Monero, a Bytecoin fork, is a decentralized cryptocurrency with a strong focus on privacy and security. Based on the same open-sourced code Bytecoin is built on — called Cryptonote — Monero offers unlinkable and untraceable transactions to its users.
The Cryptonote protocol brings three core technologies to Monero: ring signatures, stealth addresses, and zero-knowledge proof networks.
Ring signatures implement digital signatures generated for one-time use that conceals the identities of the sender and receiver. Similarly, stealth addresses are generated for a single transaction for an anonymous recording of the activity. Zero-knowledge proof technology, Bulletproofs, hides the input and output values while proving their validity.
Monero utilizes a Proof of Work consensus mechanism, called RandomX, which is built to be CPU-friendly and inherently resistant to ASIC-device mining. Blocks on the Monero blockchain have dynamic sizes for scalability.
XMR is an ERC-20 token that is fully fungible and does not retain the transaction history, thereby safeguarding user identity.
XMR was released without any ICO, pre-mine, or founders fund. Currently, it has a circulating supply of around 18.15 million tokens. There is no maximum token supply for XMR, meaning Monero block rewards will never be zero.
The main emission curve was designed to reach approximately 18.132 million coins before switching to the tail emission curve for a fixed miner reward. The fixed amount per block is 0.6 XMR, with a block time of about 2 minutes.
This is in stark contrast to Bitcoin and other PoW networks that will eventually reach zero mining rewards, causing increased dependency on transaction fees and compromising network security.
The fixed Monero block reward of 0.6 XMR ensures that mining is not rendered unprofitable due to dynamic block size and miner competition. According to a Monero tweet, tail emission means that Monero miners are not entirely reliant on transaction fees and can thus guarantee a certain income regardless of the fee market. This level of security and assurance for miners represents a significant departure from Bitcoin's security model.
Monero’s tail emission curve is also deflationary, at less than 1% inflation and decreasing over time to the point where issuance is negligible.
Monero's origins can be traced back to Bytecoin, another privacy-focused blockchain. Following disagreements over Bytecoin's token distribution system, a Bitcointalk user using the pseudonym ‘thankful_for_today’ forked the BCN codebase to create BitMonero. In 2014, just as the community was coming to terms with these developments, seven community members forked BitMonero into Monero. Riccardo Spagni, also known as 'Fluffypony', led the Monero founding team. Over the years, it is estimated that more than 100 developers from around the world have contributed to the development of Monero.
Monero was launched without a pre-mine or an initial coin offering (ICO). Grayscale, a digital investment firm, revealed in March 2021 that it was actively considering launching a trust offering with Monero and other crypto assets such as Filecoin and Decentraland. Grayscale also established a Monero trust in Delaware. Grayscale's "Assets Under Consideration" page currently includes Monero.
In December 2017, Riccardo Spagni, Monero’s core developer, and Naveen Jain launched Project Coral Reef, allowing users to spend Monero at official merchandise shops for 45 musicians including Dolly Parton, Weezer, Mariah Carey, and the Backstreet Boys.
Monero v15 hard fork
The Monero community agreed on a protocol upgrade in April 2022. It will be Monero's version 15 hard fork, and it will be released on August 13, 2022.
One of the most noticeable changes is that the ring size for transactions has been increased from 11 to 16. This increase in mixins will contribute to increased untraceability. Since 2016, Monero has routinely increased the ring size in network upgrades, with the ring size being 5 in 2017.
Monero's hard fork will also include Bulletproofs+, which will allow for smaller proof sizes, faster proof generation, and faster verification with aggregation of multiple proofs. This could account for about a 5% reduction in transaction size. This is a significant step toward scalability for Monero.
Monero employs a number of privacy technologies, including RingCT and stealth addresses, to make it nearly impossible to determine the origin, amount, and destination of transactions. Furthermore, XMR tokens are fully fungible. In essence, it is impossible to trace the history of XMR tokens and identify the addresses that held them at some point.
Although Monero employs the Proof of Work protocol, it has implemented a consensus algorithm variant that does not support ASIC miners. This implementation ensures that ASIC miners do not unfairly dominate the mining industry in Monero.
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