex and Poloniex.

Monero advantages:

• anonymity. There is no information about the owner of the crypto wallet. In this respect, Monero is a more attractive coin compared to bitcoin;
• security. The coin cannot be copied, although in part this leads to difficulties with mining, which requires the latest equipment for this reason;
• a large number of network members. Even at the time of Monero's appearance, the small number of users was a problem: despite the anonymity, it complicated the process of mixing transactions and large transactions could be seen by those who tracked them. Now the number of users is enough that even a relatively large transaction is not traceable in the total number of transactions;
• almost perfect security against hacking. Hackers who do not have information about account balances are faced with much greater difficulties than in the case of hacking other crypto currencies. One serious hacking attempt was made in 2014, and so far it has been the only one.

Like any other crypto currency project, Monero is constantly updated. One of the major releases took place in January-February 2017. Updates dealt with improving code validation (RingCT) and enhancing protection against transaction analysis. Another update was made in September 2017. Mandatory use of ring confidential transactions RingCT was introduced.

Monero disadvantages:

• Monero transactions are several times larger than bitcoin transactions (take up a lot of space);
• the anonymity of the crypto currency can be compromised. If, in the event of an attack, a hacker obtains control over most of the network, there is a risk of partial de-nomination of transactions;
• the popularity of the crypto currency in the darknet may hamper its potential in the future due to restrictions on the part of government agencies. Using a coin for shadow transactions damages the reputation of the project;
• there are no restrictions on the issue of coins. The existing issuing is relatively small - in case of large-scale projects and cooperation with payment systems, the issued volume may not be enough.

Despite Monero’s popularity, the crypto currency has competitors:

• Dash. A decentralized payment system that uses the anonymous transactions mechanism. Initially, the strategy of the project was anonymity. Later the project began to expand in the direction of instant transactions and an effective management system. By the level of capitalization, the coin takes the 8th place with 8.938 billion US dollars. And although the directions of Dash and Monero are somewhat different, the algorithm providing anonymity makes the project a serious competitor;
• ZCash. A project that ensures the confidentiality of transactions. The capitalization of the coin amounts to 1.612 billion US dollars (23 place). The crypto currency has a relatively narrow specialization, but in the future it can be promising.

The remaining crypto currencies focused on the anonymity of transactions (Spectrecoin, ShadowCash) are of little interest and therefore are not competitors. Although their developers argue that their projects will take away part of the success from Monero over time, they are below the 250th place by capitalization.

Monero prospects for investors

As of December 19, 2017, the capitalization of Monero is 6.125 billion US dollars. By this indicator, the crypto currency is in a shaky 10th place, just a few steps from EOS and Bitcoin Gold, which sometimes push the coin from the 10th place.

The Monero price chart has excellent stability. Over the past year, the crypto currency has seen only one price surge in early September, when the coin went up almost 2.5 times (from 48-50 to 128.70 USD). And even after the rollback, the price did not return to the August level, remaining in a narrow corridor of 85-95 dollars for a month. USA. The reason for the surge was XMR being added to the listing of the largest South Korean exchange Bithumb and possible support in the future by BitBay.

Monero price movement characteristics:

• low volatility;
• stable growth without strong ups or downs;
• little influence of fundamental factors and forks;
• no correlation with bitcoin. This is clearly seen on the chart, where the Monero price in US dollars (green line) has a smooth uptrend, while the bitcoin price (yellow line) is twisty and uneven due to the volatility.

Now the cost of the coin is approaching $ 400. USA, and if there is no general correction of the crypto currency market, Monero will continue to grow.

Thanks to the anonymity of the crypto currency, it became popular in many online casinos and so-called darknet websites: Oasis (a consortium that manages e-commerce standards), AlphaBay. After the FBI and Europol’s joint operation to close the AlphaBay illegal trade platforms in mid-2017, these structures firmly criticized Monero's anonymity. However, the popularity of the coin was not affected.

Theres is more and more talk about the use of instruments based on Chainalysis's blockchain start-up by the US Internal Revenue Service (IRS), which makes it possible to identify beatcoin users who evade taxes this way. This BTC’s vulnerability is successfully managed by Monero developers. For example, the update in early 2017 was also concerned with establishing an inbound connection limit from one IP address to complicate Sybilla's attack (creating fake nodes in the network for lobbying through an artificial majority of opinions) or analysis by Chainalysis. In light of this information, the popularity of coins in darknet, including Monero, will continue to grow.

How to invest in Monero

There are several investment options:

1. Open a wallet with the exchange and invest through USD or BTC. There are many drawbacks here. First, the fate of Mt Gox is familiar to many. There are many suspicions relating Bitfinex, which conducts Tether's uncontrolled emission (in mid-December, the largest batch of $180 million was issued within 1 day), on December 19, South Korean Youbit reported bankruptcy due to hacking. Secondly, there are few exchanges working with Monero.

2. Invest via cold wallets.

3. Engage in mining. The process of mining Monero is dramatically different from mining other crypto currencies:

• popular equipment such as ASIC is not applicable;
• the coin can only be mined on a 64-bit architecture, 32-bit is not supported;
• the block confirmation process takes 2 minutes and does not depend on how many miners participate in it.

Proven pools can be found on the Monero website, but you will have to look for wallets or cloud-based mining services yourself.

Recommendations for investors:

• monitor the news about new Monero partners. News about updates go unnoticed by investors, the driver of the price is still the massive use of crypto currency as a means of payment, i.e. new large participants joining the network;
• diversify risks. The Monero rate is growing along with the overall growth of the market;
• invest for an average period, withdraw the money from time to time. Do not trust crypto currency exchanges.

Conclusion. The Monero project was originally conceived as a reliable secure payment system without bitcoin problems. And we can say that the developers succeeded to manage this task. If Bytecoin project struggles for 30th place in the crypto currency capitalization rating, its fork Monero closes TOP-10. The fact that the coin is used by the black market indicates that the security and anonymity of transactions in the payment system is at a high level.

For investors, the coin can be of interest for risk diversification. It will fit perfectly into the portfolio with bitcoin and ethereum; you can find out more about them here. Earn on innovative technologies!

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