What is Monero and How Does It Work
To this day, cryptocurrencies permeate the news and our economic environment. One in particular on the scene is Monero. Because of the recent news many are asking what is Monero and how does it work?
Grown to the point where they cannot be ignored, digital and decentralized currencies have established themselves as more than just a temporary concept.
They are considered a viable investment option and have surpassed other traditional ideas such as stock trading when it comes to profitability.
However, with many cryptocurrencies currently circulating (over 700, now) is very easy to ignore some or to focus only on the most popular one which is Bitcoin.
But with the technological background surrounding them, cryptocurrencies are known for innovation and making significant improvements.
So if you do not become familiar with the majority of them you may miss the significant improvements that some bring to the financial community as a whole.
One of those coins is Monero.
What Is Monero and How Does It Work?
First of all, Monero is a cryptocurrency. That means that is a form of electronic payment protocol that is both decentralized and anarchic.
That is because is not issued by the government, a central bank, nor any centralized entity. Thus, Monero’s value and prices are determined only by its spread acceptance and how useful it can be.
Monero was created in 2014, focusing on privacy and set to correct issues related to privacy with the most popular cryptocurrency, which is Bitcoin.
Another worthy mention about Monero is that one of the other Bitcoin issues it set itself to solve is that of mining decentralisztion.
Today, Bitcoin mining is often criticized as being almost exclusive to mining pools and companies with the latest and most expensive software.
Monero’s mining algorithm was designed to be resistant to the so-called ASIC mining and is more accessible and affordable to regular people.
This is thanks to the fact that it can be mined with consumer-grade hardware like GPUs.
An Anonymous Currency.
Monero is part of the so-called “anonymous cryptocurrencies” due to how it focuses on privacy.
Monero’s main characteristic is the use of ring signatures to obfuscate transactions to make them untraceable. It does it through the CryptoNight PoW algorithm from the CryptoNote protocol.
That protocol works through the use of ring signatures which mix the addresses in the transaction log with a group of others.
This makes it virtually impossible to link the operation with the right address. It also hides the transferred amount. which is very significant.
The Details of How Monero Works.
Fundamentally, Monero works just like any other cryptocurrency:
A sender specifies the amount and address of the trade.
The request proceeds to wait until it is validated by a miner for it to be confirmed, recorded and performed.
The miner logs the operation into the blockchain.
The coins are sent from the sender to the receiver’s address.
Relatively simple, on the surface. But where Monero becomes unique is in Step 3. This is where the ring signature process comes into play.
The miner records the transaction into a block, but it doesn’t just add the sender and receiver’s address into it. It also marks several “possible addresses” that make registers somewhat crowded and hard to pinpoint which destinies are true.
Monero has some amazing features and it is positioned to be one of the better cryptocurrency investments this year according to many. It have it on my list Altcoin List for 2018.
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Please share your thoughts below on Monero. Do you have any plans to invest in cryptocurrencies in the near future?