What is the Monero Network? - Identity Review | Global Tech Think Tank - Identity Review | Global Tech Think Tank

One of the largest selling points of cryptocurrency is its anonymity; in theory, crypto is only associated with a singular wallet address that’s stored on the decentralized blockchain. With increased public scrutiny on transactions, however, the anonymity of crypto has diminished. News outlets are able to link massive purchases with investors, social networks like Context make wallets more social by linking identity, and most exchanges now ensure your crypto is linked to a social security number. Enter the Monero network, whose token boasts almost complete un-traceability.  

An Overview of the Monero Network

In 2014, the Monero token, also referred to as XMR, was launched to address many of the aforementioned privacy concerns. The currency was created as another version, or fork, of the existing Bytecoin token and was initially developed by seven individuals, including Riccardo Spagni. Using ring signatures, tracing the sender or receiver on the Monero is impossible. To further privatize transactions, the Monero network uses stealth addresses which act as a temporary address for all transactions on the network. The Monero network likewise employs Dandelion++ to anonymize the IP addresses of computers used to transact crypto on the network. Consequently, one cannot determine who owns what crypto or is transacting with which entities.

The Benefits of a Privacy-Centric Crypto

On the surface, this structure provides various benefits. For one, institutions maintain an unforeseen level of anonymity in crypto transactions due to the nature of crypto-wallet addresses. Such anonymity provides an appealing use case for government transactions, investment firms and even companies performing any type of transaction.

The Monero network also benefits individuals transacting with crypto. In authoritarian governments, for instance, having the ability to send and receive currency fully anonymously provides a level of freedom and control previously unavailable for crypto users. 

We want to provide privacy and just clog some of the basic holes that are present in most cryptocurrency protocols,” says Justin Ehrenofer, a developer of the Monero network. As opposed to making privacy an opt-in option, the Monero network presents privacy as a default option for all users, providing significant value to users in any region of the world.

Drawbacks of Monero

The network’s privacy-oriented structure, though, naturally facilitates criminal activity like drug exchanging, money laundering and more. 

Monero is increasingly used for ransomware payments,” says Ehrenofer.Criminal use of the Monero cryptocurrency is expected to increase significantly in the future.”

While this currency may enable individuals to practice transactions without the scrutinies of governments, it also allows governments to do the same. Through a currency like XMR, both companies and governments can make transactions with even less accountability to citizens and stakeholders.

Is Monero Here to Stay?

Concerns aside, it’s clear that the Monero network has made an imprint on the crypto sphere. In 2021, XMR recorded 8.65 million transactions; in the first two months of 2022, the currency shattered that volume with over 20 million transactions.

As cryptocurrencies enter the mainstream, Monero will play a significant role in shifting the way people interact with money. Whether this change will solely propagate illegal activities or provide an avenue for individuals to express their freedoms is yet to be seen. However, XMR and other privacy oriented coins will increase in proliferance as users, for the first time in history, are given the option to fully control their money.

Jibran Khalil is a computer scientist and entrepreneur from the University of Texas at Austin. He is a Tech Innovation Fellow at Identity Review and creator of My Workout Group, an iOS app that uses social accountability to help people workout. 

Contact Jibran at jibran@identityreview.com.

Do you have information to share with Identity Review? Email us at press@identityreview.com.

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