Have you ever wondered at the uniqueness of Monero despite not being the top altcoin such as Ethereum or being the premier of coins such as Bitcoin? Yet Monero value is such that it is one coin that can never be overlooked in the coin market, not by regulators or the crypto community.
The controversy around the coin stems from the fact that it is the first cryptocurrency that radically departed from that tendency of most cryptocurrencies to strike balance between what central authorities wanted and what the libertarian decentralized network adherent wants.
Monero was built with the CryptoNote proof of work algorithm which is a radical departure from what is obtainable with Bitcoin, Ethereum and most other coins.
In essence, it is the first prominent privacy coin that received acceptance from the coin community. By privacy, it means that you can send monero to anyone and people observing the blockchain will not be able to track the XMR that you sent. The amount you sent and the address that received it to will be concealed from any third party observer.
Really Anonymous and Private
This is one of the reasons Monero has continued to be in the center of controversies because there are a lot of people who would like to explore these features. There are many others wanting to exploit it.
For instance, the dark web have long realized that Bitcoin is neither anonymous nor presents much of a challenge to blockchain analysts.
When it was announced that some Russian agents were involved in electoral manipulation in the United States, blockchain analysts were able to link some bitcoin transactions to the saga. This is a pointer that Bitcoin transactions can be linked to people.
Apparently, the digital currency ecosystem needed something more private, a gap eminently filled by Monero. However, this has not come without a price.
Preferred By the Dark Web
Monero is preferred by criminal elements that want to conceal their activities using an anonymous coin.
Monero uses ring signature to mix the spender’s input with others in the network, more akin to what bitcoin tumblers are doing for some Bitcoin users who want to enhance privacy of Bitcoin.
The Monero Ring CT (confidential transaction) makes it very difficult to track transactions on the network.
This has made the coin attractive to hackers and many cyber criminals who hide under its anonymity to perpetrate crime. For instance, cryptojacking which is the process by which hackers commandeer the hard drive of devices to for their own use has risen in recent months.
Loved By CryptoJackers
The incentive for this activity is Monero which these hackers mine using malicious scripts installed in devices unbeknownst to the owners. Monero is preferred because it can be sent, received and spent anonymously unlike most cryptocurrencies.
The audacity of these cyber criminals is not unconnected with the fact that Monero is fungible. This means that tracking and blacklisting units of the cryptocurrency to sanction the owner is impossible.
The Ideal Cryptocurrency Envisaged By Satoshi?
Monero addresses can also be obfuscated, the network secure, making it perhaps the ideal cryptocurrency. I think that Monero is the sort of coin the Bitcoin inventor Nakamoto Satoshi envisaged.
Apparently, subsequent developers after Satoshi altered the code to make Bitcoin a bit more compliant to the expectation of regulators.
You can say that the peculiarity of Monero stems from the fact that it has inclination towards privacy. The Monero community views this uniqueness with pride but nonetheless is nonplussed by the illegal activities that the coin has found use for.
Two months ago, the community established the Monero Workgroup to tackle some of the issues that result in negative publicity for the coin. The Workgroup in its first blog post wrote:
“The Monero community condemns this malicious, non-consensual use of equipment to mine. Unfortunately, the Monero network itself benefits by having a wide set of stakeholders mine, since the network’s security is afforded through a distributed set of users.
While restricting mining to specialized equipment largely eliminates malicious mining, it doesn’t eliminate ransomware, and it introduces security compromises that the Monero community is not comfortable with.
Monero contributors build the best tool possible; they should not make it less secure even if it means the accessible system provides easier access to criminals too.
However, the Monero community does not want to sit idly by as victims struggle to understand the impact of mining and ransomware. Most of these victims have no idea what mining and Monero are.”
The message was clear, the Monero community is proud of what is rightly its heritage – a digital currency that is secure, private and untraceable. Though it has found some negative uses, the network has no intention of losing sight of its vision.
Future Emphasis Still On Privacy
True to its focus, Monero developers have continued to work on making the coin more private.
XMR Wallet for Tor
The open source client months ago announced the development and launch of a Monero wallet for the privacy browser, Tor. The development which has been expected from the Tor community makes it possible to browse the web anonymously using Tor as well as have access to a web-based wallet that has been built on the renowned anonymously browsing Tor.
This development accentuates the Monero inclination towards privacy. Tor is the browser that is popular for its ability to confer anonymity to users of the web. The Monero wallet for Tor implies that the crypto has been established as the go-to coin for all-round privacy need among anonymous browers.
This is especially paramount in an age in which people have been giving up their privacy to the governments, data centers and even in the simple quest to use the internet.
Privacy A Fundamental human Right
Ricardo Spagni (Fluffy Pony) a lead developer of Monero re-emphasized the privacy angle of the coin in a recent interview with Laura Shin. According to Spagni,
“I have a belief in privacy as basic human rights and I was interested in this technology that could advance that that could enable people’s privacy, especially those who were in places and in situations where their privacy was taken away from them.”
A clear reflection of the privacy coin but…
The consequence is that Monero now rules the dark web. The obnoxious corner of the internet where all sorts of illegal activities are spawned beyond the scrutiny of law enforcement agents.
Can Monero Rule crypto World?
The inclination towards strict privacy is clearly the strength of Monero, it also may be a limiting factor on its ability to rule the crypto world as the dominant coin should Bitcoin slide from its position as the king of crypto.
What we may consider as Monero’s strength can be its weakness. Just as the weakness of Bitcoin in its limited privacy could be its strength. Regulators show fewer belligerences towards Bitcoin. This is the reason it is likely to be in the forefront of mainstream and institutional adoption as seen with bitcoin futures and the prospect of ETFs.
The Financial Services Agency, Japan’s premier regulator in giving approval to cryptocurrency exchanges makes it clear to them that privacy coins such as Monero may not be traded at the exchanges.
The implication of this policy is that Monero may not find wide legitimate adoption, which is a critical factor that ensures market performance of cryptocurrencies.
Down the line, Monero value may just be a function of the many adopters who do not want any form of governmental and centralizing control on their everyday activities.
Recent data shows that Monero and Dash are the preferred cryptocurrencies of the dark web. 22 percent of users prefer XMR while 20 percent favor DASH.
Perhaps, the limitation imposed by privacy on its adoption is not a great challenge for the Monero community. It is obvious that the reclusive and exclusive that prefer privacy are enough to keep high volume of the coin in circulation and even make the coin capitalization to be among the top in the coin market.
The market value of Monero can rightly be attributed to its many privacy features such as the use of decoy to ensure that no one knows how much Monero you have in your wallet.
The practical benefit of this is that when you are discussing business, the other party would not preempt you based on how much you have in a given wallet.
For instance, businesses that use credit facilities may want to channel their funds to the most pressing financial needs. Other creditor may be unwilling to extend credit if prior wallets are seen to contain funds.
This is common occurrence with other cryptocurrencies but Monero is unique in that users have the option of using stealth wallets. This in addition to the Ring confidential transaction makes the coin the ideal for people who do not want their wallets spied on.
Will Monero Be Centralized in the Future?
There have been issues raised regarding centralization as seen with Bitcoin. The big mining pools are known to control most of the hashrate which makes it possible that an entity can actually launch 51 percent attack on the network.
Fortunately, there is no incentive to do this since the losers will be the miners themselves who by the way are the main beneficiaries of their network dominance.
There are indications that Monero may be getting centralized as well despite the network exclusion of specialized miners which are known to favor big mining corporations like Bitmain.
The largest mining pool for Monero controls 26 percent of the hashpower. This may tend towards what has been seen in Bitcoin and Bitcoin Cash if not checked.
Spirtdita in a comment at the Monero subreddit said,
“ Monero is anti-ASIC; in other words pro-CPU/GPU. So anyone with deep enough pockets could rent some cloud computing power and start dropping hashes like crazy. That being said, I think CPU mining is something we should protect, it vastly lowers the barrier for entry for hobbyist miners. That’s good for adoption and security”
The Monero community seems to have preempted the trend. The network’s developers are working on another type of proof of work that executes random codes instead of using hash function. This is to discourage centralization by large mining pools.
The Coin With Greatest Potential for Investors
In August, a report released by the ICO advisory Satis Group said that among all digital currencies that Monero experience the most rapid growth. According to the firm, XMR will be worth $18,000 in 5 years.
Although the report catalyzed a spike in the value of the coin, Monero value on the long run will depend not just on the adoption by the dark net, but on the perception of different governments and retail users that need digital tokens for everyday exchange of value.