MONERO Cryptocurrency (XMR) – A Beginner’s Guide
Monero is described as open source, scalable, decentralized, and completely private. It is the feature of complete privacy that sets Monero apart from all of other cryptocurrencies.
Monero (XMR) Explained – Blockchain and Transaction Flow
Monero uses an opaque Blockchain along with ring structure. This is instrumental in providing total privacy for the users.
In normal cryptocurrencies when two people engage in a financial transaction, money from one digital wallet is subtracted, and equal amount is added in another’s wallet. In Monero however the transaction is randomized and distributed.
For example say a person ‘A’ wants to transfer 100 Monero to a person ‘B’. Instead of the normal route, the algorithm transfers say 30 Monero from ‘A’ to ‘C’, 50 Monero from ‘A’ to ‘D’, and 20 from ‘A’ to ‘E’. Then ‘C’, ‘D’, and ‘E’ transfer 30, 50, and 20 respectively to ‘B’. Thus the actual transaction of 100 Monero from ‘A’ to ‘B’ has happened but random intermediaries. Larger is the network, larger will be the number of intermediaries.
In a large enough network, this makes it impossible to understand who transferred what amount to whom. What it also does is prevents random strangers from understanding how much total balance you have in your digital wallet, which is a huge failing of Bitcoin. This is very similar to traditional banking, where transactions would not reveal your personal wealth.
Another feature of Monero is that it is fungible or that every coin of the Monero can be used for every other coin. This is a feature that is absent from Bitcoins. When it comes to Bitcoins, certain coins can be banned or devalued, especially if they have been used for illegal purposes. In case of Monero that is not the case.
However this feature has made it notorious for being used by various parties for illegal transactions. The most recent alleged example was when the hacker group ‘The Shadow Brokers’ who were behind the WannaCry ransomware attack, took their ransom in Bitcoins, then converted them into Monero, and then converted them back into Bitcoins.
Monero Mining Approach
Monero is also revolutionary in its egalitarian mining approach. For certain Cryptocurrencies, mining requires specialized hardware, and this gives rise to mining pools. Also since only certain people or groups of people can now mine, say Bitcoin, it pushes up both the transaction fees and the chances that Nano transactions will not be verified due to small transaction fees.
Monero can be mined using consumer grade hardware like x86, x86-64, ARM etc. This takes the mining pools out of the equation and drives down transaction fees. As a result Monero becomes feasible for nano-transactions, which represent the largest chunk of transactions.
Monero – Liquid Currency
Monero is looked at as an extremely liquid currency. It can be exchanged for most of the widely accepted fiat currencies like US Dollars, Great Britain Pounds, Euros, and Indian Rupees. It can also be bought using cryptocurrencies like bitcoins.
Monero can be stored in the MyMonero wallet which has been developed and maintained by Riccardo Spagni, one of the seven members of the team that designed the Monero.
However, the MyMonero wallet gives the Monero development team viewing access to your total balance. In case you want to avoid that, you can run a full Monero client on your computer.
The download details are available on their website. The wallet at the moment is in command line format and a GUI is being developed for it. Hardware wallets are also in a development phase so as to provide complete security to your digital currency.