Guides to Cryptocurrencies
Founder: A Bitcointalk forum user known as thankful_for_today
Prominent Developer Group: Monero Core Team
Protocol: CryptoNight Proof-of-Work
Launch Date: 17 April 2014
Chinese Name: 门罗币
Monero is a cryptocurrency created as an open-source blockchain technology with the goal to design a decentralized network that safeguards users’ privacy. The abbreviation of the Monero native coin is “XMR” and it uses an obfuscated public ledger to mask the source, destination, transaction amount and balance which is different with most cryptocurrencies. Similar to bitcoin, Monero uses Proof-of-Work (PoW) protocol to create new coins and reward miners for validating transactions but it uses a different mining algorithm from the CryptoNote protocol, named CryptoNight which is completely different from Bitcoin’s SHA-256 algorithm.
Bytecoin was the first privacy coin created in 2012 and its team claimed that the coin is the first cryptocurrency to implement CryptoNote protocol. Later on, disagreements on how the Bytecoin should be marketed and enhanced led to a user known as thankful_for_today from Bitcointalk forum to hard fork the Bytecoin codebase and created BitMonero on 17th April 2014. The abbreviation of BitMonero was “BMR” and the name Monero was used because it means “coin” in the Esperanto language. BitMonero was created with a 1 minute block target and would continue to use the CryptoNote technology.
The first BitMonero auction to sell 100 BMR tokens for Bitcoins was started on 20 April 2014 by a Bitcointalk forum user known as “Smooth”. The auction successfully closed on the same day with a winning bid of 0.005 BTC. That was worth $2.50 USD since Bitcoin was around $500 USD back then. Interests for the new cryptocurrency grew and more people started to mine and trade it.
Regrettably, thankful_for_today was not active in discussions, preferred to work on things without the consensus of the community and quickly lost their support. Later, the founder admitted publicly that he was a developer and was not a sociable person. Disagreements eventually became more intense and the community changed the name of BitMonero to Monero on 23th April 2014, less than a week after launch and migrated to another newly created Monero forum thread. Monero’s abbreviation was changed from BMR to MRO, and ultimately changed to XMR. Shortly later, thankful_for_today disappeared from the development scene and his true identity remains a mystery.
Monero experienced rapid growth during year 2016 and eventually became the world’s most popular privacy cryptocurrency with a cryptocurrency market cap of more than $1.5 billion USD (14th largest in the world) and a total coin circulating supply of around 17 million as of 27 June 2019.
Monero platform uses ring signature and stealth address technologies to enhance privacy on its blockchain. First, Stealth address is used to obfuscate recipients by generating random one-time address used for each transaction to represent the recipient. The real destination address is hence not revealed and the recipient identity is protected.
Next, the Monero system clubs together a combination of senders’ account private keys and public keys on the blockchain to generate an anonymous ring signature mixing spender’s input with a group of others. This ring signature does not reveal identify of members that signed the transaction, hence it is much more difficult with many decoys around to establish a connection between each following transaction.
Comparison with Bitcoin
Bitcoin is without doubt and by far the most popular and famous cryptocurrency in the world. The Bitcoin network is more transparent than Monero with transactions, wallet addresses and balance of owners available for public to view and trace. Some pro-Monero users do not like the transparency, they commented that friends or anyone that had sent you a bitcoin transaction before will be able to view your wallet, know your financial health and track future transactions. They argued that owners are unable to prevent other users, governments or worst, criminals from monitoring their wallets. On the other hand, it is a lot more difficult to trace a Monero transaction.
Since there is no serial number on Monero tokens, all tokens are the same and are fungible, meaning they can be mutually replaced. Due to the difficulty of tracing participants, transactions and addresses, it will be harder for Monero tokens to be suspended, blocked or banned. The Monero community believes that token holders will more likely be able to trade or use their coins at a 1 for 1 rate under any circumstances. As the saying goes, “While fiat money is legally fungible, Monero is practically fungible”.