Monero (XMR) is a bit like the dream cryptocurrency of the Banque de France. In many press releases, the most interesting of which is clearly this one, the BdF has clearly placed itself at the top of the anti-cryptoactive front as it calls them. It must be said that the venerable and old institution, created in 1800 by the First Consul Napoleon Bonaparte, clearly feels the wind of cryptocurrencies blow more and more strongly on his face. Because of its anonymous character, Bitcoin would be a colander helping to finance terrorism and money laundering. Just that.
Anonymous transactions are the obsession of the financial authorities. Billions they can not control and use. However, we can say what we want on Bitcoin, but it is not anonymous and the financing of hidden activities would represent a tiny part of transactions. And it is not a vulgar geek (in the eyes of the BdF) who says it but the very serious European police office, Europol!
However, Monero realizes one of the dearest wishes of the Bank of France to shoot red balls on cryptocurrencies: the anonymous nature of transactions. I will not go further in this introduction, which would make the rest of the article redundant. Here are the origins, birth and characteristics of Monero.
Origins of Monero
Relatively speaking, Monero is closer to the Ripple. Not for its features or its protocol, but because it is not yet another bitcoin derivative. Indeed, Monero has its origins in the CryptoNote protocol. It is not useful to know all the technical specificities of the protocol. Some will be discussed in the section on the characteristics of Monero. But the most important thing to know is that this protocol makes it possible to destroy all transaction traceability.
In October 2013, a Nicolas van Saberhagen published his white paper in which he presents the CryptoNote protocol . Bitcoin is evoked first and foremost by its disadvantages, whose head of bow is traceability. For van Saberhagen, the goal is to create a new protocol to make any transaction invisible.
The CryptoNote protocol is therefore a prelude to the creation of another type of cryptocurrency with the aim of counteracting the disadvantages of Bitcoin.
Birth of Monero
April 18, 2014 is announced the creation of BitMonero, the cryptocurrency applying the principles of the CryptoNote protocol. This one is quickly renamed Monero, which means “piece” in Esperanto, the universal constructed language.
There is no need to add more on the birth of Monero. What matters here are the features of this cryptocurrency.
You can find the official website of Monero by clicking on this link.
Characteristics of Monero
If it did not have particular characteristics, Monero would only be known by the mother of its founder! Indeed, Monero owes its fame to the particular characteristics of its blockchain using the CryptoNote protocol.
First, Monero has a great fantasy making it a real electronic cash: an anonymous and absolute nature of transactions. How is it possible? The blockchain of Monero is configured by the developers to be opaque. The details of the transaction (identities of the parties, amount) are made anonymous by hiding the addresses used by the participants.
Monero uses circle signatures concepts ( Ring Signature ) and stealth addresses ( Stealth Addresses ) to achieve his ends. Circle signatures allow a sender to hide their identity from other participants in a group, so that they do not reveal which member signed the transaction.
To generate a circle signature, the Monero blockchain uses a combination of a sender’s account keys and associates it with public keys on the blockchain, making it unique and private. This makes it possible to hide the identity of the sender, since it is impossible to determine which of the keys of the members of the group has been used to produce the signature.
Stealth addresses add extra privacy because these randomly generated addresses for one-time use are created for each transaction on behalf of the recipient. The use of these stealth addresses thus makes it possible to conceal the real destination address of a transaction and hides the identity of the recipient participant.
You will find that it is quite complex and that this technical presentation deserves more depth.
A more egalitarian mining process
Second, Monero differs in the mining process. With anonymity, mining is based on an egalitarian concept. At the launch of Monero, its developers were not remunerated and relied on the community and the gift to further develop the virtual currency. Today, Monero supports a mining where individuals are rewarded for their activities by joining pools, or they can mine new moneros individually. Monero mining can be done on a standard computer and does not require any specific hardware or application specific integrated circuit (ASIC). So it’s a big difference with Bitcoin that requires ultra-powerful hardware to solve complex calculations.
Cryptocurrency with a fungible character
Fungibility is another important feature of Monero. What is fungibility? This means that two units of a currency or convenience can be mutually substituted and there is no difference between the two. For example, if you take two tickets of € 10, they are not fungible because everyone is unique. The value is the same but not the support. On the other hand, two ounces of gold of the same quality are fungible because both have the same value and are not distinctive.
Using this analogy, Monero would be the ounce of gold while, for example, Bitcoin would be the € 10 bill.
Other features, such as the use of a hash different from that of Bitcoin, are a bit too technical for them to be mentioned in a general article.
Concluding on Monero is complex because this protocol has as many potentialities as risks. The certainty of seeing one’s transaction invisible is a guarantee of confidence, the assurance of absolute independence and foolproof infallibility.
The problem is that anonymity is also a gateway for illegal sites and trade … But has the main asset of illegal activities, cash? No. So there’s no reason to throw Monero away. Its technology represents a real protection of privacy and could become more and more important in the future.