The most important cryptocurrency project focused on security and user privacy undertakes a network upgrade.
The developers report that this hard fork will bring significant improvements in several areas such as network efficiency and ring improvement.
The currency is one of the most controversial among the community due to its opaque network, but at the same time it is indispensable in the fight against authoritarian regimes.
The most important privacy blockchain in the world, Monero, since weeks ago announced the update that would bring various improvements to its network. The time has come and the application of the new hard fork was successfully carried out at the level of block 2,688,888. The developers called on the participants to update their software in order to have the possibility to continue using the network.
Monero and its native currency, XMR, are among the most controversial in the entire crypto market. The community around this project is one of the most solid and its foundations are entirely organic. Its enthusiasts qualify themselves as “maximalists” and consider that this project fulfills all the purposes outlined by Satoshi Nakamoto in the Bitcoin White Paper.
In that sense, they criticize that the main cryptocurrency, Bitcoin, suffers from flaws that Satoshi was not able to correct. Among them, poor privacy for users and the scandalous centralization of the mining business that deprives millions of people from being part of the generation. XMR’s proposal, they claim, fills all those gaps left by Nakamoto. They call their currency (Bitcoin) a “first experiment” and even label it an “altcoin”.
This is how the Monero blockchain works
This is not the place to define which is the best of the cryptocurrencies between BTC and XMR, even if it is clear which is the most popular and used. In any case, the important thing is that the Monero network is undertaking one of the most important updates of its blockchain. With it, they seek to improve the user experience and privacy qualities.
To understand the magnitude and importance of the changes implemented in this new hard fork it is worth briefly reviewing how that blockchain works. There are four main features on which the blockchain relies to become the most secure and private of the entire virtual currency ecosystem:
The XMR cryptocurrency is based on three core values that are at the heart of its philosophy. These are privacy, security and decentralization. To this end, the developers claim to avail themselves of the latest and most robust encryption tools available. The level of privacy is one of the main reasons for the coin’s existence.
Indeed, there are projects that are secure like Bitcoin or Ethereum, but privacy is poor. Monero developers claim that there are certainly projects with security options based on RingCT, for example. However, for most such currencies, privacy is an option and not an attribute imposed by the network as in the case of Monero.
This is one of the best thought-out tools for the XMR cryptocurrency. With it, the chain hides the address that is responsible for sending during the transaction. Any network user can create these signatures and the conjugation of them creates a ring.
In this way, when a person sends a transaction, it is mixed with others that form the ring and then sent. In doing so, no outside observer will be able to tell from which of the keys in the signature group the transaction is coming from. With this tool, the transaction of money in the form of XMR becomes anonymous.
According to the Monero portal, this mechanism in its blockchain is implemented by using the keys of an account and a series of public keys. The latter are known as “outputs” and are extracted from the network with a “triangular distribution method”. This whole process is just one of the multiple mechanisms on which the blockchain is based.
For users, it is a great advantage to have this concealment, as people’s financial privacy is guaranteed. In countries where totalitarian governments exist, this network works as an impeccable mechanism to receive funds without being victims of reprisals from the state apparatus.
At the other extreme, the person receiving the funds also has a privacy protection mechanism. In that sense, the recipient is not registered on the blockchain thanks to Stealth Addresses. Thus, the person sending funds creates random unique addresses for each transaction on behalf of the recipient, the portal explains.
“With Monero, third parties are unable to know about the existence of transactions between two people.”
“The recipient can publish only one address, but it makes all their incoming payments go to unique addresses on the blockchain, where they cannot be linked to the recipient’s published address or to the addresses of other transactions,” they stress. With this, only the two parties (the sender and the receiver) know the addresses.
In this way, this blockchain makes it impossible to verify the sender and receiver of an XMR transaction. This fulfills another of the important steps that guarantee the four main characteristics of the network. Unlike other chains, such as the Bitcoin blockchain, the Monero blockchain is completely opaque.
This translates into the fact that a third party will not have the ability to find out if private transactions between two people take place. In Bitcoin, the blockchain is public and fully transparent. That gives the possibility that a moderately thorough analysis will be able to find the whereabouts of the person behind the funds.
The third feature of the Monero network is called Bulletproofs. With this feature, confidentiality is maintained when sending funds from this network to other protocols. Similarly, with RingCT, transaction amounts are hidden.
Simply put, when a user sends amounts (even to other protocols), the amount sent is hidden. Add to this the other two features described above, and there is no possibility of tracing the sender, the receiver, or the volume of money being sent.
The RingCT confidential transaction stands out because of the advantages over other networks. For example, when sending cryptocurrencies in Ether, BTC or others, not only the address of the sender and the receiver is known, but also the amount and the funds stored in their respective wallets.
With that, users are exposed to criminal organizations. If a bank account is transparent, it means that anyone can see it, including extortionists and kidnappers. With these three operating characteristics of the Monero blockchain, people are guaranteed security and privacy.
Finally, with the Dandelion++, the link between the transaction and the physical address of the person behind the transaction is completely broken. In other chains, the users’ IP could be linked to the transaction. To avoid this, VPNs are generally used, but in Monero this option comes built-in.
The development of Dandelion was originally intended for Bitcoin transactions, but in Monero it is also adopted as an extra security measure. By applying the Dandelion++ option to nodes, some detectors such as Chainalysis will be unable to override the anonymous nature of transactions.
It should be noted that the network has a lot going for it and technology is not slowing down at any time. It is to be expected that many interested parties will work daily to neutralize a blockchain like Monero. Hence, developers feel obliged to make frequent updates to improve the protocols.
Consequently, that is precisely the vision of the developers of this blockchain with the update that was applied this Saturday.
What are the improvements of the Monero upgrade?
With an eye on improving the network’s security, privacy and decentralization qualities, the developers aim to improve the operating mechanisms explained above. Thus, the update features the following improvements:
It increases the Ring size from 11 to 16. This is the largest absolute increase in the entire base anonymity complex for every transaction given on the Monero network.
The hard fork will upgrade the bulletproofs algorithm to bulletproofs+. With this, the typical transaction size will be reduced by 5% to 7%. This will allow transactions to be less heavy and, with that, faster. In addition, the typical verification performance will be improved by 5-7%.
Appearance of View Tags. This new option will reduce the synchronization times of a wallet by approximately 30% to 40%.
The update also includes sensible changes to commissions. The portal explains that this will “improve the security and resilience of the network to rapid changes in the fee market or attacks by malicious entities”.
The last of the hard fork enhancements include major fixes to multi-sig features along with critical security patches.
As mentioned above, the upgrade to the Monero blockchain was successfully completed this Saturday. With it, the most secure and private currency of the entire ecosystem further increases its qualities and consolidates itself as the most solid project in terms of guarantees of the right to privacy of its users.
Binance welcomes re-powered Monero
One of the good news for the aforementioned blockchain is that it received the backing of the most important cryptocurrency exchange in the world, Binance. The cryptocurrency exchange led by Changpeng Zhao announced that it will support the new update of this blockchain, which further guarantees its continuity.
In the official communication, apart from talking about the approximate date and the corresponding reversal of transactions for the migration, the platform announced the support. “Binance will take care of all technical requirements for all users who have XMR on their Binance accounts. We will reopen deposits and withdrawals for XMR once we deem the upgraded network to be stable, and will not notify users in a further announcement.”
It should be noted that the Monero blockchain is not very popular for many centralized cryptocurrency platforms. This is because the privacy features are not compatible with many legal requirements that force platforms to maintain collaboration with regulators.
Thus, an opaque network like Monero contradicts KYC or know-your-customer mandates and anti-money laundering (AML) laws. This explains why many exchanges have taken XMR off their list of options and others have not even taken the initiative to include it at some point. The recent Tornado Cash case is a reminder to many platforms that they should do their best to avoid these types of privacy assets.
In any case, some users in that community consider XMR’s stay on some platforms to be temporary. The moment regulations become clearer, the currency will be excluded from all exchanges, they warn.
The use of Monero for criminal activities
The high security and privacy qualities of handling funds on the aforementioned network make it an ideal choice for criminals. It is no surprise that it is one of the favorite currencies in the dark web. It is also the most used option by the so-called cryptojackers.
The latter, by means of bots, use the computing power of victims to generate money. In other words, without the victim’s knowledge, they infiltrate their devices and start mining for them. It should be noted that the Monero blockchain works with the Proof-of-Work (PoW), which means that it is generated by the mechanism known as digital mining in the same way as Bitcoin does.
The difference is that XMR is mined with CPU, while Bitcoin requires more sophisticated hardware such as Application-specific integrated circuit or ASIC. In any case, one should not lose sight of the fact that the bulk of financial crimes are carried out with the use of fiat currencies and through traditional banking.
A recent example was uncovered by INVESTOR TIMES with the Juicy Fields case. According to an expert’s report,more than 60 banks were involved in this scam, which allowed criminals to drain an approximate $1 billion euros from their victims to Cyprus. Although this scam also relied on cryptocurrencies, the amounts in these were minimal compared to the amount moved in fiat money.
From this it can be assumed that as long as criminals continue to go unpunished using business as usual money and methods, it is unlikely that Monero will be at the top of their list of options.
Some Monero features
As already said, the Monero network for the generation of new coins is given by means of PoW. However, unlike Bitcoin, its protocol is anti-centralization, which implies that it is resistant to ASICs. If any manufacturer were to create machines that could mine XMR, this coin would be quickly monopolized by large companies in the same way as happened with Bitcoin. With that, hashing and difficulty would increase negating CPU mining.
“To mine XMR does not require expensive specialized equipment like Bitcoin’s ASICs. It’s enough with CPU or GPU to mine from home and without major complications.”
To avoid that scenario, the network works with an algorithm called Randomx. This is an ASIC-resistant and CPU-friendly program. In this way, Monero mining can be performed from any computer without major impediments for users. In fact, on CPUs it is more convenient than on GPUs.
There are two ways to mine on the Monero blockchain. The first is individually and the second is through mining pools. In the first case, it is a “lottery” that could take months or years without seeing results. With the second mode, you get consistent results, albeit with low rewards. The developers recommend not to use the most crowded pools, as this can lead to a dangerous concentration of the network.
In this regard, it is noteworthy that the largest mining pool in this network, MINEXMR, announced its closure last Friday (August 12). This is because it controlled 48% of that network, which increased the odds of a 51% attack. This is positive news for the health of this blockchain.
The XMR issuance curve
Although the Monero coin shares similarities with BTC, it is not entirely identical in its generation mechanisms beyond PoW. For example, Satoshi Nakamoto’s coin has a quantitative limitation of 21 million, meaning it is deflationary. XMR, on the other hand, has an indefinite issuance curve, which makes it an inflationary coin.
The developers claim that this is a way to always maintain a stable reward for miners. That way, miners have the necessary motivation to keep the network secure. In that sense, the issuance of XMR is infinite. It should be noted that there are two main types of issuance of this coin. The main curve, which consists of 18,132 million coins by May 2022.
In parallel, the tail curve is counted. This is equivalent to 0.6 XMR for each mined block. This is triggered once the main issuance has taken place. This results in a 1% inflation. It should be noted that in the Monero blockchain blocks are processed every two minutes. This means that in order to have a good mining reward, several factors such as the cost of electricity and CPU capacity must be taken into account.
Although XMR can be generated from virtually any computer no matter how old it is, the higher the CPU power, the better the performance. For many users, the main profitability of the currency is to buy it and keep it for the long term, since its valuation has been highly positive over the last few years.
How to mine XMR?
Generating coins or fractions of XMR is a simple task, although it is not as cost-effective to do it with the old laptop. The advantage is that no further permissions are required from the authorities where mining is regulated. But being a PoW-generated coin demands computing power and that implies considerable energy consumption.
Although the cost of the bill will never be the same as mining Bitcoin with the Sha-256 algorithm or Litecoin’s Scrypt, the costs must still be weighed. For example, mining on an old computer that generates more in bill costs than the rewards obtained is not the best decisionto make.
In any case, the first option should be to choose a computer with an advanced CPU such as AMD’s Epyc 7742. This one has 64 cores that allow mining with a computation of 44,000 H/s. In addition, its power consumption is only 225 W. Of course, there are less expensive options. Once you have the equipment, you must choose the software, for example, the Monero Spelunker, which is adapted for mining with CPU in the aforementioned blockchain.
Once the equipment is ready, in which one must also take care to have an adapted GPU and SSD memory that provide greater mining power, the user must join a pool. Each pool requires steps to be followed to start operating. In that case one must search the list and choose one or mine on one’s own in the form of a “lottery”.
Alternatives to Monero
It should not be overlooked that XMR is not the only privacy coin on the market. There are others that can fill that role very well such as Secret or Zcash. The most recent case occurred with the legendary Litecoin LTC. This coin applied the Mimblewimble Extension Block (MWEB) update, in which it made a radical turn to its traditional operation.
With the MWEB, LTC joined the club of privacy coins. It should not be lost sight of the fact that the privacy of the coin is optional and a change from one modality to another facilitates tracking. As uncomplicated as it would be to break LTC’s privacy, this shift led to some problems with exchanges . Some platforms excluded the currency to avoid run-ins with regulators and AML laws. This media outlet reported at the time about Litecoin’s problems with its new vision.
As emphasized above, the big difference between Monero and the rest of the privacy coins such as Zcash or Litecoin, is that in these privacy is optional. At the other extreme, in Monero, it is a feature of the network itself and extends to all its use in a mandatory way.
So far there has been no news of sanctions from other platforms against the XMR coin, which indicates that it will continue as before, but with greater power.
This work is for informational purposes only. Under no circumstances should it be assumed as an invitation to invest in XMR or other digital currencies.