Are you planning to trade the Monero cryptocurrency? Here are the basics to get you started
One of the core precepts of blockchain technology is to provide users with unbreakable privacy. Bitcoin as the first decentralized cryptocurrency pegged on this premise to market itself to a broader audience who at the time needed a virtual currency that was free from government meddling.
Unfortunately, along the way, Bitcoin proved to be plagued with several weaknesses, including non-scalability and a mutable blockchain. All transactions and addresses are written on the blockchain, making it easy for anyone to connect the dots and reveal users’ private details based on their existing records. Some government and non-government agencies are already using blockchain analytics to read data on the Bitcoin platform.
Such flaws have led developers to seek alternative blockchain technologies with enhanced security and speed. One of these projects is Monero, usually represented by the XMR ticker.
What is Monero?
Monero is a privacy-oriented cryptocurrency project whose main goal is to provide better privacy than other blockchain ecosystems. This technology protects user information through hidden addresses and ring signatures.
Stealth address refers to the creation of a single address for an individual transaction. Two addresses cannot be attached to a single transaction. The received coins go to a totally different address, making the whole process unclear to an outside observer.
Ring signing, on the other hand, refers to combining account keys with public keys, thus creating a “ring” of multiple signatures. This means that a monitoring agent cannot link a signature to a particular account. Unlike cryptography (mathematical method of securing cryptographic projects), ring signing is not a new kid on the block. Its principles were explored and recorded in a 2001 paper by the Weizmann Institute and MIT.
Cryptography has certainly won the hearts of many developers and blockchain aficionados, but the truth is that it is still a fledgling tool with various uses. Since Monero uses the proven Ring signature technology, it has stood out as a legitimate project worth embracing.
Things to know before you start trading with Monero
Monero Market
The Monero market is similar to that of other cryptocurrencies. If you want to buy it, Kraken, Poloniex, and Bitfinex are some of the exchanges to visit. Poloniex was the first to adopt it, followed by Bitfinex and lastly Kraken.
This virtual currency appears mostly linked to the dollar or against other cryptocurrencies. Some of the available pairings include XMR/USD, XMR/BTC, XMR/EUR, XMR/XBT, and many more. The trading volume and liquidity of this coin record very good statistics.
One of the great things about XMR is that anyone can participate in its mining, either as an individual or by joining a mining pool. Any computer with significantly good processing power can mine Monero blocks with a few hiccups. Don’t bother going for ASICS (Application Specific Integrated Circuits) which are currently required for Bitcoin mining.
price volatility
Despite being a formidable cryptocurrency network, it is not that special when it comes to volatility. Virtually all altcoins are extremely volatile. This should not worry any avid trader, as this factor is what makes them profitable in the first place: you buy when prices are down and sell when they are in an uptrend.
In January 2015, XMR was $0.25, then went up a bit to $60 in May 2017 and is currently breaking the $300 mark. The Monero coin registered its ATH (all-time high) of $475 on January 7 before it began to fall along with other cryptocurrencies to $300. At the time of writing, virtually all decentralized coins are in the price correction phase with Bitcoin reeling between $10-11k from its glorious ATH of $19,000.
Fungibility and Adoption
Thanks to its ability to offer trusted privacy, XMR has been adopted by many people making their coins easily substituted for other coins. In simple terms, Monero can easily be exchanged for something else.
All Bitcoins on the Bitcoin Blockchain are recorded and therefore when an incident such as theft occurs, all the coins involved will be prevented from trading, making them non-tradable. With monero, you can’t tell one coin from the other. Therefore, no seller can reject any of them because it was associated with a bad incident.
Monero blockchain is currently one of the most popular cryptocurrencies with a significant number of followers. Like most other blockchain projects, its future looks very bright despite the impending government crackdown. As an investor, you should do your due diligence and research before trading any Cryptocurrency. Whenever possible, seek the help of financial experts to get you on the right track.
