An Overview of the Monero Network

In 2014, the Monero token, also referred to as XMR, was launched to address many 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. Many have chosen to work with Monero due to the increased 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.

“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.

ABOUT THE AUTHOR

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. 

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