The Market For Monero | What You Need To Know Before Trading Monero
What you need to know before trading Monero
Anonymity was initially touted as a benefit of Bitcoin, the first cryptocurrency to scale. The cryptocurrency’s protocol attempted to offer a high level of privacy by masking users’ identities behind pseudonymous addresses and random numbers and letters. However, this approach did not work.
Bitcoin addresses and transactions are both recorded on the blockchain, making them publicly visible. Even though a bitcoin address is pseudonymous, it can be linked to many transactions over time, making it easier for friends, family, and even government agencies to track the address owner’s purchases.
While some thought bitcoin transactions were completely private, organizations such as law enforcement agencies have used blockchain analytics to track bitcoin transactions.
Several cryptocurrencies were developed specifically to provide users with more anonymity after bitcoin was released. Using CoinJoin, Dash, for example, combines the funds of multiple users to reduce the chance that any one user’s identity will be discovered.
Another privacy-oriented cryptocurrency, Zcash, uses zero-knowledge proof constructions called zk-SNARKs to allow users to exchange information without revealing their identities. Furthermore, the currency’s blockchain does not reveal the value of any transactions.
The launch of this cryptocurrency generated significant hype, but its privacy feature is optional, so many users have not used it. 28% of transactions were shielded at the time of the report.
By contrast, Monero is a private cryptocurrency by default, and it has been widely adopted by those who wish to remain anonymous while using cryptocurrencies.
Launched in April 2014, Monero is an open-source, privacy-oriented cryptocurrency. Developers introduced this innovative cryptocurrency without holding any for themselves, and the team relies on donations and the broader community to continue development.
To conceal the identity of senders and recipients, Monero uses ring signatures and stealth addresses. In ring signatures, a user’s account keys are combined with public keys obtained from monero’s blockchain to create a ring of possible signers, thereby preventing outside observers from linking a signature to a specific user.
It was first described in a 2001 paper by academics from MIT and the Weizmann Institute, and the technology has provided legitimacy to monero at a time when much of the cryptography used in blockchains is new and has not endured the test of time.
While mixing services are available for many cryptocurrencies, users typically only mix coins to hide something. Monero, on the other hand, mixes all coins used in transactions, which helps eliminate the possibility that coins are being mixed to hide information that senders and recipients don’t want third parties to see.
Monero users can keep their transaction history private, but they can also selectively share it with others. Almost every monero account has a view key, allowing anyone to view the account’s transactions.
Originally, ring signatures obscured the sender and recipient involved in a monero transaction without disclosing the amount. A new update called RingCT implemented a ring signature that concealed both the value of individual transactions and the identity of senders and recipients.
Besides using ring signatures, monero enhances privacy via stealth addresses, which are one-time addresses generated randomly for each transaction on behalf of the recipient.
 The recipients publish a single address and receive payments at separate, unique addresses. Therefore, monero transactions cannot be linked to the public address of the sender or recipient.
Adoption and fungibility
Providing a high level of privacy, monero offers fungibility, meaning that each unit of a currency can be replaced by another. To put it another way, every coin has the same value.
The blockchain records the history of individual bitcoin transactions, so coins that are linked to certain events, like theft, may be shunned by merchants and exchanges.
Due to monero’s untraceable nature, no two coins can be distinguished from one another, and they are both equal in the eyes of merchants. In the absence of this level of fungibility, a vendor who accepts cryptocurrency may reject a unit of one of these assets because of its previous transaction history.
As a result, monero (XMR) has seen its adoption increase steadily since its release. Dark web marketplaces such as AlphaBay and Oasis have embraced bitcoin, reportedly due to popular demand.
A press release stated, “Considering the security features of monero and the high demand from the community, we decided to add it to our marketplace.”.
Earlier that year, Oasis adopted the currency, and the endorsements of these two dark web markets influenced significant media coverage.
The market for Monero
Monero’s market is similar to that of many other cryptocurrencies. Interested investors can purchase the cryptocurrency outright through exchanges such as Poloniex, Bitfinex, and Kraken.
In July 2014, Poloniex was the first of these exchanges to list the currency, offering eight different currency pairs. In November 2016, Bitfinex, the largest bitcoin exchange by BTC/USD, added XMR/USD and XMR/BTC trading pairs and enabled deposits and withdrawals of monero.
Starting in January 2017, Kraken offered monero trading, offering XMR/USD, XMR/EUR, and XMR/XBT. On its blog, Kraken praised monero at the time, writing that the currency “trades with high volume and liquidity”.
Monero, like many other cryptocurrencies, allows interested parties to mine blocks. Besides joining mining pools, individuals can also mine monero on their own.
A computer can be used to take part in this activity, as it does not require any special hardware such as the application-specific integrated circuits (ASICs) required today to mine bitcoin.
To ensure mining was open to a range of parties rather than just large mining pools, Monero uses a proof-of-work (PoW) algorithm that was designed to be accessible by a wide range of processors.
The block time of the cryptocurrency is approximately two minutes. Miners receive a ‘permanent block reward’ from Monero, which is described as follows:
„The block reward will never drop below 0.3 XMR, making Monero a disinflationary currency: the inflation rate will be roughly 1% in 2022 and go down forever, but the nominal inflation rate will remain at 0.3 XMR per minute. There will always be an incentive for miners to mine Monero, keeping the blockchain secure with or without a fee market.”
The block reward at the time of reporting was approximately 7.46 XMR, meaning the monero network was producing approximately 224 XMR per hour and 5,376 XMR per day. There were 81.84 million hashes per second on the network.
Price volatility
Monero’s XMR token price has experienced significant volatility at times, climbing nearly 70% in the last month and more than 1,300% since it began trading on CoinMarketCap. Since its inception, the cryptocurrency has fluctuated between roughly $0.25 (in January 2015) and $60 (in May 2017).
Although some market observers think that monero’s volatility makes it less credible, sharp price fluctuations provide opportunities for traders. Monero can be purchased with both fiat currencies and cryptocurrencies, which might motivate traders to buy and sell it to maximize their profits. They might also use the currency as a hedge against other cryptocurrencies.
Because monero has been accepted by multiple dark web marketplaces and has gained significant visibility for its ability to provide a high level of privacy, it is less speculative than competitors like Zcash.
Monero’s price will be determined by supply and demand in the future. The former is increasing and the latter is unknown. This uncertainty might prove appealing to investors, giving them the opportunity to speculate on the cryptocurrency’s future value in order to generate strong returns.
