Bitcoin, Crypto currency, Blockchain

Crypto-currencies explained: Monero

What is it exactly that Monero is actually?

Monero (XMR) is, as well, such as Bitcoin, block chain based crypto-currency, however, increased focus on decentralization and privacy / anonymity. How, exactly, Monero is able to achieve these target properties, and what makes Monero a special project, you will learn in the following article.

History

As with so many new crypto-currencies, the history of the Monero Coins began with a Hardfork, so a spin-off of an already existing crypto currency. The “native currency” of Monero is the since 2012, existing Bytecoin, which is based on a new technology, which bears the name of cryptonote.
CryptoNote is an application layer Protocol to solve the Protocol behind Bitcoin-described problems. Today, the cryptonote Protocol is the basic framework for many of the Coins have specialised in the preservation of anonymity and privacy – including Monero. The technology of Bytecoin found a group of 7 Entwicklerm initially very appealing, however the fact that already 80% of the to mine the Bytecoin already as a Pre-mine existed and the decentralization saw here very much in danger of being prompted you in the year 2014, to fork the Blockchain and “Bitmonero”. The “Bit” in Bitmonero was later deleted easily and the Kryptowhärung today is only a “Monero” what is taken from the planned language Esperanto, and as much as “coin” means. Of the 7 original developers, only two are publicly known, while the remaining five wanted to remain anonymous and still want to.

Consensus-finding and scalability

Consensus

The consensus determination in the case of Monero works by “Proof-of-Work”. This means the network requires a Miner to be kept Running and validate transactions. Unlike many other crypto-currencies Monero sets, however, not on the well-known Secure Hash Algrotihm (SHA), but a hashing algorithm called “crypto night”. This is characterized by the fact that he was very memory intensive and is thus, particularly for widely-used General-Purpose Hardware (processors, ud graphics cards in standard PCs), while the development and production of specialized Mining Hardware is hardly worth.

Scalability

To improve another area, the Monero has tried, in the case of Bitcoin, is the scalability. Simply put, it means scalability, how well the network can grow in proportion to demand. Block chain based crypto currencies are by Definition limited in size.

If many users try at the same time, transactions in Bitcoin, the Blockchain, unfortunately, with the transaction data. The transactions that do not fit in a Block, will have to wait until a Miner has taken – and mostly it is so that these transactions with high fees as the first turn. Towards the end of 2017 transaction came about as the fees of about US$ 30.

Monero is also different here. There is no “default” block size limit. This allows more transactional data in each Block, but there is one drawback – spammers can fill the Blockchain with transactions, which would then be in huge blocks.

The Monero developers, however, had a special reward system, which is based on the average size of the last 100 blocks. If the new Block, the Miner work, exceeds the Median of the previous one hundred blocks, reduce the block premium. This discourages the Spam-transactions, because the Miner to mine any blocks that are assigned a high penalty if it is not profitable to do so.

The block reward will never drop below 0.3 XMR, what makes Monero a disinflationary currency: Inflation will be 2022, approximately 1%, and always decline, but the nominal Inflation will remain at 0.3 XMR per Minute. This means that there is always an incentive for miners will be to Monero, so as to keep the block chain secure, with or without a fees market.

-Monero Homepage

Supply and future

Unlike for example Bitcoin, there is no fixed upper limit of Monero Coins ever to be gemint. The currency is always slightly inflationary. According to the emission plan, the inflation rate is Monero approximately 0.87%.

In the year 2040 there will be for the first time, more Monero Coins as Bitcoins. At the time of writing this article (January 2019) are 16.690.661 XMR in the been produced and are in circulation.

Core features of Monero

Decentralization

In the Monero network, all Nodes (node points) are equal. There is no type of Nodes that has more influence or control over the System than another. Each participant in the Monero network is just as much value as any other participant.

A large Problem with Bitcoin now is that the Mining network is today, only with special Mining equipment is profitable. These systems use components that are as application-specific integrated circuit chips (ASICS) are known. Because this special Hardware is very expensive and it is worthwhile for private individuals and little more to invest in ASICS, the consensus determination in the case of Bitcoin, currently just a few large Mining companies, which is in terms of decentralization, unfortunately, is little conducive.

Monero is different, however. The Algortihmus called crypto night (note: crypto night to a close, a word game with the kryptonite. “Cryptonite” from the Superman universe) uses many advanced features to make the production of ASIC Chips, which would be suitable for the removal of Monero, unprofitable. The specifics are for this introduction to the Monero currency is a bit complex, but everything you need to know really, is that Monero can be gemint with both CPUs as well as GPUs to be profitable and the currency is also available for private people accessible. For this reason, you could say that Monero in principle, has the potential to be even more decentralized than Bitcoin, it is.

Privacy

What the General Public does not understand often, is the fact that a Blockchain (like. for example, the of Bitcoin) does not guarantee per se the privacy and anonymity. Quite the contrary – The Blockchain of BTC be granted full transparency. Every person with Internet access (or other access to the Blockchain), it is theoretically possible, each transaction back to the Genesis block to trace. You can see where the “account” (address) what amount of Coins is where you came from and where they are to be sent. Since then, some scientists, moreover, is able to associate several addresses on the Bitcoin Blockchain with real identities, given the privacy in Bitcoin really. But here, too, Monero provides a remedy. In the case of Monero, both the transmitter and the receiver, as well as the transaction amounts and balances are completely anonymous.
For the case that transactions need to be assigned to, for Example, in the case of donation to a relief organization, you would like to submit for tax reasons or similar, the tax office offers Monero is the possibility with the help of a so-called “View Keys” to the transaction yet. The account balance remains private.

Untraceable

Associated with the just described privacy, Untraceability of Monero Coins. This can not be due to a Blockchain analysis or Blockchain-Monitoring followed.
Through the use of so-called Ring signatures Monero allows anonymous transactions which can not be traced. This means that it is not clear what amounts were spent. That is why it is extremely unlikely that Monero transactions can be associated with a particular user

Fungibility

In the case of a transparent block chains and it can happen again and again, that so-called “tainted Coins” so dirty coins, for example, occur when these Coins were used for a crime, such as the purchase of drugs. These tainted Coins could then partially lose their value, because they would be not accepted everywhere. Since the transaction history is not in Monero can be viewed, can not occur in this case. All Monero are the same and have the same value. Tainted Monero Coins there are and thus some Moneros can not be blocked by a specific instance (e.g., Exchange) or in Person.

Safety

All transactions on the Monero network are secured using the use of a distributed Peer-to-Peer network cryptographically. It needs to be familiar with currencies, as with all “real Crypto” any outside party, since the network is backed up by all the participants and the consensus Algrotihmus.

Important Terms:

The Mnemonic Seed (Passphrase) in the case of Monero out of 25 words and is used to generate the other three keys, Public address, and View Key Spend Key,

The Public address is your “Public Key”, so the address can be made public, and the Monero-Coins will be sent. With the help of the Public address, but nobody – and outgoing transactions, as well as the existing balance.

The Spend Key is basically the same for other crypto known, “private Key currencies”. The Spend Key empowers you to send your Monero and manage completely. Keep it safe and secret!

The View Key allows transactions to view, such as (as mentioned above) to the tax office, etc. certain transactions are available. The View Key can theoretically be released, since no access to the Coins. Since other Users can view using a combination of a TxId, the View Key and the Public address of your transactions and, therefore, privacy would no longer be given to 100%, you should still work around carefully.

To be able to (actually anonymous) payments if necessary to allocate, you need the so-called Payment ID. This can be added to a payment optional, to identify you as a payment of Person XY.
As an example, here is the Deposit of XMR would be a call on a stock exchange. In order for the Exchange to be able to assign the cash receipt to the correct user account is the use of a Payment ID is mandatory and necessary.

The ring signatures are a technical means of Monero to obscure the network to the sender of a transaction and to protect his privacy. You find details here, in another article from us.

Ring Confidetial Transactions, often only as a RingCT abbreviated, are basically a more developed Form of Ring Signatures, and extend these so-called “Confidential Transactions”, i.e., confidential transactions. With the help of the RingCt, it is absolutely impossible for the sender, the receiver, or the amount of a transaction to see what Monero currencies to one of the most anonymous Crypto at all.

More about Monero you will find on their Homepage: https://ww.getmonero.org/

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