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All About Monero
What is Monero, how does it work & why is it cool?
What is Monero?
Monero is a privacy and security-focused cryptocurrency with fast, reliable transaction times based on an adaptive block size. It is a cryptocurrency, like the popular Bitcoin and Ethereum. However, Monero is different in many aspects, most importantly in the blockchain obfuscation algorithm and the protocol they use, namely CryptoNote.
History of Monero
Monero was launched on 18 April 2014 by a developer who went by the name thankful_for_today. In 2016, the market capitalisation went up to USD 185 million. While the original developer left, the core team has taken good care of the currency and it has gained popularity due to its privacy, decentralisation and scalability.
How Monero Works
Whatever currency you use is actually a token of your wealth kept with the issuing authority, generally the government of the issuing country. Cryptocurrencies are different because no single entity can issue or affect their value or even the origin.
When you want to make a payment, you need to send the transaction command (containing the amount of Monero and the receiver’s wallet address) which goes riding on a ‘block’ to the ‘miner’ who basically approves the transaction and keeps a tab. The amount of Monero is then deducted from your digital wallet and added to the Monero balance of the receiver.
When receiving money using Monero, the process is simply inverted.
- Complete Wallet Privacy: While Bitcoin and Ethereum reveal the transaction history to anyone interested, Monero uses a strong cryptography so that your financial transactions are kept private from everyone. Even knowing your wallet address will not allow them to check your transactions.
- Complete Transaction Privacy: Neither the interested party gets to know the source of your Monero funds nor the transaction amount. They use always-on privacy setting where every user is a protective layer for the other users. The Monero blockchain doesn’t carry any signature of the previous owner so nobody can censor a Monero transaction either.
- Superior Mining Technology: Mining is a cryptocurrency term which denotes confirming a transaction and record keeping. It is like authorising and keeping a tab of every transaction. Monero keeps this very protected using unbreakable encryption technique. CryptoNight Proof of Work (PoW) and RingCT are two important algorithms for Monero.
- Adaptive Scaling: Monero blocks are created every 2 minutes, compared to 10 minutes for Bitcoin. Bitcoin Blocks have a maximum size and as many transactions are done in 10 minutes, not all of them find accommodation in the block. This leads to delayed payments as well failed payments. You need to pay a higher transaction charge to accommodate your transaction on the first available block. Monero has an adaptive block size which means no matter how many transactions take place within those 2 minutes, your transaction will always find a place in the block. The transaction is fast and there is no extra charge for anything.