Monero (or XMR for its market identifier) ​​is an open source cryptocurrency created in April 2014. This cryptocurrency has a high level of privacy and decentralization.

Symbol
XMR
Logo
XMR Monero logo
Algorithm
RandomX
Consent
PoW

PTo accomplish this, Monero has used and created many technological advancements in the area of ​​crypto. In addition to this, it has become one of the cryptocurrencies with greater cross-platform support. Your software can officially run on systems Windows, MacOS, GNU / Linux, Android and even systems BSD. The project was born with the aim of offering a secure, private and anonymous option. A triad that very few cryptocurrencies can offer.

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Of course, being a project focused on high privacy and anonymity, has earned him many detractors. Especially due to the concern that the currency is used for illegal purposes of all kinds. All this protected by the impossibility of tracking who uses the cryptocurrency and from where. A situation that is echoed especially by known cases in which hackers have used the cryptocurrency.

Despite all this, Monero is a strong and healthy project. Well, it has a rich community of developers and users that continues to grow. And as Monero's development continues, this situation also affects its financial activity.

The bases of the project are based on three important pillars:

  1. Security. Monero must ensure an unprecedented level of security, not only to keep money safe, but its entire privacy and anonymity scheme.
  2. Privacy. Privacy at Monero is everything. Its total protection is indisputable in the project.
  3. Decentralization. Monero is not run by anyone. Development is merely meritocratic and fully community based.

Project beginnings

Monero's beginnings were quite modest. On April 9, 2014, the user thankful_for_today de Bitcointalk the story began. I create a thread where I published the creation of BitMonero. This name is a compound of Bit (for Bitcoin) and Monero (from Esperanto currency). This project had been created as a hard fork of Bytecoin, improved some of its features. However, the project was not well received and the community quickly took charge of it. The project name was immediately changed to Monero, and the history of this cryptocurrency began to be written.

Thanks to its focus on privacy thanks to the use of the algorithm CryptoNight, Monero experienced rapid growth. But further improvements came to this project. In 2017, the project included a new algorithm to make transactions even more private. This thanks to the development of a hiding algorithm that came from the hand of Greg Maxwell, based on the recommendations of Shen noether. The algorithm was called Ring Signatures. A short time later the Ring Confidential Transaction one of the great advances introduced by Monero., which allows calls confidential transactions.

Monero suffered another big push in its adoption in 2017, especially for its cross-platform capability and ease of programming. Same that earned him good and bad news in the crypto world. Like using Coinhive to exploit Monero from web pages using the users device without their authorization. Or the adoption of Monero by Change.org to obtain funds for financing. Each and every one of these actions had a great impact on the history that Monero has gone through as a project. History that has allowed it to grow and position itself as one of the great coins of the crypto world.

How does Monero work?

Monero is a cryptocurrency that bases its operation on the action of block mining, as it does Bitcoin. But unlike Bitcoin, Monero makes use of other very particular technologies. To understand a little more about the tools that this cryptocurrency uses, let's begin to analyze them:

CryptoNight PoW

This algorithm is the star of Monero mining. Unlike Bitcoin that uses the system HashCash for your system mining is., Monero uses CryptoNight PoW. This is a proof-of-work algorithm designed to function properly in CPU ordinary PC. Greatly hindering the mining process using graphics cards (But by the full GPU acceleration tech) or specialized hardware ASIC. The reason for this is to achieve a fair mining process that encourages the decentralization of mining from its blockchain. The development of CryptoNight is closely linked to the development of CryptoNote.

CryptoNight is built to rely on random access to data stored in RAM and emphasizes its dependency on RAM latency. In addition, each new block depends on all the previous blocks, which means continuous memory access. This process exponentially slows down the mining process within machines such as GPUs and ASICs, but not on CPUs. Remember that ASICs are circuits without RAM memory and lack the infrastructure to handle CryptoNight requirements efficiently. The same situation is repeated with GPUs. Well, despite their large amounts of memory, the memories of these devices are not efficient in random access to data and have high levels of latency.

Thanks to this, CryptoNight is perfect for the task of equalizing mining tasks. A miner may have expensive specialized mining equipment, but it won't do them much good. CryptoNight makes using these computers not cost effective. All this because the reward received does not offset the consumption of electricity.

Currently, Monero no longer does its mining using CryptoNight, but does so using RandomX its new mining system, and which we will talk about later.

Emission

The issue is the amount of coins that will be issued within the economic system of the cryptocurrency. In Monero, the issue is divided into two parts. Monero's main issuance curve is 18,132 million XMR coins as of the end of May 2022. After the initial emission curve is completed, they will be issued 0.6 XMR for each block. This second broadcast is called tail emission, and will take the maximum supply of currency to infinity.

Block reward

The reward is the amount of coins a miner receives, after solving a mining puzzle. At Monero, when writing the article, the reward is more than 3 XMR per block. It is declining slightly and is subject to block mining penalties greater than the average size of the last 100 blocks (M100). The system has been designed so that miners can always get a reward of at least 0.3 XMR per block.

Ring Signatures

To achieve the high levels of privacy that Monero has; it makes use of advanced cryptographic techniques. One of these techniques in particular is called Ring Signature. This is a system that mixes the sender address with a group of other addresses. In this way, it becomes exponentially more and more difficult to track each new transaction. Additionally, the "Secret addresses" generated by each transaction make it impossible to discover the true destination addresses of a transaction by anyone other than the sender or receiver.

Signature Circle

The Signature Circles were intended as a way to prove that a signer belongs to a group, without necessarily identifying it. But to achieve the full operation of the Signature Circles, they must meet three important criteria:

  1. Must there is ambiguity with the signer. This means that an observer can determine that the signer must be a member of the ring, but not which member. This is used to hide the origin of the funds of each Monero transaction.
  2. Linkability is possible. If you use a private key To sign two different messages, the messages will become linked. This is used in order to avoid double-spending attacks that may affect the blockchain.
  3. No attacker can forge a signature except with negligible probability. This is to prevent theft of Monero funds by those who are not in possession of it.

Finally, there is also a mechanism called Ring of Confidential Transactions (Ring Confidential Transaction). This mechanism serves to hide the amount transferred. This closes and hides all the information related to the actors and balances within a transaction.

Fungibility

This is one of the most important features of Monero and is closely related to privacy and economy. La fungibility It means that each Monero currency can be exchanged for another with identical properties. This capacity in turn gives it the property of non-traceability. This allows it to not be tracked or related to any activity in which it has been used. So there is no way for a person to know if the currency in question was used in any transaction with another person. There is no registry that allows such action and that improves the level of privacy and anonymity of the system.

Address format

A Monero address consists of 95 characters beginning with number 4. These addresses are created thanks to the CryptoNote address creation process that differs greatly from that used in Bitcoin and the like. Cryptography is used in this process EdDSA different from the ECDSA that you use in Bitcoin. This ensures a unique address creation process that supports the Monero privacy model.

Monero bulletproof

EThis is a zero knowledge protocol created by Monero, in order to improve the cryptocurrency. For its application, Monero developers had to implement a hard fork from your blockchain. All this because it made very marked changes in the way how transactions and blocks are handled. But the result of this work was pleasantly rewarded. With the arrival of this new system, Monero significantly improved its transaction capacity and its level of security. In addition to all this, the network decreased its bandwidth requirements, since transactions required very little data to transmit and receive.

Bulletproof's main job is focused on hiding the addresses of a transaction. This new algorithm is more efficient in speed and size than the previous algorithm used together with the Confidential Transaction Rings.

Sarang Noether, a mathematical specialist working on the development of Monero, explained Bulletproof as follows:

Overall, Bulletproofs represent a breakthrough in Monero transactions. We get massive space savings, better verification times, and lower rates.

Sarang Noether

Mathematical Specialist - Monero Development Team

Scalability

Scalability is the technical capacity for growth or technological expansion of a blockchain and the associated cryptocurrency. This is strongly related to the following aspects:

  1. Transactions Per Second (TPS)
  2. Validation time of a transaction (to become effective)
  3. Transaction fee or fees charged for shipping
  4. Infrastructures and technological advances are the ones that will mainly influence these three previous points

At Monero, the blockchain is capable of processing close to 1,000 TPS at full capacity. Regarding transaction speed, Monero takes on average 2 minutes to confirm and add a new block to its blockchain, with 18 being the required number of validations per block to take a transaction as secure. This results in an approximate delay of between 10 and 30 minutes to verify a transaction as valid.

Monero's transaction cost currently ranges from $ 0.05 to $ 0.01. This enables it to be one of the lowest cost-per-transaction cryptocurrencies to date.

Stealth address or secret address

Stealth Address is another of Monero's unique features. It is concerned with maintaining the privacy of the recipient. By default, it requires a sender to create unique random addresses for each transaction on behalf of the recipient. Although this may publish a single address, your payments should be directed to addresses that cannot be linked to the published address. With the use of hidden addressing, it is only possible for the sender and the recipient to know where a payment was sent.

To achieve this, when creating a Monero account, two private keys and a public address are created. Private keys are called the private view key and the spending private key. The public address is created using EdDSA cryptography and guarantees its relation with the created private keys.

The spending key is used to send payments, while the view key is used to show incoming transactions destined for your account and the public address is to receive payments. This double key model allows Monero to be personally converted into a semi-transparent system. In such a system, you can deliver a view key for audit purposes to a third party. With this key, you can only review some information about your wallet and transactions but nothing else. The rest of the information remains private and completely under your control.

RandomX, Monero's new PoW mining algorithm

Monero is a cryptocurrency with a very active development, a situation that has led it to carry out different hard forks throughout its history. The main reason for this is that the Monero community always seeks to offer the best possible security, privacy and anonymity. And such changes can only be applied by hard updates of your entire chain. But another point that leads you to apply these updates is to offer the highest possible ASIC resistance. For this they seek to make mining easier to run on CPU or GPU. This in order that the decentralization of Monero protects the principles of this community as well as possible.

This “ASIC Resistance” attitude has led Monero to change its CryptoNight mining algorithm several times. But recently CryptoNight has been abandoned and instead they have created the RandomX algorithm. To be more precise, on December 1 the Monero network activated its new RandomX mining algorithm. Although its operation is radically different from CryptoNight, RandomX sought to make ASIC mining impossible and to enhance CPU mining, with a new mining scheme using a virtual machine.

How does RandomX work?

Basically what RandomX does is create a random mining core. This kernel is executed inside a virtual machine specially designed for RandomX, and it is the one that will allow the mining interaction between the virtualized mining algorithm and the CPU that is running said virtual machine. This virtual machine and its execution is the first point of defense against ASICs. This is because these computers are not designed to run virtual machines or very advanced instructions.

In addition to this, RandomX ensures that the instructions within this virtual machine can be executed by any CPU. But many of these instructions consume large amounts of RAM. The process begins by creating a workspace called Cache. This cache is generated using the argon2 cryptographic function, a function that can adjust its memory consumption and that can occupy up to 2 GB of RAM in a generation process. This is another barrier of resistance to ASICs, since in ASICs RAM is usually not very large and expensive.

Next, RandomX begins with the process of generating the workspaces (Scrathpad) for mining. These workspaces will allow you to exchange data between the RandomX virtual machine and the CPU that runs it. In other words, the mechanism that will make RandomX use the CPU to mine begins to be created. The generation of these spaces depends on advanced instructions, that the ASICs can hardly implement, but that the CPUs already have to their credit.

RandomX Capabilities

Among the capabilities of RandomX we can mention the following:

  1. Requires double precision floating point operations.
  2. Use 128-bit vector math (like the views in the SSE CPU instructions).
  3. Use the four floating point rounding modes indicated in the IEEE 754.
  4. The VM reads and writes in the workspace recreated by RandomX.
  5. Take advantage of the out-of-order execution and prediction capabilities of CPUs. Basically, the script takes advantage of the CPU's random execution capabilities to inject more randomness into its execution.

As you can see, all these functions are advanced, not applicable to an ASIC and only applicable to CPUs with dynamic functions such as those that are part of our computers. This and the high memory consumption leave the creation of ASIC miners or the creation of botnet networks using low-power devices such as IoT devices that do not meet the minimum specifications for the execution of this type of algorithms in a difficult situation.

On the other hand, the algorithm improvements allow current CPUs to maintain and even increase their mining potential, something that has served to increase the hashrate potential in a good way without jeopardizing its decentralization and security. This has undoubtedly made RandomX a highly flexible algorithm and Monero will surely be able to continue taking advantage and improving its possibilities for a long time.

However, this is not without risk because RandomX makes heavy use of the speculative execution and the out of order execution, and both have demonstrated serious security problems that could negatively affect this algorithm in the future.

Project governance

Governance refers to the level of efficiency and effectiveness with which collective decisions are made in a community. As we noted earlier, Monero is a community and meritocratic development. This means that there is no project manager or leadership position in any sense. All decisions are taken communally by the development team. The same goes for the introduction of new features and the development of new technologies at Monero.

Reciente en un official statement, Monero developers made all of this very clear. In it they reported certain aspects of how governance is carried out in their project, let's examine some of them:

1.- The Core Team members are NOT anyone's boss, and their permission is not needed to do anything.

2.- The Core Team does NOT act as a centralized point of failure, but rather encourages organic and self-initiated initiatives that promote the Monero ecosystem.

3.- The Core Team is NOT equal to Monero. In case one, or the entire Core Team becomes corrupt, we must remember that Monero is a movement. A global initiative to promote privacy around the world and provide real, fungible digital money for everyone. This can happen even without the presence of the Core Team.

Core Team Announcement

Monero Core Team - Monero Official Website (March 01, 2018)

A coreless organization

This makes it clear that there is no nucleus of command within Monero, and that its development is decentralized. Certainly there are very important figures within the Monero development group, but their voices are not the law. Between these major developers can include:

  1. Riccardo "fluffypony" Spagni.
  2. Francisco “ArticMine” Cabins
  3. NoodleDoodle (Its real name is unknown)
  4. luigi1111 (his real name is unknown)

Likewise, the fact that in relation to any member of the Core Team who cannot be sufficiently active or committed in the development of the project, it is expected that they resign and that the remaining members choose a new one in their position. replacement.

On the other hand, it clearly establishes what are the responsibilities of the central team, which include managing the Monero code base, acting as trusted arbitrators in the The Forum Funding System, explained below and where the community's right to take the project to a new team is also established in the event that the present is not meritorious or does not fulfill its duties. You can see the full announcement here.

The Forum Funding System

Within the Monero community, the call works The Forum Funding System (FFS) o Forum Financing System. In general terms, it consists of presenting an idea in the forum intended for it, where its feasibility is discussed and whether or not its development is relevant.

Whoever presents an idea must describe it, indicate how they plan to develop it and why they would be able to do so. The proposal must be divided into milestones and be accompanied by a completion period, without specifying the duration of each milestone.

After presenting the proposal, the community discusses it and according to the conclusions, it is modified. When its final version is approved, a moderator moves it to the Funding Required or Funding Required. Once financing is secured, the thread moves to Work in Progress, where the delivery of progress reports by the developer is expected.

Advantages and Disadvantages of Monero

Monero Advantages

  1. Its development is focused on guaranteeing a high level of security, privacy and anonymity.
  2. Transactions are not linkable in any way with any Monero user.
  3. It is impossible to track your transactions.
  4. The blockchain does not have a block size limit and is dynamically scalable.
  5. Even when the Monero total is mined, 0.6 XMR per block will continue to be created to incentivize miners.
  6. It has achieved great growth in regards to its price.
  7. It is selectively transparent. Anyone can make their transactions visible to the people they choose, such as an auditor, just give them your private viewing key. This makes Monero auditable.
  8. He has a very capable development team behind him.

Disadvantages

  1. Even though Monero has been built to avoid centralization of ASIC, 31,9% of Monero's hashrate is provided by 3 mining farms. The good news is that this number is falling.
  2. Due to the intricacy of its cryptographic process, Monero has difficulties in implementing new functions.

Summary of Technical Specifications

  1. Monero had no previous mining, does not have instant mining, and does not have a token either.
  2. Proof of Work: CryptoNight V8, although the system may change in the future.
  3. Difficulty Reset: Difficulty is adjusted in each block, but is related to the last 720 blocks. At the same time, 20% of outliers are excluded in the time stamp.
  4. Block Time: Approximately 2 minutes (1:58 minutes today). It may change in the future as long as the emission curve is preserved.
  5. Block Reward: Sliding down slightly and subject to penalties for blocks greater than the average size of the last 100 blocks (M100)
  6. Block Size: dynamic, with a maximum of 2 * M100.
  7. Issuance curve: main curve: approximately 18.132 million coins by the end of May 2022. Then a tail curve with a reward of 0.6 XMR for each block (2 minutes), and begins once the main issue is made, which is translates into a <1% reduction in inflation over time.
  8. Maximum Supply: Infinite.
  9. Issuer Privacy: Signature Circle
  10. Recipient's Privacy: Secret Addresses
  11. Quantity Concealment: Circle of Confidential Transactions

If we want to review the source code of the project we can go to its repository GitHub.

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Links of interest

Official Website

Monero - XMR

White paper

Monero - XMR

Official Twitter

Monero - XMR

Official GitHub

Monero - XMR

Official GitHub

Go to the Monero github

Official Forum

Monero - XMR

Reddit thread

Monero - XMR

Bitcointalk

Monero - XMR

Block Explorer

Monero - XMR

Telegram Canal

Monero - XMR

Official Telegram Channel

Go to the official telegram channel