Mysterious Internet Money: What Is Monero in Cryptocurrency?  

Transparency is a hallmark of cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH), but some blockchains are more selective about what info they put in the public domain. For example, Monero (XMR) is a historic crypto project that has always focused on preserving user anonymity. 

Monero shares many of Bitcoin's traits, but it distinguishes itself from other peer-to-peer (P2P) networks thanks to its advanced privacy-protecting technologies. Crypto traders most concerned about issues such as identity theft, censorship, and online tracking continue to gravitate to Monero for its promise of a private P2P transaction process. 

Monero’s history

Due to Monero's heavy emphasis on privacy, there's no clear account of the project's founders or the history of its development. However, most accounts of Monero's origins highlight the significance of an earlier privacy-focused crypto project called Bytecoin (BCN). There are many theories about whether BCN entered the crypto market in 2012 or 2014, but crypto historians agree it was the first virtual coin based on a privacy-preserving protocol, CryptoNote. 

Due to controversy over BCN's early distribution, some cryptographers—including Riccardo Spagni (online alias "Fluffypony")—created the Monero blockchain. Unlike BCN, Monero launched in 2014 without a "pre-mine," meaning none of the developers claimed XMR coins before the protocol went live. The perceived fairness of Monero's launch compared to Bytecoin's helped XMR gain more trust in the crypto market, increasing Monero's prominence and growing its market cap to become one of the largest for a privacy-focused coin.

Over the years, Monero's team has continued introducing extra cryptographic technologies, including ring signatures and zero-knowledge (ZK) proofs, that further obscure transaction data on its payment ledger. Monero also released a Bitcoin to Monero atomic swap feature in 2021, allowing traders to swap their BTC holdings for XMR without intermediaries.  

How does Monero work?

Monero shares many of the core features on Bitcoin's blockchain, including a Proof-of-Work (PoW) mining algorithm where computers (aka nodes) use energy to solve algorithmic puzzles and confirm the latest transactions on the network. Whichever node wins these "mini-games" receives trading fees and newly mined XMR rewards in their crypto wallet. 

The critical difference between the Monero protocol and other PoW cryptocurrencies is that it uses multiple advanced cryptographic techniques to obscure transaction data from outside observers. For example, ring signatures mix batches of XMR transactions before sending them to their final destination, making matching the senders and recipients more difficult. Monero also generates one-time blockchain addresses (aka stealth addresses) for each transaction, making it even more challenging to figure out the XMR in a user's crypto wallet. 

In addition to its privacy-preserving software, Monero uses the "RandomX" algorithm to prevent centralization on its blockchain. Unlike Bitcoin's SHA-256 system, RandomX discourages large computer rigs known as Application-Specific Integrated Circuits (ASICs) designed explicitly to mine cryptocurrencies. In Monero's RandomX system, computers need to adapt faster to a series of different computations, making it more suitable for central processing units (CPUs) rather than ASICs. The Monero team hopes RandomX's features help eliminate the possibility of miners with expensive ASICs exerting greater influence over their blockchain and launching a 51% attack. 

Monero FAQs

Why do crypto traders use XMR? 

XMR's use case is a P2P electronic currency with built-in privacy features, making it most attractive for traders concerned about data security and online identity. 

Although Monero transactions are invisible to outsiders, it's easy for traders to find the current Monero coin price online using a real-time Monero price chart. Like other fungible cryptocurrencies, Monero has a 1:1 exchange rate and price that's accessible on exchanges and crypto price aggregator sites. 

Is Monero a privacy-optional cryptocurrency? 

Monero is a "privacy by default" cryptocurrency, meaning traders can't choose whether to turn its anonymous features on or off for each transaction. Unlike other privacy coins like ZCash (ZEC), every Monero transaction is untraceable. 

Is Monero legal?  

Due to Monero's association with anonymity, it has attracted the attention of many nations and regulatory bodies. Although there's no global ban on using Monero, some exchanges and jurisdictions prohibit its use, and traders should review their jurisdiction’s's latest rules and regulations before trading XMR.  

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