Monero cryptocurrency guide advises where to buy and how to buy Monero. This guide also contains the markets, value, trading, investing, buying, selling, transactions, blockchain, mining, technology, advantages, risks, history, legislation, regulation, security, payment, networks and many other interesting facts about Monero as well its status in the world of cryptocurrencies.
Monero, Tuesday, 2018-08-14
- 1 What Is Monero?
- 2 Beginner's Guide to Monero
- 3 Where and How to Buy Monero?
- 4 Monero Markets
- 5 Where to Spend or Use Monero?
- 6 How Does Monero Work?
- 7 Monero Regulation
- 8 Is Monero Secure?
- 9 History of Monero
- 10 Monero Videos and Tutorials
- 11 See Also
What Is Monero?
Cryptocurrencies are the talk of the town. Since 2009 when Bitcoin opened the gate to the world of cryptocurrencies, it has been a race with no end in sight. By the start of 2018, more than 1,400 cryptocurrencies had entered the crypto world. The core objective of cryptocurrencies as espoused by the pioneer, Satoshi Nakamoto, was to create a trustless system of sending money without relying on centralized third parties. One of the leading cryptocurrencies is Monero.
What exactly is Monero? Monero, abbreviated as XMR is an open source cryptocurrency launched in 2014. The cryptocurrency was created to help address flaws reported in previous cryptos especially Bitcoin. In particular, Monero core code was crafted to help enhance privacy and decentralization.
While many other cryptocurrencies are created as derivatives of Bitcoin, Monero is different. The cryptocurrency is based on the advanced CryptoNight Proof-of-Work hashing algorithm created from CryptoNote protocol. The hashing algorithm provides a high level of privacy, better fungibility, and block creation timeframe.
Since 2014 when Monero was stated, its performance has been very impressive. Early in 2018, Monero was ranked among the top 20 best cryptocurrencies based on market capitalization. The good performance of Monero has made people join the cryptocurrency in droves. This, coupled with a highly vibrant development team is making experts in the cryptocurrency agree that it could at some point outdo Bitcoin.
With Monero being one of the most potential cryptocurrency in the market, do not be left in taking advantage of the emerging demand. Join us in this exploratory ride to know more about Monero.
Beginner's Guide to Monero
We are in the era of cryptocurrencies. This is the reason that the rush to become part of the main cryptocurrency networks is on. While the Bitcoin is the word in every person’s mouth, other cryptocurrencies are about to dislodge it. That is right. To dethrone Bitcoin from the top position. One of these cryptocurrencies is Monero. When it was founded in 2014, its value was less than 1$. By the start of 2018, Monero value had grown with over 22,000%.
Monero is an open source peer-to-peer cryptocurrency that was founded in 2014 by an anonymous group that wanted to see things being done differently. Well, though Bitcoin was the biggest network and most valuable cryptocurrency by then, the Monero founders saw major flaws in the Bitcoin Core code and went out of their way to rectify it with a new crypto. They were particularly concerned that anonymity was very poor in Bitcoin, the system was becoming extra slow, and fungibility was wanting.
The Monero developer team came up with a new method of enhancing anonymity in the new cryptocurrency using a new CryptoNote protocol to beat Bitcoin. They were very successful. The cryptocurrency has now won the tag of the most anonymous crypto in the crypto industry. They adopted unique ring signatures technologies mix your address with others during transactions such that no one can tell where exactly the address came from or who owns it.
The ever surging demand for Monero could makes it the crypto of the future
This guide takes a comprehensive look at the Monero cryptocurrency to demystify its architecture, application of blockchain technology, and a special focus on anonymity. All the features and operations of the Monero have worked towards one goal; enhancing Monero its application, acceptance, and trust in the market.
We explore the best ways of buying, trading, and great markets that you should consider when using Monero. These will help you to see Monero in the light of other cryptocurrencies and fast shifting competition. This is not all. The greatness of Monero is not without its share of risks. Like other cryptocurrencies, the Monero risks are indeed very many. You need to strike a clear balance and compare the crypto with others.
Join us in this exploratory guide of Monero to establish everything that you need to know about it. Whether you are planning to simply try a hand in the cryptocurrencies, want to send cash using the cryptocurrency, or learn about it, this is your guide.
No matter the questions you have about Monero, doubts about its application, or thoughts, it is time to get the right answers. All of these are captured in this guide. Welcome.
Where and How to Buy Monero?
New people who are interested in cryptocurrencies always ask about where they should buy the coins. Well, there are two ways of getting hold of the highly demanded XMR. The first one is mining XMR on the Monero network. This means joining the network as a node and starting to confirm transactions for a reward in XMR. Mining is the main process used by Monero to release new coins. The second method of acquiring Monero is direct buying. This is direct, easy, and fast. Here is the procedure of buying XMR.
- Start by acquiring a Monero wallet. A Monero wallet is a cryptocurrency wallet that is designed to hold your XMR (Monero crypto coins) after a successful purchase.
- Look for a good cryptocurrency exchange. The exchanges are just like the standard forex markets. However, they deal with cryptocurrencies as opposed to fiat currencies. Make sure to carefully pick the platform without a hacking history, provides multiple payment methods, and holds great reputation. Some great options at this point include Binance, Poloniex, KuCoin, YoBit, and BitMex.
- Buy from cryptocurrency ATMs. Cryptocurrency ATMs look like standard bank ATMs, but they do not dispense cash. They only allow you to buy the cryptocurrency of choice and direct it to your main wallet. Today, most cryptocurrency ATMs only allow buyers to purchase Bitcoins. This means you will need another step to convert Bitcoins to XMR.
- Cryptocurrency Clubs. The growing popularity of cryptocurrencies such as Monero has created a new type of formation that allows people to meet and trade. These groups are mainly found in cities with a lot of cryptocurrency users such as New York, Seoul, and London. One example of these clubs is the LocalBitcoins.com. The good thing about the clubs is that they do not have restrictions. All they do is bringing prospecting buyers and traders together. Then, you can agree to pay in another crypto or even fiat.
One must have thing when joining the Monero network is an appropriate cryptocurrency wallet. The wallet is the special location where the XMR (the native Monero asset) is stored. The wallet is also used to help you make transactions with XMR such as trading in cryptocurrency exchanges, following the trading history, and enhancing security through cold storage.
Note! Though Monero wallets are referred as storage units for XMR, the definition is a misconception. Because XMR are not printed or minted, you cannot in reality talk about storing them. The Monero native coins only reside in its network. In reality, what Monero wallets store are two things; the private keys and public keys. The private keys is a special code that is only known to you and the wallet. You need the private keys to access your XMR. If the keys are lost, it means that the XMR are lost completely.
Unlike the private keys, public keys are the signature codes that point to your wallet in the network. This is the code that shared with the people you are anticipating to make payment to you. Once you share the public keys in the network, the miners spread across the globe pick it to confirm the transactions. However, this is done in total privacy to ensure that no one can use the details to know the actual sender and receiver in a transaction.
Top five Monero wallets you should consider today
There are five main types of wallets you can go for. They include hardware wallet, web-based wallets, paper wallets, desktop wallets, and mobile wallets. Here are the top five best wallets you should consider.
- Trezor wallet (hardware wallet). This is a finger-sized hardware wallet that looks like a flash drive. The wallet is one of the most secure in the market because the private keys are stored in a hidden chip and do not leave even when confirming transactions. When you acquire a Trezor wallet, it generates a recovery seed phrase that you can use to recover XMR in case the wallet gets lost or damaged.
- MyMonero wallet (web-based wallet). This is a web-based wallet for Monero. The wallet is owned and run by one of the lead Monero developers, Riccardo Spagni. It operates like an email account where users are required to sign up for an account using personal details. The wallet encrypts all the details to prevent the danger of being accessed by third parties.
- The Monero desktop wallet. This is also the official Monero client that will help you to operate as a complete node in the Monero network. This means you are ready to start interacting with other nodes and even mine XMR by confirming transactions.
- XMR wallet (mobile wallet). For users who opt to use their mobile devices, the best option is the XMR wallet. As a mobile wallet, it is designed for both IOS and Android to help those who want to connect with their Monero network on the go. Though the wallet takes some time to sync with the blockchain after installing the app, it will ultimately work well.
Where to Buy Monero with Credit Card?
The growth of Monero in the last months of 2017 and early 2018 is considered explosive. Many people have been shifting their investment to acquire this high potential crypto. For many people, the credit card is part and parcel of their lifestyles. However, can you buy Monero with a credit card?
- Start by acquiring an appropriate Monero wallet. This is the main location for holding your XMR after the transaction is completed.
- Look for an appropriate cryptocurrency exchange that accepts credit card as a method of payment. Some great options include Coinbase and Binance. Follow the purchase procedure and select pay with credit card. This will prompt you to enter the credit card number and confirm the transactions.
- You can also opt to use Coinmama. However, the procedure for using Coinmama, is longer because it is a broker and only accepts Credit cards for Bitcoins. Therefore, you have to start with buying Bitcoin and then convert to XMR at an appropriate exchange.
Where to Buy Monero with PayPal?
There is no direct way to buy Monero with PayPal. Indeed, PayPal discourages all users from using its platform to trade in cryptocurrencies. The only way to buy with PayPal is through an exchange that accepts PayPal for Bitcoins. Then, convert them to XMR at the exchange of choice.
How to Buy Monero with Wire Transfer?
Bank accounts are very personal to people. Indeed, no one can imagine living without having a bank account. The bank is trusted with savings, salary, mortgages, insurance, and even advice on portfolio growth. Now, if you have cash in the bank account, there is no need to move it through a lengthy chain to buy Monero. Here is a direct process.
- Open a Monero cryptocurrency wallet. This is the location that the XMR will go after the transaction is completed.
- Look for an appropriate marketing platform that accepts payment in a wire transfer. Such exchanges include Coinbase and Bitpanda. You have to visit the selected exchange and create an account before initiating the process. Then, follow the purchase procedure and select pay with a wire transfer. You will be prompted to add the bank details so that the exchange can claim the cash.
- Be patient with this method because the cash transfer takes time. In some cases, it can take up to 4 days before the cash hits the exchange account. The Monero will only be transferred to your wallet once the cash hits the exchange. In case of issues of lack of ample cash in your account, the transaction will be canceled.
Where to Sell and Trade Monero?
If you have been in the Monero network for some time, the chances are that you have mined or received XMR as payment. While some prefer to hold the native assets and wait for them to gain value before selling, others opt to sell immediately and get other higher value cryptos. For some, this is a line of income. This means they mine the Monero coins and sell to others on the exchanges.
To sell and trade XMR, you need to select the right exchanges or markets. Note that unlike the Monero network that allows its nodes to operate in full anonymity, it is different when it comes to exchanges. Most of these markets are run under local laws which means they have to be compliant by ensuring traders verify their identities. Here are the top exchanges to sell and trade Monero.
- This is one of the top cryptocurrency exchanges that have gained a lot of popularity for its unique model and emphasis on security. The exchange allows users to trade XMR and move them immediately to reduce the risk of loss through online attacks.
- To further lower the risk of attacks, Poloniex progressively monitors the transactions on a 24/7 basis and blocks anything that looks suspicious. This model has endeared it to Monero traders who want to trade without worrying about fraudsters.
- The biggest issue with Polonex is its complex UI (user interface). Despite its great features and progressive focus, many people argue that the exchange is more effective for seasoned traders as opposed to newbies. Besides, the hacking of 2014 that saw a lot of coins stolen keeps haunting the exchange with some people indicating they prefer markets with no hacking history.
- This is one of the new trading platforms in the market that targets making trading in cryptocurrencies faster and easier. This Chinese based cryptocurrency exchange allows users to trade in multiple assets. This means that users will always have multiple trading pairs to optimize profits. To guarantee users of their safety, CHBT offers cold storage services and uses multi-layer security architecture.
- The biggest undoing factor in CHBT is that it only allows traders to use Yuan fiat currency. This makes it a geo-specific market mainly for people in China and the Far East. If you are outside that geographical region, this exchange might not be the right one for you.
- This is another leading cryptocurrency exchange that Monero traders find irresistible. Its fast growth and success are attributed to the fact that it serves as an exchange and a cryptocurrency. The exchange allows Monero traders to trade in very many cryptocurrencies at a very small fee of 0.1%.
- The main drawback of Binance is the failure to accept trading for fiat currencies. You cannot convert or buy XMR with fiat currencies. You can only trade Monero for cryptos such as Bitcoin, Ether or Ripple among others.
- Changelly is a cryptocurrency-to-cryptocurrency exchange that was established in 2015 with by MinerGate with the aim of removing trading barriers. MinrGate is an anonymous group that was also credited with creating the MinerGate Bitcoin mining pool.
- Unlike other exchanges, Changelly uses trading bots that help to integrate some of the biggest trading platforms such as Poloniex and Bittrex to provide users with a bigger market. It has also partnered with Coinomi, CoinPayments, and Jaxx. This means that once you join Changelly, it is easy to follow other markets and make a more informed decision.
- The exchange has won praise in the entire cryptocurrency industry because of allowing traders to operate anonymously. The only verification that you require to start using Changelly is your email address.
How Much Are the Transaction Fees of Monero?
One promise made by all cryptocurrencies when they are created is lowering the cost of transactions. Though the initial focus was to demonstrate that the cost of using a cryptocurrency is always lower compared to a conventional institution such as a bank, the focus has now shifted to the charges between respective networks.
The transaction fee in Monero depends on the priority of the transaction. This means that the fee will increase if you make the transaction a high priority one. The cost goes up to help the transaction compete with others to become part of the next block being added to the public ledger.
The transaction fee will also go up if you are sending funds that were previously sent as tiny transactions. This is because the size of data involved will be larger. Because Monero uses an adaptive model of the block size, users rarely need to raise the priority of the transactions that automatically raises the associated fee.
The average transaction fee when Monero was launched in 2014 was 0.0011 USD. This price remained characteristically low until May of 2017 when it rose to 1.064 USD. The highest level that the transaction cost rose to was 20.01 USD in mid-December of 2017. In early 2018, the price shifted downwards from the high of the previous year to about 9.0USD.
Monero markets are platforms that facilitate direct trading either with other cryptocurrencies or fiat currencies. Since 2014 when Monero debuted, it has won a lot of acceptability. This means that almost all cryptocurrency exchanges allow users to trade in Monero.
Though Monero works very hard to ensure that all user's coins are safe, things can take a dramatic shift when it comes to the markets. Most hackers find it easy to ambush and steal clients’ cryptocurrencies at the exchange level. The latest successful hacking was in South Korea where millions worth of Bitcoins were siphoned away. Remember that Monero is not responsible for how the markets operate. Therefore, how do you pick the best Monero markets?
Five tips for picking the best Monero markets
Today, every market out there markets itself as the best option. Therefore, you must do your assessment well to only select the best market. Here are some great tips you can apply.
- Go for the most reputable cryptocurrency market. A market that has gained excellent reputation for its security, customer support, margin trading, and customer satisfaction is the best option for you. To know this, read through reviews done by experts and join cryptocurrency talk forums.
- The security of the market. The last thing that cryptocurrency users want to hear is that their coins are at risk of getting lost. Therefore, you need to carefully evaluate the security of the market for assurance that all transactions will be free from attacks. Here, you can look for the exchange with a strong operational code and no hacking history.
- The transaction fee. To trade Monero in any cryptocurrency, you have to pay a fee. The target is ensuring you pick a market with a subtle fee that will not eat into all the profits.
- Geographical restrictions. Most cryptocurrencies are designed to follow local laws, rules, and regulations. Because some are registered as companies, the objective might be serving clients of only one geographical region. Therefore, you should go for a cryptocurrency that allows traders from your country to use the platform. For example, Cryptopia only allows traders from New Zealand.
- Verification demands. In many cases, cryptocurrencies are run under local laws. Unlike the cryptocurrencies that allow traders to operate in total anonymity, markets require users to verify their identities in line with local laws. But the level of verification differs with exchanges. The best cryptocurrency should only require you to provide a few details about you to complete the verification process.
Top Monero markets
While a lot of markets exist out there, their operations vary so much. There are those that only allow users to trade Monero for other cryptos while others allow other payment methods like the Credit Card and Wire Transfer.
1) The Coinbase
- Coinbase is a leading cryptocurrency exchange based in the United States. The market was established to support Bitcoin trading but has grown to support other top cryptos including Monero. The main features of the market that make it more appealing include a lovely UI (user interface) and advanced market analytics.
- If you target trading a lot of XMR, Coinbase has an exclusive feature that ensures you get preference in everything. Coinbase also insures all XMR and other crypto coins trading in its system. To make trading even simpler, Coinbase also acts as a cryptocurrency wallet. This means you can use the wallet to hold your coins and still trade them there.
- This is one of the most diverse markets in the crypto world today. The market has won the affection of many Monero traders because it provides them with an opportunity to trade XMR for other cryptos and fiat currencies. This means that even new people who want to join Monero are sure of making an easy entry to start enjoying value growth. Besides, it has a lovely user interface and allows users to trade with credit cards.
- ShapeShift is one of the fastest growing cryptocurrency markets because of its focus on security. The target of ShapeShift is helping users to access larger markets and buy their preferred crypto coins easily. It has a lovely UI and low transaction charges. If you opt to use some cryptocurrency wallets such as Jaxx, the ShapeShift market is integrated into the features.
- The biggest issue with ShapeShift is the limited payment options. Unlike other emerging markets that allow users to use multiple payment methods, ShapeShift only allows traders to use other crypto assets.
- This is considered among the most advanced cryptocurrency markets in the globe today. In addition to the lovely User Interface, the platform also provides traders with funding so that they can continue trading to make profits. Most experienced Monero traders prefer using Bitfinex because of its advanced trading tools that help them to visualize positions, prices, and orders when making moves.
- For people who have their funds in banks, Bitfinex allows traders to use wire transfer for payments. You can also use a credit card to trade on the platform. Bitfinex is considered the best platform for users who target growing rapidly in the crypto world.
- This is another cryptocurrency exchange that was established to help trading Bitcoin for other top coins. Its biggest selling point is accepting users to trade Monero for fiat as well as cryptocurrencies. Besides, it also supports many- cryptocurrencies which provide more opportunities to target the most profitable opportunities. The fee charged in HitBTC varies based on the cryptocurrency type.
Value of Monero
The value of Monero has increased rapidly as its demand continued to surge. Two key things drive the current demand. One, Bitcoin appears to be approaching the climax and, therefore, fear of rapid downtrend is making investors focus on alternative cryptos. Two, Monero privacy architecture makes it more appealing than other cryptocurrencies in the market. This growth is expected to continue over time.
When Monero was launched in April of 2014, its price was less than $0.4. However, this price has grown rapidly to hit $19 in April 2017 which is more than 800% growth. If you compare it to Bitcoin over the same period, the growth was only 200%. This demonstrates the huge potential held by the cryptocurrency. By early 2018, Monero value had surged again to over $230. In 2016, Monero was considered the best performing cryptocurrency in the market.
Despite the high volatility reported especially in 2016 and 2017 when the darknet market AlphaBay joined and started using Monero network, the value of Monero is likely to continue growing because of its vibrant team. After hitting the market capitalization of $285 million in April of 2017, it entered the top five cryptos after Bitcoin, Ethereum, Ripple, and Litecoin. If you are anticipating to invest in cryptocurrencies, Monero is no doubt one of the most promising.
Is It Profitable to Invest in Monero?
The profitability of a cryptocurrency depends on its performance in the market. Monero has maintained a steady growth curve that makes it a great option for those considering joining the crypto world. Let us look at an example. A person who bought 1000 XMR when the value was under 1USD is now smiling all the way to the bank. The 1000USD have grown to about 230,000USD based on the Monero value at the beginning of 2018.
By maintaining a steady growth curve, it means that you can now look at Monero as a major investment. There is a general consensus in the cryptocurrency community that Monero will take the same growth trajectory assumed by Bitcoin. Therefore, it is a great opportunity, and you should take it.
As you invest in Monero, it is also crucial to understand the challenges that lay ahead. These are issues that can threaten the smooth upward growth curve with changes and compromise profitability.
- Looming legislations.
- A shift in demand to other cryptocurrencies.
- Disagreements necessitating a fork such as with the case of Bitcoin and Ethereum.
- Attack and loss of XMR at the exchange level.
When it comes to investing in cryptocurrencies, it is important to note that future profitability is only a matter of speculation. That is right. Cryptocurrencies are characterized by high volatility that can see prices take a nose dive with slight provocation. Therefore, simply invest what you can afford to lose.
Where to Spend or Use Monero?
The effectiveness of a cryptocurrency and its acceptance can be easily assessed based on the number of outlets that accept it for payment. The privacy provided by Monero has made a lot of traders and services providers to add it in their payment systems. Here are a number of the places you can spend Monero.
- Reservoir mugs.
- Xusah Boutique.
- Syntec Gaming.
- 99stack hosting.
- Go Forward Software.
- PHP Monero.
- Python Monero.
Can Monero Grow to Become a Major Payment Network?
Yes, Monero can grow to become a major payment network around the globe. Between 2015 and 2018, people appear very excited about cryptocurrencies. The fact that people can use the Monero to send payments instantly without involving third parties is making even governments rethink about regulation. But the competition is very fierce for Monero. It is not just competing with the conventional banks, but it is also in the race against other cryptocurrencies and established financial providers such as Visa, PayPal, and Skrill.
Even with these competitors, Monero still stands tall and will emerge as a major network. The network has made privacy the main driving force for its operations. People feel comfortable when using the Monero network because their transactions cannot be unmasked to reveal identities of users.
The Monero development team is very aggressive in bringing onboard a lot of traders. A lot of stores are angling themselves to make their systems Monero and Bitcoin compliant. This will catapult Monero ahead of others and make it the ultimate payment solution.
The steady growth of Monero value has demonstrated that users can expect their investment to continue growing. This coupled with ease of conversion to fiat and other cryptocurrencies will help to drive the value even higher.
To maintain this growth, it is important that Monero continues to enhance its core code regularly. The network developers should particularly be focused on preventing cyber attacks, adding new features, and growing partnership.
How Does Monero Work?
Monero is a cryptocurrency network that utilizes blockchain technology to help run transactions. Like Bitcoin, Monero was established to help people make payments both locally and abroad directly without relying on third parties.
As a peer-to-peer network, Monero connects the sender and recipient in the same network to ensure that transactions are completed instantly. The cryptocurrency uses CryptoNight proof-of-work hashing algorithm that requires nodes spread in the network to confirm and add transactions in the public ledger. Here is a breakdown of how Monero works.
- For a user to send or receive payment on the network, he must start by acquiring an appropriate Monero wallet. Consider downloading and installing Monero Desktop Wallet that also serves as a full node for confirming transactions in the network.
- When a sender flags a transaction, the Monero network encrypts the details immediately and releases the request to the nodes spread in the network.
- The details of the transaction have to be verified and confirmed by miners in the network. The miners are nodes in the network that help the network to confirm that transactions are correct. The most important thing during the confirmation is checking whether the sender has ample XMR to send to the receiver.
- To confirm the transactions, Monero generates complex mathematical puzzles that the nodes must crack to confirm the answers. Only the first node to get the answer right gets the chance to add the details to the new block. The node that confirms the transaction is rewarded with XMR.
The operation of the Monero network helps to make the transactions direct and keep the cost as low as possible. Besides, users on the network do not just confirm transactions; they also own it. This means that they can participate in making decisions about the network.
Does Monero Use Blockchain Technology?
Yes, Monero uses Blockchain technology. The Monero network operates an open blockchain that has users distributed across the globe. These users (also referred as miners) help to confirm details of every transaction in the Monero network.
Monero employs the CryptoNight Proof-of-Work algorithm that helps to change the mining difficulty during confirmations. When miners solve the complex puzzles, they create new blocks that are added to the public ledger in a chronological way. The addition of the blocks into the blockchain means that they are permanent and cannot be reversed. If the sender makes a mistake and sends XMR to the wrong address, they are lost completely. The nodes in the network must agree before a block is added to the public ledger.
The blockchain technology in the Monero is the biggest factor in enhancing the system’s security. The data contained in the blockchain is stored in different nodes across the globe which means it is very difficult to compromise it compared to when stored in a single data center. As far as more than half (50%) of all the nodes spread in the network remain independent, the network remains secure. When this operation model is enriched with ring signatures, users are assured of high levels of security in the of Monero network.
The nodes spread in the network are also used to help protect users from third-party seizures. Because the users own the network, there is no one who can come to make a claim. Eve a court of law cannot order for details of clients operations, transactions, or balances in the Monero network. Such details can only be generated by the user on own volition.
Mining in Monero is the process of confirming transactions in the network. As a CryptoNote algorithm architected cryptocurrency, Monero employs Ring Signatures to guarantee high levels of privacy. It also uses a proof-of-work algorithm that means it can be mined using computational power from a computer. Unlike Bitcoin that only allows ASIC (Application Specific Integrated Circuits) to mine its network, Monero makes it possible for more people to mine the network using CPU (Central Processing Unit) and GPU (Graphics Processing Unit).
To mine the Monero network, you need a computer with ample computational power (hashing power). If you opt to mine as an individual, it is important to download a full Monero node and store the entire blockchain. Another method is joining a pool of miners who consolidate their hashing power to raise the chances of confirming transactions. Here are the main mining methods of mining Monero.
- CPU mining
- CPU (Central Processing Unit) mining involves using the standard computer or laptop to mine XMR in the Monero network. The process would involve acquiring the right high power computer, and downloading a full node. You can also get the Monero client and install an appropriate miner such as MinerGate. As a new user, it might be necessary to do some practice with the selected miner to understand how all the features before optimizing them.
- GPU mining
- GPUs (Graphics Processing Units) are designed to deliver higher computational power compared to the standard computers. They are designed to help raise the computational power of a computer and raise the chances of confirming more transactions. Once you acquire the right GPUs and set them in your system, you have to download the Monero client and an appropriate miner such as AMD GPU Miner. The miner comes with a lovely interface that makes it easy for users to start mining XMR.
- Mining in a pool
- The process of mining XMR on your own can be complicated, tiresome and unfruitful. Often, new miners indicate they take a lot of time learning about the mining system before they can confirm the first block. In other cases, the hashing power generated by your CPU can be very low and make mining too slow or unviable. The best alternative is considering a Monero mining pool.
- Mining pools bring together people who want to consolidate their mining capabilities to confirm more transactions. The main challenge with mining pools is that the resultant benefits are shared between all the members based on the computational power contribution. But this is not all.
- Today, a lot of mining pools advertised online are indeed scams. You should carefully vet them and only join those that have a good reputation. Ensure they are transparent in their operations and do not create unnecessary hurdles when it comes to payments.
What Are the Advantages of Monero?
Today, the growing demand for cryptocurrencies is an indication of acceptance across the globe. While the main area of Monero application is sending cash, the cryptocurrency can also be applied in other areas such as research, medical fields, academia, and publishing. Monero is also used in advancing artificial intelligence and solving the problem of Big Data by large companies. Here are more advantages of using Monero.
- Monero is the most secure cryptocurrency. Monero is one of the cryptocurrencies that are fully anonymous. This means that users are sure of operating in total privacy. It uses advanced Ring Signatures and can generate multiple public addresses to make it even harder for anyone including those on the same network to identify you.
- The fastest way of sending money across the globe. Unlike the conventional banking system that takes a lot of time before cash can be moved from one end of the globe to another, it is different with Monero. Because payments are done on a peer-to-peer system, the payment is instant. It only takes a few seconds to send cash from a continent to another.
- Monero is the best way to operate without restrictions. If you opt to use a bank when sending payment, transactions can only be done during working hours. It is impossible to send money or get assistance during weekends, public holiday or night. However, Monero is always at hand. You can mine the Monero network, send money, or use it any time of the day or night.
- The value of Monero has been growing steadily. For many people, the interest in cryptocurrencies is informed by upward value growth. Monero is one cryptocurrency that has grown progressively to become among the top 20 cryptocurrencies by market capitalization. Its growth means that it is an excellent investment you can rely on to grow the personal portfolio.
- The surest way to own the network and become an important part of the decision making system. When you join the Monero network, you become part of the system and own it. All the decisions involving transactions or other advanced applications will require your input before implementation.
- Monero makes it possible to work without worrying about third-party seizures. If you have some savings in the bank, they can easily be targeted through a court of law. If a case finds itself into your doorstep, the savings can be frozen with the strike of a pen. However, Monero allows you to operate in complete anonymity. No one will ever know about the funds in the Monero network or seize them.
What Are the Risks of Monero?
Joining and using a cryptocurrency is a very risky thing. While the anonymous nature of Monero is a great advantage, it also opens users to myriads of risks. For example, if you send XMR to the wrong address, there is no way to reverse the transaction. Here are additional risks that you should know when joining the Monero network.
- The risk of getting hacked.
- The danger of losing funds in case you send to the wrong address.
- Monero might lose its appeal in future as more cryptocurrencies join the market.
- The looming regulations are expected to hit Monero very hard.
- The danger of Monero losing its value.
- Entry of more advanced cryptocurrencies that provide higher levels of security and anonymity.
- Very high volatility.
The best way to address the risks is ensuring you only invest what you can afford to lose. You should also try to spread the risk by investing in several cryptos, fiat currencies, and even hard assets. Also, join cryptocurrency forums to learn about Monero and upcoming issues. Such forums talk about the latest issues and even make great predictions that can be used to prepare for uncertainties such as the expected regulations.
What Happens if Monero Gets Lost?
When you join Monero networks, the risks involved are many. But the most significant of them is the danger of losing Monero. Since cryptocurrencies entered the globe in 2009, it is not uncommon to hear people saying they have lost their native coins. In December of 2017, a cryptocurrency exchange was hacked in South Korea, and a lot of funds in the form of Bitcoin lost.
There are several ways of losing XMR. First, you can send XMR to the wrong address. In such cases, the transactions are irreversible. Second, you can also lose Monero through hacking. In many instances, hackers target crypto assets at the exchange level. However, your personal computer and wallet can also be hacked, and XMR siphoned away.
What actually happens when Monero gets lost?
One thing that you need to appreciate at this point is that XMR only resides in the Monero network. This means that if you send XMR to the wrong address or get hacked by criminals, the coins will still be there but under a different address. The biggest problem is that you cannot reverse the transactions.
Some people also lose Monero through loss of XMR wallet or forgetting their private keys. This means that XMR remains yours but they are not accessible. They are simply dormant in the network. You must get the private keys to recover the XMR or they will forever remain locked.
The secret to operating safely on the Monero network is ensuring you have a back-up and moving the XMR to cold storage when not in use. You should also only trade in cryptocurrency exchanges that put a lot of effort in protecting clients’ assets.
Since 2009 when Bitcoin was launched, governments see cryptocurrencies as a competitor and a serious threat. The blockchain technology is considered disruptive. From Russia to the US, there is huge suspicion that cryptocurrencies are out to redefine the world order. So tense are the governments that the United States Federal Bureau of Investigation (FBI) recommended that cryptocurrencies be relooked at because they are an avenue for illegal activities, fraud, and even funding terror.
Very many administrations have come out to express their disapproval of Monero, Bitcoin, and other cryptocurrencies. In China, the administration had to close ICO (Initial Coin Offerings) because they were considered a ploy to prevent the government from collecting taxes.
To put this scenario more vividly, let us look at a simple Monero transaction. In an ordinary situation, a person who wants to send cash abroad would require to open an account with a local bank and use it to wire the cash to the target client. For this to happen, a complex chain of actions is involved.
- The sender must have an account with a local bank.
- The recipient must also have a bank account in the target country.
- The banks carefully review both the sender and receiver to ensure they do not have criminal records.
- The charges levied on the sender and receiver are used to grow the banking institutions.
- The central administrations use the transactions and banking system to grow their taxes.
- The administration uses the banking system to enforce regulations in the banking system. It is also used to control inflation.
The banking system and the entire fiscal network are used by the governments to maintain inflation at the right levels. Now, enters Monero and other cryptocurrencies. The cryptocurrencies target to make transactions peer-to-peer. This means that the sender in the US and receiver in Singapore are on the same network. This cuts off all the third parties such as banks, central administrations, and central banks, and even related law enforcement entities. All transactions are effected in total anonymity.
The consequences of Monero and entire cryptocurrency niche hit the banks hard because the client base is bound to decline, their revenue are expected to take a nosedive, and the governments do not expect to get anything in the form of taxes. Despite these serious disruptions, it is very surprising to note that no administration had passed cryptocurrency regulation by the start of 2018.
The big dilemma that is cryptocurrencies
If the cryptocurrencies are so disruptive, why are governments not passing the required legislation? It has emerged that passing cryptocurrency legislations is not an easy as governments would want the entire scenario to be. Here are some things that make the legislation a big problem.
- Monero and other cryptocurrencies are not owned by any individual or party. This means that any legislation has to target the entire network which comprises of nodes spread all over the globe. This is practically impossible.
- The Monero system and other cryptocurrencies represent the latest tech development in the Fintech. Therefore, no administration wants to be seen to block technology advancement.
- While the blockchain technology is indeed disruptive, it comes with numerous benefits that every government wants to enjoy. For example, the Monero network is a great solution for Big Data.
- The technology in cryptocurrency niche is advancing so fast. The cryptocurrencies that have been introduced since 2009 have very diverse operational designs. Even if Monero is regulated using laws, new and completely different blockchain networks will emerge.
The dilemma facing most governments appears it might persist for longer because they are only playing catch-up. In the EU, the giant union is studying the blockchain technology before drafting related laws. However, one thing that remains very clear is that Monero and other cryptocurrency legislations will, at last, be passed.
Is Monero Legal?
Monero is legal. Since 2014 when Monero was established, no country has passed a piece of legislation to control of guide its use. This means that you can use Monero without worrying about being on the wrong side of the law. While many express the desire to legislate Monero, the way to go about it is indeed very murky. To understand the legality of Monero even better, let us take a closer look at individual jurisdiction.
1) The US
- Monero is legal in the US. Up to the beginning of 2018, there was no piece of legislation passed by the US to guide the use of Monero. The only reference is by the Commodities Futures Trading Commission (CFTC) that classified cryptocurrencies as commodities. This was done to help users understand that any benefit coming from trading Monero is taxable.
- Monero is legal in Russia. Like the US, Russia does not have legislation for guiding Monero and other cryptocurrencies. However, the government has voiced its reservations and cautioned traders against using it. The government warned traders that using cryptocurrencies could be illegal.
3) Hong Kong
- Monero is legal in Hong Kong. This Special Administrative Region of China has indicated that Monero and other cryptocurrencies are legal. Though the jurisdiction is very supportive of new startups especially in Fintech, it indicated that application of cryptocurrency for fraud or illegal activities would result to a total ban.
- Japan has been categorical that Monero and other cryptocurrencies are legal. The government indicated that there is no section in its Banking Act and Financial Instruments and Exchange Law that prohibits the use of cryptocurrencies for trading. However, it pointed that such cryptocurrencies are not legal tenders.
5) South Korea
- This is one of the most vibrant Monero and other cryptocurrency markets. While the administration pointed that Monero and other cryptos are legal, it has indicated the strong desire to regulate blockchain technologies after recent hacking and huge losses. In December of 2017, one of the cryptocurrency exchanges was hacked and a lot of funds stolen in the form of Bitcoin.
Monero and Taxes
"I joined Monero to enjoy total anonymity and, therefore, live without worrying about taxes". This is one argument that many people hold dearly when they are coming to Monero. The emerging scenario points to a serious shift from stashing cash in tax havens to investing in fully anonymous cryptocurrencies such as Monero. But the financial experts have a different view of Monero and taxes.
The best way to go about using Monero is ensuring that you are tax compliant. This means treating any gains made through trading as taxable income. The reason for this is that technology is advancing so fast and future developments could break the current Monero anonymity. This would leave you exposed and at risk of prosecution.
In the US, the federal government has indicated that Monero should be considered a commodity. This means that profits made from such commodities trading are taxable. In Israel, the government said that it has no intention of controlling cryptocurrencies but all associated returns must be taxed appropriately.
The best way to handle Monero and taxes
To be on the safer side of the law, it is important to ensure you are tax compliant in all avenues including cryptocurrency trading. Though this means taking some personal decisions and being patriotic, it is the best way to go about it. Here are some great points to consider.
- Make sure always to pay taxes after trading XMR.
- Capture the actual transaction when they happen so that they can be verified should the need arise.
- Ensure that the respective fiat value of corresponding XMR is captured at the time of trading.
- At a time like now when the regulations are looming from every corner of the globe, make sure always to seek a legal opinion on taxes and how to go about them.
Does Monero Have a Consumer Protection?
Monero does not have consumer protection. Once you join the cryptocurrency, all the decisions are made by the network of trusted nodes. Like other cryptocurrencies, Monero is not owned by a single individual or entity. Even the founders ceased control when they released the protocol.
The anonymous and decentralized nature of Monero makes consumer protection very difficult to enforce. It is because of this that those who make mistakes such as sending money to the wrong address do not have a way to reverse the transactions. There is actually nowhere to report to.
The problem of consumer protection is made worse by lack of supportive laws. Those on the Monero network cannot go to complain to the local justice system. For example, you cannot sue Monero or even seek court help to recover lost XMR.
Lack of consumer protection at Monero means you are in full control of XMR security. Therefore, you need to take caution all the time when using the network through the following tips.
- Always verify the payee address when sending funds through the Monero network.
- Make sure always to keep the XMR in cold storage and only activate them for trade.
- Maintain the Monero wallet fully updated to lower the risk of getting hacked.
- Never share the private keys with anyone.
- Appreciate that Monero and other cryptocurrencies are risky ventures. Therefore, simply invest only what you can afford to lose.
- Have strong antivirus programs to protect your computer and system from attacks.
- Pick and use third-party platforms such as exchanges and mining pools with a lot of care. Consider working only with those that have no hacking history.
Illegal Activities with Monero
When cryptocurrencies entered the finance sector, many people saw them as the ultimate place to run and operate in total anonymity. However, even the anonymity espoused and promised in most crypto networks such as Bitcoin is not perfect. In the Bitcoin network, it is still possible to follow back on the chain of transactions and unmask the users. Now, Monero has introduced additional layers of privacy, ring signatures, and advanced cryptography that make it possible to operate safely and in total privacy. Criminals have taken this advantage to run illegal activities.
Using site visitor’s CPU to mine Monero without their consent
Today, a lot of Monero miners are using Coinhive miner Monero with clients’ CPU without consent. This has prompted the browser miners getting blocked with browser extensions and ad blocking lists.
Use of shadow brokers
At times, Monero is employed by Bitcoin to break transaction links. Because Bitcoin level of anonymity has often come into question, some brokers have found a unique method of breaking the link that makes it impossible to unmask users. This is done by sending Bitcoins to the Monero network and returning to Bitcoin. This method was used by wannacry (cybercriminals who released the strain of Ransomware in May 2017) to get their funds from Bitcoin without being unmasked.
Is Monero Secure?
Monero is described as the most secure and anonymous cryptocurrency in the market. When the founders sought to create a new cryptocurrency, they wanted to take the security that was offered by Bitcoin and other networks to the next level. While it is true that Monero was hacked in 2014, the efforts by the development team have been successful in making the network one of the most secure in the globe today.
- Monero employs the CryproNight hashing algorithm as opposed to the standard SHA-2 applied in Bitcoin. This means that everyone can use standard computers to mine XMR. This method makes it very difficult for one party to mine over 51% XMR and conspire to harm the network.
- The focus of the lead team shifted from being reactive to proactive after the 2014 hacking attack. The team members do not wait for attacks to happen. They stay ahead and identify them before they strike. Whether you are new to Monero or has been in the system for some time, the safety of your XMR is guaranteed.
- Monero has a very effective method of maintaining the private keys for its clients. Unlike third-party wallet providers who only provide one recovery key phrase, it is different with Monero. It provides 25 mnemonic seeds that make recovering XMR easy and fast.
- All the decisions are made by the nodes spread across the globe. As a fully decentralized network, Monero has empowered its nodes to make all the decisions. Because the users consider the network as their own, they protect it with envy. Most of them will go to great length to help maintain the network and see it grow.
As Monero developer team works tirelessly to guarantee its users of extra security, you must also play your part well. Your XMR remain vulnerable at the home computer, wallet and exchange levels. Therefore, make sure always to keep the systems updated and avoid opening Monero client in multiple places. Consider designating a single computer for all Monero related transactions.
Is Monero Anonymous?
One of the most notable things about Monero is its high levels of privacy. To put it differently, Monero is one of the most anonymous cryptocurrency. Like other cryptocurrencies, Monero uses the CryptoNote protocol to ensure that all the transactions are fully encrypted. From your personal node details to info about every transaction, all the details are fully encrypted.
However, encryption as the standard form of enhancing anonymity has been proven to have some flaws. In Bitcoin, it has been demonstrated that standard encryption using Bitcoin core leaves important trails that can be used to identify users in the network. Monero moved a step ahead to enhance anonymity with ring signatures.
The Application of Ring Signatures in Monero
Ring Signatures are used to mix the user’s address with others to make it very difficult (practically impossible) to figure out a link with subsequent transactions. The ring signatures work in three ways.
- The ring signatures allow the sender to hide his transaction output.
- The ring confidential transactions (RingCT) help to create stealth addresses that mask receiving address.
- The RingCT helps to mask the amount involved in the transaction.
In 2017, the privacy of Monero was enhanced after the adoption of the Confidential Transactions algorithm developed by Bitcoin Core developer called Maxwell Gregory. The algorithm helps to strengthen the ring signatures.
The good thing about Monero is that users have the option to implement privacy based on their preferences. Call it Optional Transparency. Monero client has two types of keys; the spend keys and view keys. The View Key allows the user to share some details of every transaction to enhance optional transparency. But the Monero architecture targets making processing on all devices easy and accurate. This can only be achieved by using the Spend Keys.
Has Monero Ever Been Hacked?
Yes, Monero was hacked in 2014. Months after Monero was launched, it was attacked by cybercriminals who used a flaw in the CryptoNote protocol. The flaw allowed the criminals to design two subchains that declined acceptance of transaction validity on each other. However, a patch was later released to address the flaw.
Monero used the hacking incident of September 2014 as a serious learning lesson. The lead team was strengthened to easily identify issues early enough and craft workable solutions. No other incident of hacking has been reported after 2014.
Note! Users in the network are not completely safe. No one can claim to be 100% free from hacking. You are particularly at a higher risk of getting hacked when trading XMR in the exchanges. Therefore, you also need to ensure to take personal measures of protecting XMR by moving to the cold storage and only using the most secure markets.
How Can I Restore Monero?
If you lose Monero, the ability to restore XMR depends on the nature of loss and whether you had a backup. If the loss occurred because you sent the coins to the wrong address or was hacked, there is no way to recover them. They are gone completely.
However, if the loss occurred because you lost the XMR wallet or forgot the private keys, it might be possible to restore Monero. Here are some helpful tricks to restore XMR.
- A loss caused by loss of the cryptocurrency wallet. If you lost the Monero wallet, you can restore XMR by reinstalling the backup. Then, use the old private keys to activate and reconcile it with the latest updates in the Monero public ledger.
- If you lost the private keys, Monero can be restored through the use of the seed phrase. The Monero wallet generates mnemonic seeds that have a total of 100 words that you can use to restore XMR. Besides, most Monero wallets also generate private seed phrases that can be used to recover the private keys in the case of a loss. To be safe when working on the Monero network, always ensure that the private seed is generated and stored safely under lock and key.
Why Do People Trust Monero?
When people join cryptocurrency networks, the main objective is seeing their investments grow. But the competition in the cryptocurrency world has continued to grow rapidly with over 1400 cryptos entering the market in about 10 years between 2009 and 2018. Here is an account of why people trust Monero so much.
- It assures users of total anonymity.
- The high level of anonymity using advanced cryptography and Ring Signatures has given users of assurance that they will not be seized by third parties. This assures that no one can access or interfere with your investment.
- Its value has been growing progressively.
- The value of Monero has been growing progressively since 2014 when it was launched. This means that most users who are joining the network have the assurance of growing their investment in the coming years. Most people argue that Monero could follow the same growth graph like that of Bitcoin.
- The cryptocurrency is seen as the best alternative to Bitcoin.
- The fast growth of Bitcoin means that current investors in the network have to part with a lot of money compared to when it was launched. However, Monero is still in its early years before growing and reaching the level of Bitcoin. If you invest in Monero, it gives you the same impetus like those who invested in Bitcoin when it was a few years old.
- Monero has a very aggressive team.
- The developer team of Monero is very aggressive. The aggressiveness of the Monero team has been the main reason for the network's advanced security. After the successful hacking of late 2014, Monero team readjusted its operations and made the network one of the best in the crypto world today.
- High acceptance of Monero in the cryptocurrency world.
- The cryptocurrency world appears in agreement that Monero holds a lot of potential for growth and success. This acceptance has made even those with other cryptocurrencies to ensure they also have some XMR and enjoy rapid growth.
- The Monero system does not have a block size limit.
- Unlike other cryptocurrencies that limit the cryptocurrency block size and the transactions that can be confirmed, Monero is different. For example, Bitcoin limits block size to only 1 MB that often slows down transactions. However, Monero does not have block size limits. By adjusting the block size on demand, it means that Monero can handle more transactions faster.
- The Monero cryptocurrency allows users to mine XMR even with standard computers.
- The use of CryptoNight Proof-of-Work hashing algorithm in Monero means that even standard computers can be used to mine the network. This has been crucial in acceptability of Monero and growing trust at all levels.
History of Monero
The history of Monero can be traced back to 2013 when an anonymous group referred as Nicolas van Saberhagen created and launched the CryptoNote protocol. In 2014, another anonymous group that went by the name Thankful-for-today on the Bitcoin forum combined Bitcoin and Monero to form Bitmonero. This is the name used when Monero was launched in April 2014. However, the new cryptocurrency users suggested that the name be changed to Monero about five days after launch.
Five months after launching Monero, it was attacked by unknown cybercriminals who took advantage of a flaw in the CryptoNote. The flaw made it possible to create two sub-chains that did not recognize the validity of transactions. The flaw was later patched, and no other successful attack has been reported.
In 2016, Monero implemented RingCT (ring confidential transactions) that helped to enhance the privacy of the network greatly. This feature enhanced the anonymity of Monero that made it get adopted by darknet market AlphaBay. The adoption grew the demand of Monero with a huge margin. However, AlphaBay was later closed in July of 2017 by law enforcement which meant that Monero also lost one of the largest client-base by then.
In January 2017, Monero further enhanced its anonymity algorithm by enriching its algorithm. The Monero developer team adopted the confidential transaction algorithm that was created by Maxwell Gregory. Maxwell is one of the Bitcoin Core developers.
In Mid 2017, Monero growth accelerated and pushed the cryptocurrency to top five best performing in the market based on market capitalization. This growth is anticipated to continue as demand for Monero and other cryptos continue growing.
Who Created Monero?
One notable thing about cryptocurrencies is that most of them operate in total privacy. In Bitcoin cryptocurrency, the Satoshi Nakamoto is a mystery. People are only left to speculate the identities of Satoshi. Now, the same thing applies to Monero. The only identity that Monero creators provide is an anonymous group called Thankful-for-today in the Bitcoin Talk forum that decided to create a new cryptocurrency. Nothing much has been said about the group or its identity.
Another personality associated with the Monero creator is the Nicolas van Saberhagen that created the CryptoNote protocol applied in Monero. The group is believed to be the same one referring to itself as the Thankful-for-today. However, this remains a mystery until such identities are completely revealed.
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