The Monero Market Potential Explained
In a landscape that is populated by several projects with similar objectives and use cases, Monero clearly is a departure from the norm in the cryptocurrency space. Luckily, in our world today, the need for anonymity cannot be completely avoided in many facets of life.
Having a crypto that meets the yearnings of a class of users with a specific expectation is a marked move that is proving worthwhile for the inventors of XMR. Although there are challenges that Monero faces in certain parts of the world, there exists enough market to serve investment enthusiasts.
Why Was Monero Invented?
Monero was made and designed for cryptocurrency users who are all out for anonymity. While many people do not bother about the public status of their transactions, there are others who really care about what shows up in the public space.
It is to meet the need of people who do not want their transactions open to public scrutiny that Monero was launched. Interestingly, Monero was not designed out of the blues as it is the consummation of algorithms that were already in use by the secret services. Today, the improvement of Monero’s confidentiality derives from research papers and their outcomes from around the world.
Is Monero Technology Unique?
Monero uses the blockchain as a base for its operations and governance. In that sense, it shares some basic similarities with the Bitcoin blockchain. However, in terms of anonymity and privacy, it is way apart from Bitcoin. While the processes of transaction approval are based on the proof of work algorithm, other layers of procedures and presentation have been built-in to give Monero its anonymity aura.
The level of stealth and intrackability built into Monero blockchain makes it impossible for anyone to know the transactions within a wallet, its contents or status. While the same person can fund a Monero wallet multiple times, there is no way to tell the source of these funds unless the sender confirms to the recipient that such transactions have taken place.
The CryptoNote Protocol is fully at work in the Monero Network, and it describes the range of cryptography that obfuscates the identity of a transaction initiator. By using ring signatures, transactions are authorized on behalf of the user groups, and only the recipient can access the wallet based on a transaction-specific private key and the image of the associated public key, that is not re-usable.
The Real Worth of Monero
Monero is real money when viewed in terms of having a valid transaction power. It can be used to settle accounts, pay bills, and transfer value. When you send Monero to anyone, the recipient can decide to change same to fiat, other crypto, or simply hold it in store.
The power of real money is tied to its acceptability and not necessarily that it is tangible. Where it not so, mobile payments and other digital payment forms would be invalid. Monero has an intrinsic value that is quoted by crypto exchanges around the world, and at each time, its market price or value is known. This also explains the reason why there are several Monero trading pairs across the world.
At the time of writing, XMR traded for $52.99, and is worth 0.00731353 BTC. When converted to Ether, 1 XMR is equivalent to 0.354857 ETH
The Cost of Monero Transactions
Like most crypto, blockchain charges arise whenever there is an XMR transaction, with average fees at about $0.021. Traditionally, proof of work-based cryptocurrencies attracts higher fees except they are upgraded with other efficient processors.
For Monero, the block size per transaction is flexible, and this impacts on the resources required for processing This is where it differs from Bitcoin blockchain, which requires data duplication and accumulation each time a transaction needs to be approved. With a fixed block size, Bitcoin blockchain attracts higher transaction fees.
The much-reported bulletproof upgrades to Monero in Q3 2018, led to increased privacy, and random authorizations, which invalidated purpose-built mining gadgets and ASICs. With lower block approval fees, industrial-grade mining of Monero is less attractive.
Can XMR Be Used Anonymously?
Monero is the leading anonymous cryptocurrency and all transactions on the platform are anonymous and not even optional as presented by Zcash blockchain.
First, transactions that are initiated do not get to the destination in a straight loop. Rather, the transaction details are further encrypted in such a way that even the recipient cannot tell its source except the sender provides such information.
Anonymity and privacy are the two hallmarks of the Monero network that effectively locks up the identities of participants and their wallets. So, it is impossible for a transaction to be traced to its source and the contents of a wallet cannot be known by other parties in the blockchain.
How Safe is XMR?
The safety of the Monero blockchain boils down to its proof of work algorithm that effectively makes the authorization of transactions a team effort. While there are concerns of late that the POW mechanism can be manipulated by ASICs as a result of higher production capacity, this fear is already invalidated by Monero’s system upgrade.
ASICs are no longer able to access Monero blockchain and as such, the consensus procedures will persist and naturally, must be adhered to. This basic requirement makes the blockchain safe, and intruders or hackers will be unable to gain control of a majority of the participating nodes. Failure to be in the majority in the blockchain means that no hack will succeed or be able to muster the 51% vote needed for authorization.
Monero is a POW ecosystem, and this means that it is a cryptocurrency that can be mined. Mining is the process recognized for new XMR tokens to be introduced in the ecosystem. At present, traditional mining using GPU cards and the CPU of computers is the norm. With the subsisting POW algorithm and improvements or upgrades so far, Monero transactions have become less costly and less profitable to miners.
In essence, small holder mining will continue to be order of the day, and miners with better energy efficiency will continue to make profits. This is beneficial to the fortunes of XMR, as the moderated mining lessens supply pressure, thereby keeping the tokens mined within expected projections. Afterall, it is basic economics at play when low supply gives rise to better pricing or higher market value.
Apart from the native Monero wallet GUI, which is installed on computer desktops, there are several other hardware and online alternatives. Generally, wallets are deemed safer when they are offline, as it is a lot more difficult for them to be hacked without internet connectivity.
However, online wallets have their attraction by reason of ease of access, which explains their popularity. However, the recommended practice is to avoid storing tokens in your exchange wallet except they are actively traded. For users of hardware wallets like Nano and Exodus, it is important to always use the devices that are Monero-compatible in order to avoid losses.
While paper wallets are used in some places, these have become largely obsolete as the risk of loss due to destruction or misplacement can be rather high.
An investment is only as good as the market that exists for it. In the case of Monero, while it might not be everyone’s favorite, it surely packs the punch in its niche. By consistently maintaining its place on the Top 20 crypto by market capitalization list, there seems to be hope for its future.
Despite the reports of doubts over its legality in certain countries, a lot many nations on earth have no qualms with the existence of Monero. As it stands, with the increasing popularity of XMR, anyone with access to a crypto platform will be free to trade Monero with ease. This development could be a middle ground that will allow investors see XMR like any of the leading tokens, whose highs and lows provide windows of opportunity to beat the market and reap the gains.