Monero, launched in 2014, is outside of being a cryptocurrency, also a digital payment system that runs on blockchain technology. Since the launch, Monero has taken a strong position in the crypto market. Unlike for example Bitcoin, transactions from XMR, the cryptocurrency of Monero, are completely irreducible and 100% anonymous. The Monero developers strive for privacy, not only from the sender and recipient but also with regard to the value of the transaction. The users of Monero are their own bank, which means that financial privacy can be achieved. This makes Monero unique, wanted and very valuable.
What makes Monero unique?
Monero stands for complete anonymity, so also for its users. Although every transaction is recorded, they use far-reaching technology to hide all data from the transaction. For this process, they use three different technologies:
– Ring signatures: hides the identity of the sender (payer) of the transaction
– Ring confidential transactions (RingCT): hides the amount of the transaction
– Stealth addresses: hides the identity of the recipient
The data is therefore recorded in the ledger but is completely protected by this technology. It is also not possible to do a transparency transaction. In this Monero deviates from Bitcoin, which is a protocol that shows the transactions in a transparent and visible way to everyone (in principle).
While Bitcoin pretends to be decentralized, the reality turns out to be something else. The person with the most coins has the most power in the network. And the one with the most money (crypto or otherwise) can buy the heaviest machines that are needed to successfully mine, and thus earn more coins.
Monero works with the principle that everyone in the network is equal. Many or just a few coins, it doesn’t matter, there is no distinction. Mining the coin is possible with any normal PC, so everyone can mine it and this will not change.
Bitcoin and the network are troubled by the size limit of blocks. This problem is particularly evident with growth because it means that only a limited number of transactions can be executed per second. This, therefore, requires increasingly heavier equipment because otherwise, the transactions will take far too long. The fact that the transactions take a long time is already a common complaint, plus as it takes so long, the transaction costs are also going up considerably. Bitcoin, however, needs 95% consensus of the network to change and this is becoming increasingly difficult as the network gets bigger and bigger.
Monero does not have this problem. This is because there is a dynamic limit on the block size that is applied in the Monero network. This automatically adjusts when needed. There is, however, a maximum growth possible at a time, which avoids the sudden growth spurt that one cannot keep up with.
All amounts with the same value are the same, so whether you have 1x 10 XMR or 2x 5, this does not matter at all. Also, as a recipient, you don’t have to be afraid to receive “contaminated” coins (for example ‘drug money’ or ‘stolen funds’). Because all transactions are hidden, you cannot check the history of the XMR you receive.
Fixed reward for mining
With Bitcoin, among others, the rewards of confirming transactions will decrease (it will always be halved). The more mined, the less you get as a reward. Also, mining is becoming increasingly difficult and the equipment used for mining is becoming faster and more specialized, and therefore also more expensive.
Deflation is applied at Monero. So over time, less is paid to miners, but this goes down very slowly. In addition, a minimum of 0.3XMR will always be paid out, where it will stop at a given moment at Bitcoin completely. In that sense, Monero is just that little bit more interesting, especially since it is newer and so a lot of coins still have to be mined before we reach the point of 0.3XMR. The intention is that more than 18 million coins will be mined until the year 2022, an inflation rate of 1% per year is then expected.
This sounds too good, are there any disadvantages?
From the whole story, it seems that Monero is a much better coin than, for example, Bitcoin. But is that picture justified? In general, certainly, but there are also a few lesser points. The most important of these is the compatibility, or rather the lack of. Monero has set up a very strong and good platform of its own but therefore is not compatible with any other (crypto) currencies. Fortunately, there are now also solutions (brokers) for that, so that you can still pay with XMR to Bitcoin and vice versa.
Because Monero works with its own completely new (relatively) platform, it also means that this must be built up from 0. The network must also start all over again and cannot build on existing techniques.
The last point I want to mention here is that Monero is only a digital currency, and therefore not a payment network. They also do not pretend to be this. However, you can also use this currency quickly, cheaply and especially safely to pay anonymously. And we should not want to make more of it, that is not the purpose of this coin at all!