With the world of cryptocurrencies being heavily populated by a wide range of different coins, it would be easy to focus on the big names in the market. Bitcoin is the obvious example, yet Ethereum and Ripple have consistently featured in the headlines too. It therefore seems appropriate to dedicate some attention to the lesser-known cryptocurrencies that have also been able to benefit from the hype surrounding the market.
One such example is Monero (meaning ‘coin’ in Esperanto), a decentralised cryptocurrency that prides itself on its privacy. Created in April 2014, Monero has seen exponential growth since sitting at $16.38 at the start of 2017, reaching a high of $542.33 on January 9th, 2018. And amongst its crypto peers, Monero ranks highly, enjoying a market capitalisation of around $4bn, placing it 13th in terms of size. This can be attributed to Monero’s distinctive ability to deliver a service that provides privacy for its users, giving it an advantage over many of the other cryptocurrencies out there and allowing Monero to establish itself within the market, reflected by its position as the most valuable privacy-focused cryptocurrency.
Compared to other cryptocurrencies, Monero offers its users a high level of privacy through an ‘opaque’ blockchain (record of transactions). There are three main elements to ensure that transactions stay anonymised. Firstly, the sender’s address is mixed with several others obtained from the blockchain in order to create more difficulty when tracking the source of a transaction. Further, ‘stealth addresses’ are generated in order to hide the destination of the transaction. Lastly, the amount of the transaction is also kept private.
These combine to ensure that users are able to remain unknown, therefore creating a unique quality for Monero as a cryptocurrency. This has proved popular, although significantly amongst those interested in illegal activities. As a currency to be traded, Monero is the natural choice of those that want to keep their purchase history private, filling a definite (if not questionable) gap in the market.
Monero is also ‘fungible’ – this means that each unit of currency is exactly equivalent to every other unit, essentially making them substitutable. This isn’t the case for those cryptocurrencies with a transparent blockchain, such as Bitcoin. As a transaction history is readily available for these currencies, those coins associated with undesired activities, such as theft, tend to be avoided by merchants. However, given the anonymous transactions that exist with Monero, coins are indistinguishable from each other, thus meaning that, in the eyes of the individual, each coin is worth the same.
This gives Monero an advantage. As all coins are mixed and identical, there is no need to assume that any one coin is dirty. The requirement of all transactions to be private therefore works to the benefit of all users and allows individuals to participate in their desired activities with no questions asked about the legitimacy of their coins.
Monero can be seen to be a more efficient cryptocurrency than Bitcoin and other competitors. Firstly, Monero allows the user to produce a block in an average time of two minutes, compared to Bitcoin’s ten minutes. It can also boast average transaction fees of around $3 versus $20 for Bitcoin. Lastly, Monero does not require any specific chips to be installed, meaning that any computer is capable of mining. This creates a larger demographic of individuals that Monero can appeal to, especially given that many chips can be costly to purchase. Quicker, cheaper, simpler – everything points in favour of Monero.
For the right individual, Monero is an incredibly attractive cryptocurrency. With its focus on privacy and fungibility, it is able to provide a service unmatched by most other currencies including Bitcoin, therefore allowing it to carve out a niche within the market. It also allows users a faster process, ensuring a more convenient and efficient product.
So could it overtake Bitcoin? It seems possible given that there will always be a market for illegal activities and given the strength of the service itself. However, arguably the former point may put off your average crypto-kid, limiting Monero’s growth to some extent compared to more popular currencies such as Bitcoin. Nevertheless, as long as there is demand for privacy, there will be demand for Monero.
Have your say. Sign up now to become an Author!
More on Cryptocurrencies
Crypto Briefing: Facebook Allows Crypto Ads Once Again
In a reversal to a long-running trend, Facebook has become the first social media platform to roll back on a...
Why Cryptocurrencies and Tokens Are Securities
“We are the Investor’s Advocate” are the first words visible to visitors on the Securities and Exchange Commission (SEC) website. The...
The Dotcom Boom and Bust, a Preamble to Cryptos?
Lіfе аѕ one оnсе knеw it drаѕtісаllу сhаngеd іn thе mіd-90ѕ. Thе intеrnеt’ѕ popularity wаѕ оn thе rіѕе аnd mаnу...