Cryptocurrencies of 2022 aim to offer security, scalability, and decentralization. Bitcoin and Ethereum are considered one of the most decentralized, while Solana and Avalanche promise great scalability.
Today we will talk about Monero, the project that is a leader in user privacy. Read on to learn whether you should start the Monero to Bitcoin exchange and whether this currency is a good investment for the future.
THE “PRIVACY COIN” CONCEPT EXPLAINED
Monero, as well as ZCash and Dash, belong to a group of cryptocurrencies called privacy coins.
The main principle is to maintain users’ anonymity by hiding the identity and origin of blockchain transactions.
How is it different from any other cryptos?
For instance, Bitcoin promotes privacy, yet the transactions made with Bitcoin are fully transparent.
Each bitcoin transaction is free of any central authority but is easily traceable to a person.
The peer-to-peer network doesn’t leave space for anonymity, as the addresses and nodes are public.
On the other hand, there are privacy coins that make it impossible for third-party users to uncover transaction details.
They are accomplished by different methods, from CoinJoin to ZkSNARKs. For example, Monero reaches privacy with the following:
- Stealth addresses
A mechanism that generates a new address for every transaction.
- Ring Confidential Transactions(CT)
A protocol that hides the origin and destination of each payment.
- Ring signatures
A digital signature scheme that makes the transaction keys accessible only to the participants of a payment.
THE BENEFITS AND DRAWBACKS OF MONERO
Since its launch in 2014, Monero (XMR) has caught much attention. Some experts trace its roots to 2012’s Bytecoin, but the 7-member team behind the crypto remains primarily anonymous.
The only public faces of the core development team are David Latapie and Riccardo Spagni.
Monero works with the help of CryptoNight, which is a proof-of-work algorithm. As for the pros of XMR, they are:
COMPLEX PRIVACY MECHANISM
RingCT, ring transactions, and stealth addresses combined lead to great results. These methods have made the currency untraceable.
EASY MINING
You don’t need a powerful beast of a PC to mine XMR. Moreover, it can be mined only with a CPU, making it accessible even for beginners.
OPEN-SOURCE TECHNOLOGY
Open-source blockchain networks almost always imply long-term community support.
DYNAMIC SCALABILITY
Besides being private, Monero’s free block size mechanism allows for dynamic scalability.
Still, there are some cons as well:
LEGAL MATTERS
The anonymity that Monero gives its users sometimes makes XMR the primary coin for illegal activities like gambling and money laundering.
That’s why in some countries (South Korea), it is prohibited to use privacy coins at all.
LOW AVAILABILITY
Due to its half-legal status and untraceability, privacy coins, including Monero, are the main targets of government regulators. That leads to delisting XMR on some of the exchange platforms.
DOES MONERO HAVE A PROMISING FUTURE?
Monero is a perfect example of a genuinely anonymous network. Trust is why people use cryptocurrencies in the first place, which is why Monero has a lot to offer to its investors.
The competition in the modern crypto market is insane, but the price of XMR is growing each year, and the future looks bright for Monero’s users.
It is expected to have an upswing in the upcoming years, and we will observe to see if it delivers the hopes.
FINAL THOUGHTS
Monero is an excellent choice for beginner investors and those who care about their privacy.
In the age of data trading by technological giants like Google, Amazon, and Microsoft, it is essential to have a means of anonymity.
Privacy coins push the limits of privacy in an already existing crypto market, and that’s why they gain so much trust among their users.
Still, reliable exchange platforms are necessary for any crypto transaction, be it BTC to XMR or ALGO to USDC.
Always go for trustworthy services, no matter what coins you are dealing with.