What's Monero (XMR)？

Monero (XMR) is a cryptocurrency that utilizes blockchain technology with enhanced privacy features to achieve anonymity and fungibility. The protocol of Monero is open-source and based on the concept of CryptoNote, which was described in a whitepaper in 2013. The developers of Monero designed it based on this concept and deployed its mainnet in 2014. The key features of Monero are privacy and anonymity, as all transaction details are obfuscated despite being a public and decentralized ledger. This is in contrast to Bitcoin, where all transaction details, user addresses, and wallet balances are publicly transparent. Monero utilizes the RandomX algorithm for proof-of-work, which was introduced in November 2019 to replace the previous algorithm. The goal of Monero is to enable fast and inexpensive payments without compromising privacy and security.

History of Monero (XMR)

Who Created Monero?

Developer Nicolas van Saberhagen published the CryptoNote whitepaper in 2013, emphasizing privacy and anonymity as crucial aspects of electronic cash. This article caught the attention of Bitcoin developers Gregory Maxwell and Andrew Poelstra, who subsequently published a paper discussing the impact of enhanced privacy and anonymity features on existing cryptocurrencies. Other developers used the ideas of CryptoNote to create Bytecoin, the first privacy coin."Thankful_for_today" is an anonymous user on the Bitcointalk forum who created a fork called BitMonero based on Bytecoin. Some users disagreed with this direction and ultimately established another fork called Monero.

History

• On April 18, 2014, Monero was launched. A few weeks after the release, the team developed an optimized GPU miner for the CryptoNight proof-of-work function.

• On September 4, 2014, Monero recovered from an attack on its network.

• On January 10, 2017, Monero further enhanced its transaction privacy starting from block #1220516 by implementing the Ring Confidential Transactions algorithm developed by Bitcoin Core developer Gregory Maxwell. By early February, over 95% of non-speculative transactions utilized the optional RingCT feature.

• On March 18, 2018, Coincheck announced the delisting of XMR, DASH, and ZEC, three anonymous cryptocurrencies. Additionally, several exchanges in South Korea and Japan delisted coins with anonymous transmission and transaction capabilities, such as XMR, ZEC, and DASH.

• On February 15, 2022, the mining power of MineXMR surpassed 50%, reaching 50.159%. After being exposed on the Reddit community, it sharply declined to 38% but still fluctuated around 40% in the long term. Although the mining pool has never performed a 51% attack, it raised concerns about network security.

How does Monero (XMR) Work?

Monero ensures that every user on the network is anonymous by employing technologies such as ring signatures, stealth address, and ring confidential transaction that hide the details of senders, recipients, and transaction amounts. For example, ring signatures are a digital signature technology that mixes the sender's signature with the signatures of other network participants, making it impossible to determine who initiated the transaction. Monero also utilizes Bulletproofs technology to reduce the size of confidential transactions, improve scalability, and lower transaction fees.The mining process of Monero is different from other cryptocurrencies as it uses the RandomX algorithm aimed at preventing the centralization of mining power, allowing more participants to contribute to network security and receive rewards.

RandomX Algorithm

The RandomX algorithm is a proof-of-work algorithm that is CPU-friendly and aims to reduce the advantage of specific hardware (ASICs). It utilizes random code execution and various memory-hard techniques, making ASICs not particularly advantageous. RandomX has two primary modes: Fast mode requiring 2080MB of shared memory and light mode requiring 256MB of shared memory. This algorithm is designed to be resistant to ASICs, employing random code execution and memory-hard techniques to minimize the efficiency of ASICs and protect the network. The design of the RandomX algorithm enables regular users to mine using consumer-grade CPUs with a minimum of 2GB of memory, lowering the barrier to mining participation.

Ring Signatures & Key Image

Ring signature technology generates "ring signatures" using multiple one-time public keys, concealing the identity of the actual payer in a transaction. Third-party observers can only know that the payer comes from a list of potential public keys but cannot determine which one exactly.

Key Image is a derivative mechanism of ring signatures used to prevent double spending. In each transaction, the input end of the ring signature needs to calculate a Key Image, which has uniqueness on the blockchain and cannot be reverse-engineered to associate with the actual payer.

RingCT

Ring Confidential Transaction, or RingCT, encrypts transaction amounts to prevent third-party observation or theft of the amount information.

Stealth Address

A stealth address dynamically generates a one-time address for each transaction, hiding the recipient's information. Only the sending and receiving parties of a transaction know each other's identity and address, making it impossible for third parties to associate the transaction address with a specific user.

How to mine Monero (XMR) ?

Monero mining rewards are obtained by solving complex mathematical problems while verifying transactions on the Monero blockchain. Monero utilizes the RandomX algorithm for mining operations, which optimizes CPU efficiency, allowing ordinary computers to participate effectively.The main mining methods are:

- Solo Mining: Mining using one's own computer. Although the reward time is longer, low-power hardware can also participate.

- Mining Pool: Multiple miners form a group to share computational power and increase the chances of winning rewards. Rewards are distributed based on computational power, resulting in lower volatility.

- Cloud Mining: Renting mining power from cloud servers. No need to purchase hardware; payment is made for usage.

To start mining, miners need to set up a Monero wallet, download software compatible with their mining method, connect to a mining pool or cloud service, commence calculations, monitor the mining process, and track received rewards.

Tokenomics

The token distribution of Monero ensures fairness, with no pre-mining or pre-sale, and all block rewards going to miners. The supply of Monero tokens is theoretically unlimited, but inflation occurs linearly, gradually decreasing at a rate of 0.8% per year, approaching zero. By the end of 2022, approximately 18.132 million Monero coins will have been issued. After the primary issuance curve ends, a block reward mechanism will be activated, generating a fixed 0.6 XMR every 2 minutes. This results in a low inflation rate, less than 1%.

Why is Monero (XMR) Valuable?

Security:Monero employs cutting-edge encryption technology to ensure the security of transactions and the network. To encourage miners to maintain network security, Monero offers substantial mining rewards. This position incentivizes miners as crucial network maintenance participants, motivating them to join and protect the decentralized network.Privacy:Monero prioritizes user privacy protection. It provides users with a strong level of anonymity and safeguards against chain analysis within legal frameworks, even protecting user identities and transaction contents in extremely sensitive scenarios. This anonymity protection applies to all users, even those who do not understand the technical implementation principles of Monero. Decentralization:Monero strives for maximum decentralization. When using Monero, users do not need to rely on or trust any centralized institutions in the network. Monero's proof-of-work mechanism also encourages participation from ordinary computers rather than concentrating hashing power in large mining pools, increasing the degree of decentralization. Communication between Monero nodes is also facilitated through I2P to reduce the risks of censorship and surveillance.