Hey guys :) Today I’ve got for you, a comprehensive list of questions and detailed answers to help you understand the most well-established and successful privacy-focused cryptocurrency in the world – Monero (XMR).
Hope you enjoy!
The list of Q&A is pretty long so first comes the list of questions that I have prepared the answers to:
- What is Monero?
- Who and When Created Monero?
- Is Monero a Fork?
- How does Monero work?
- What Algorithm does Monero use?
- How to anonymously get Monero?
- Can you solo mine Monero?
- How and Where to store Monero?
- Where to Buy and Sell Monero?
1. What is Monero?
Monero website homepage
Monero (XMR) is an open-source cryptocurrency focused on private and censorship-resistant transactions. It is widely considered to be the leading privacy-centric cryptocurrency as it provides users with complete anonymity through untraceable transactions.
Like Bitcoin, Monero is a decentralized peer-to-peer (P2P) digital currency that empowers anyone to be their own bank and transact with people and merchants around the world. Also like Bitcoin, Monero is mined via a Proof-of-Work (PoW) mining algorithm, except for Monero’s algorithm is resistant to ASIC miners and enables anyone to mine with a CPU or GPU.
But what really makes Monero stand out from Bitcoin and the sea of other cryptocurrencies is that it focuses on privacy and anonymity. Bitcoin and most other cryptocurrencies are actually pseudonymous with transparent account balances and traceable transactions that could lead to the revealing of one’s identity.
Monero (XMR) on the other hand has hidden account balances and transactions that can be fully anonymized like physical cash. These privacy-enabling features have made Monero an attractive crypto for people interested in evading law enforcement or purchasing illegal substances on the dark web.
But it's not just for criminals, Monero is also a favorite among those who actively seek and encourage financial privacy.
- Monero is Private
- Monero is Untraceable
- Monero is Fungible
- Monero is Secure
- Monero is Decentralized
- Monero is Censorship-Resistant
Monero is Private
Monero uses a combination of privacy-enabling technologies – ring signatures, ring confidential transactions, and stealth addresses – to obfuscate the origins, amounts, and destinations of all transactions. Monero transactions are always private by default.
Monero is Untraceable
Monero transactions can not be tainted through participation in previous transactions, meaning they cannot be linked to a particular user or real-world identity. Sending and receiving addresses as well as transacted amounts are obfuscated by default.
Monero is Fungible
Since Monero is private by default, units of Monero cannot be blacklisted from by merchants or exchanges due to who they are associated with or whom they have transacted with.
Monero is Secure
Monero is a decentralized cryptocurrency operated by a global network of users. Monero operates without any trusted third parties and transactions are confirmed by distributed consensus and then immutably recorded on the blockchain.
Monero is Decentralized
Over 500 developers, including 30 core developers, from across the globe have contributed to Monero’s open-source code and the Monero network is maintained by a globally distributed network of users.
Monero is Censorship-Resistant
Since Monero is fungible and decentralized, its blockchain cannot be shut down by any centralized authorities and transactions cannot be stopped or censored. It is safe from ‘capital controls’ imposed by authoritarian governments.
2. Who and When Created Monero?
Monero was created by an anonymous BitcoinTalk forum user, ‘thankful_for_today’, and launched in April 2014.
When the Anonymous BitcoinTalk forum user launched Monero, he initially named it BitMonero, which is a compound of Bit (as in Bitcoin) and Monero (meaning "coin" in Esperanto).
BitMonero was launched fairly with no pre-mine or insta-mine like you see with most coins today, and the block rewards go directly to miners for securing the network instead of a portion going towards “development” as you see in some projects.
You can review details of Monero’s launch in the original BitcoinTalk thread here.
Shortly after launch, Monero’s founder, ‘thankful_for_today’, proposed some controversial changes that were not received well by the Monero community. As a result, a fallout ensued and the Monero core team, led by another anonymous BitcoinTalk forum user, ‘Johnny Mnemonic’, forked the project to take it in another direction.
With this fork, BitMonero simply became Monero and has undergone several large improvements since including:
- Monero’s blockchain migrated to a different database structure to improve efficiency and flexibility.
- All transactions were made private by default.
- RingCT was implemented to hide transaction amounts
The Monero project continues to develop to this day with a focus on privacy and security first, ease of use and efficiency second.
The project has received contributions from over 500 developers, including 30 core developers, from around the world. Therefore, Monero has always been very decentralized in this sense.
However, the project does have a lead maintainer that helps to streamline developments and collaborations. And up until December 2019, Monero’’s lead maintainer was Riccardo Spagni, better known by the alias "Fluffypony." Replacing Fluffypony’s role as the project’s lead maintainer was the longtime Monero contributor "Snipa", who continues to lead the project now.
3. Is Monero a Fork?
Yes, Monero (XMR) is a fork of the Bytecoin (BCN) codebase and bases its fundamentals off the same CryptoNote protocol that’s integrated into Bytecoin.
The CryptoNote protocol was originally featured in a whitepaper alongside a cryptocurrency called CryptoNoteCoin (CNC) and was later used in a lot of other CryptoNote-based currencies.
While Monero was originally a fork of Bytecoin and utilized the CryptoNote protocol, it has largely deviated from the Bytecoin (and CryptoNote) code over the years. This is because Monero undergoes regular hard fork network upgrades every 6 months.
These hard forks (network upgrades) often include new security features, protocol changes, and important proof-of-work (PoW) changes to help maintain ASIC-resistance.
As Monero stands today, it is very different from the Bytecoin (BCN) cryptocurrency and is magnitudes more popular and successful than Bytecoin ever was.
4. How does Monero work?
Monero ensures its transactions, transaction amounts, and account balances are private and untraceable by employing the following privacy-enabling features and technologies:
- Enforced privacy by default
- Ring confidential transactions (RingCT)
- Stealth (one-time) Addresses
- Ring signatures
- Transactions over Tor/I2P
Enforced Privacy by Default
Unlike some privacy-centric cryptocurrencies like ZCash (ZEC), Dash (DASH), and others, Monero is private by default for all transactions so that no one can accidentally or deliberately be traceable.
Cryptocurrencies that are public by default with secondary or optional privacy features can lead to the loss of privacy altogether because nonprivate transactions can be traced to a receiver even if they employ privacy features. Therefore, they are not as private as Monero.
Ring confidential transactions (RingCT)
Monero uses RingCT’s to obfuscate the amount sent in a transaction along with range proofs, which are used to allow the Monero network to cryptographically prove that the amounts used in a transaction are greater than 0. This is done to prevent transactions of negative value, which would reduce Monero’s supply.
Stealth (one-time) Addresses
To further improve upon privacy, Monero requires senders to create one-time addresses for every transaction on behalf of the recipient by using the receiver's public address. This ensures that transactions cannot be linked back to either the recipient or sender's published addresses by an outside party.
When using the Monero wallet, all this is handled by the software. The sender only needs to enter the destination address, the amount, and press send. To receive Monero, all you need to provide the sender is your public address.
Monero utilizes ring signatures when sending a transaction to ensure that transaction outputs are untraceable. The way it works is, Monero transactions are cryptographically signed with your account keys and a number of public account keys to generate the transaction.
This forms a "ring" of possible signers in which all ring members are equal and valid, making it so an external observer cannot be certain exactly which address sent a given transaction.
Bulletproofs – a type of non-interactive zero-knowledge proof that allows transactions to be verified without knowledge of the sender, receiver or amount without the need for a trusted setup – are used in Monero. It is a secure method of verifying transactions that's necessary to prevent senders sending currency they do not possess.
Transactions over Tor/I2P
Tor and I2P are the latest privacy features to be implemented in Monero and their usage is still considered to be experimental. Transactions over Tor/I2P are intended to maximize the privacy of the source of a transaction.
5. What Algorithm does Monero use?
Monero uses a proprietary algorithm called RandomX, an ASIC-resistant and CPU-friendly Proof-of-Work (PoW) mining algorithm.
Prior to utilizing the RandomX algorithm, Monero used an algorithm based on the CryptoNight Proof-of-Work hash algorithm, which comes from the CryptoNote protocol. However, to prevent ASIC miners from mining Monero, the project made the switch to the RandomX algorithm in December 2019.
The RandomX algorithm was designed by Monero community members who specifically designed it to make the use of mining-specific hardware, like ASICs, unfeasible. Additionally, RandomX improves the efficiency of mining using CPUs and penalizes GPU miners who wish to mine Monero.
Since RandomX is optimized for CPU mining, the Monero network is more decentralized and egalitarian in the distribution of block rewards.
6. How to anonymously get Monero (XMR)?
There are many ways to get Monero, but unfortunately, not all of them are anonymous. However, you can get Monero anonymously in the following 7 ways:
- Convert Bitcoin to Monero on an exchange (that does not require KYC)
- Buy Monero on a peer-to-peer (P2P) exchange with cash
- Use a prepaid card to buy Monero
- Buy Monero on a decentralized exchange (DEX)
- Buy Monero on a cryptocurrency ATM
- Buy Monero from an individual
- Mine Monero on your CPU
1. Convert Bitcoin to Monero on an exchange (that does not require KYC)
One way to buy Monero anonymously is to exchange Bitcoin for Monero. However, for this to work, you must first get Bitcoin anonymously so that your identity is not tied to the Bitcoin you are using to buy Monero (because Bitcoin accounts are transparent and Bitcoin transactions are traceable).
Depending on your local jurisdiction, you can easily buy Bitcoin anonymously via a peer-to-peer exchange like LocalBitcoins.com or via a Bitcoin ATM. After buying Bitcoin, you can exchange it for Monero on an exchange such as Binance, which does not require you to provide your ID.
2. Buy Monero on a peer-to-peer (P2P) exchange with cash
You can buy Monero anonymously using LocalMonero, a peer-to-peer exchange for Monero buyers and sellers. The anonymous payment methods supported include: cash in person, cash by mail, cash at ATM, cash deposit, gift cards, or cryptocurrency as the payment method.
3. Use a prepaid card to buy Monero
You can use a prepaid credit card to buy Monero on an exchange that accepts credit card payments and does not require KYC information, such as Changelly. Prepaid credit cards can be bought in convenience stores and online.
4. Buy Monero on a decentralized exchange (DEX)
Decentralized exchanges facilitate trades in a peer-to-peer manner so you are buying and selling directly from buyers/sellers with no third party in-between. Also, these types of exchanges don’t require KYC information.
5. Buy Monero on a cryptocurrency ATM
Another way to buy Monero anonymously is through a cryptocurrency ATM that does not require proof of identity before buying. Also, not all crypto ATMs support Monero, but you can use CoinATMRadar to find the nearest Monero ATM to you.
6. Buy Monero from an individual
If you know someone who has Monero, you can sell goods or services in exchange for Monero. However, if you are doing this online, you should use a service like Tor or a VPN to remain anonymous.
7. Mine Monero on your CPU
You can obtain Monero anonymously by mining it, using nothing but your computer’s CPU.
It’s important to note that many of the above-mentioned methods of getting Monero Anonymously should be used in conjunction with Tor or a VPN to prevent anyone from tracking your IP address.
7. Can you solo mine Monero?
Yes, you can easily solo mine Monero. No specialized hardware is required, you can solo mine Monero with nothing but your computer’s CPU.
How to solo mine Monero
The first step is to download Monero’s official GUI from the Monero downloads page to your operating system. Once downloaded, you will have to be patient as the Monero blockchain synchronizes with the network.
Once the network status says “Connected” in the lower left-hand corner, click the “Advanced” tab. Several options should appear, but all you need to click on next is the “Mining” sub-tab.
You can now start mining Monero. But before you click the “Start Mining” button, you have the option to change the number of threads to mine with. For optimal efficiency, you should mine with your CPU's cache divided by 2. You can look up your CPU’s specs on your computer’s control panel or the manufacturer’s website. However, if you are unsure, simply leave the number at 1 and click “Start Mining”.
When you solo mine Monero on your computer, you are helping to secure and decentralize Monero’s network and might even get lucky and receive a reward for protecting the network.
If you want to stop mining Monero, you can do so at any time by clicking the "Stop mining" button.
8. How and Where to store Monero?
The different ways to store Monero include:
- Full Node
- GUI Wallet
- Paper Wallet
- Hardware Wallets
Monero is stored on an account, which is based on two distinct cryptographic keys: the spend key and the view key. The spend key enables you to transfer funds out of your Monero account and the view key enables you to view your account balance.
In addition to these two keys, your Monero account also consists of a public address and mnemonic seed. The public address is what you share with others to receive Monero. The mnemonic seed is what you receive when you first create a Monero account and is used to backup or restore your Monero account.
See the different Monero storage types explained below:
The most simple and easiest way to store Monero is via the official online web-wallet MyMonero. MyMonero works on your computer or mobile internet web browser and doesn’t require any installation.
However, while MyMonero may be convenient and easy to use, it is not as anonymous as some other ways of storing Monero because MyMonero’s servers can see (but not spend) your Monero balance.
Advanced Monero users can choose to run a full Monero client Node which not only enables you to securely store your Monero completely anonymously but also contribute to the strength of the Monero network. Running a full node provides you with the highest level of privacy while allowing very quick access to your funds. This wallet does not require a large amount of processing power but does require a few gigabytes of workspace.
There is an official GUI Wallet that can be downloaded and installed on your desktop computer. Using this wallet, users benefit from secure and anonymous storage as well as the ability to solo Mine Monero.
One of the most secure ways to store Monero is to move your funds fully offline into “cold storage” using a physical paper wallet. However, this method of storage is not very convenient if you want to remove your funds from the paper wallet and put them back online.
The popular Ledger Nano S hardware wallet is now compatible with the Monero GUI wallet. The Ledger wallet must be used through the Monero GUI wallet as opposed to the Ledger application.
9. Where to Buy and Sell Monero?
Monero (XMR) can be bought and sold on a peer-to-peer (P2P) basis but the most popular way to buy, sell, or trade Monero is through cryptocurrency exchanges.
You can buy XMR with cryptocurrency or fiat at the following top exchanges. In most cases, you will have to fund your account with fiat, buy Bitcoin or Ethereum, and then use BTC or ETH to buy Monero (symbol XMR).
- Bitfinex - BTC, USD
- HitBTC - BTC, ETH, BCH, EOS, USDT, TUSD, EURS, DAI
- Kraken - BTC, EUR, USD
- Bisq - BTC
- Binance - BTC, ETH, USDT, BUSD, BNB
In addition to the exchanges listed above, Monero (XMR) is also traded on a wide array of other exchanges and platforms that enable people to buy, sell, or trade cryptocurrencies.
Hope you enjoyed that read :) Let me know if I have missed something in the comments.