Introduction
Monero (XMR) is a nerd among the cryptocurrencies. For one, it's an open source project that does not invest money in marketing. On the other hand, the Monero Community insists on being the only truly anonymous cryptocurrency. Let's see what's up and what kind of weaknesses Monero is struggling with.
Particularities
A fundamental feature of Monero is its own code base. Unlike many other cryptocurrencies, Monero is not a fork of Bitcoin. There are also differences in bitcoin in block time, block size, proof-of-work algorithm, inflation, and the way transactions are sent. In addition, there is a hard fork every six months, with which the software is updated. The regular hard forks allow a relatively faster development compared to Bitcoin.
To achieve the desired anonymity, Monero currently combines three mechanisms:
- Stealth addresses
- Ring signatures
- Ring Confidential Transactions (RingCT).
Stealth addresses
The recipient of a transaction is concealed by so-called stealth addresses. In Monero there is a private View Key, a private Spend Key and a public address. In a transaction, a unique, unique address is generated from the View Key and Spend Key, resulting in only the recipient finding the transaction on the Blockchain. A third party can not recognize the objective of a transaction.
Ring signatures
The sender of a transaction is anonymized by the so-called ring signatures. The original input is obfuscated by combining it with past blockchain outputs to form a unique signature. The individual components of this signature are all the same probability the actual transmitter. Technically, the sender can not be traced back. This obfuscation happens automatically. In short, all transactions are hidden in Monero. Transparency is optional. If you want to disclose your transaction, you can do so by sharing the view key.
Ring Confidential transaction
The RingCT update in early 2017 finally made the transaction amounts invisible. Mathematical formulas ensure that the sum of the inputs is equal to the sum of the outputs - without the concrete numbers having to be open.
Through the interplay of these three functions, Monero actually manages to keep the sender, the recipient and the amount anonymous. Every Monero transaction is automatically secured, resulting in a truly fungible coin.
Weaknesses
A Monero transaction consumes significantly more storage space than a Bitcoin transaction. A transaction can easily be a few kilobytes in size. Of course, this also allows the blockchain to grow correspondingly fast (current size as of January 2018: just under 30 gigabytes). Efficiency measures are being worked on.
Legal uncertainty
The cross that all cryptocurrencies currently have to bear is the uncertainty about future regulations. Due to the lack of marketing, Monero is indeed more covered than other projects, however, the anonymity also serves illegal businesses such as tax evasion, drug trafficking and other illegal transactions, which states will probably be a thorn in the side.
Slow development
Compared to other cryptocurrencies Monero develops supposedly slowly. The reason for this is the open-source nature, in stark contrast to classic companies. Monero is driven by his community, for example, through voluntary work on the code or by donations of users. The answer to the question when "Feature XY will be released" is mostly "SoonTM" - a running gag in the Monero community, as projects are notoriously long in coming. It lacks features that are already a thing of the past for other coins, such as a hardware wallet integration, a light weight client or multi-sig support.
Trolling
Fluffypony , aka. Riccardo Spagni, is one of the faces of the Monero community and known for his sarcastic comments. In Altcoin summer 2017 he made headlines. Announcing an announcement on his part, the price of XMR rose sharply, but then fell drastically later, when it became clear that it was a troll action. Fluffypony wanted to show how news-oriented the crypto market is and how few price pumps have to do with technological advances. With phrases like "Do not buy Monero" ... "unless you have a use for it" he already confused some newbie. Monero is an experiment and the price is secondary.
Current state of the art (Development)
With the introduction of the RingCT another essential aspect of the transactions was anonymized. Also a graphical wallet software (GUI) was published in 2017 by the Monero Project.
Currently, the Monero team is working on an I2p network solution called Kovri to disguise , among other things, the IP addresses of the users. Kovri is expected in 2018.
Multi-Sig is another feature that the Monero developers have recently completed and is not live yet. For the next Hard Fork Multi-Sig should be activated. This will especially simplify Escrow Services.
At least one hardware wallet seems to be on the way in 2018. Both Ledger and Monero work on a hardware wallet integration. Due to the technical uniqueness of the project, companies in this direction were complex.
View in the future
Undoubtedly, the developers of the Monero project are competent. This is reflected in the written code and the overall quality of the products. With Kovri and the Hardware Wallets, there are more important milestones for Monero on the doorstep. It is expected that 2018 will bring many new features and improvements for Monero.
Summary
Monero is a functioning, anonymous Coin: Sender, transaction amount and receiver are completely obscured to outsiders. As the only cryptocurrency, Monero has automatically activated this mechanism, avoiding fundamental economic problems such as lack of fungibility. If you want to protect your privacy, Monero is the right choice.