Most people here have heard about Monero before, some of you probably own some. That however, doesn't necessarily mean people know why it's better than Bitcoin nor why you should be using it.
The official logo of Monero
What is Bitcoin?
Before we can talk about why Monero is better than Bitcoin, first we need to know what makes Bitcoin what it is.
The Blockchain
Bitcoin consists of 3 fundamental components, these components being:
- A public ledger than can be added to but not modified
- Cryptographic verification of transactions
- Creation of new currency via a cryptographic system based on Hashcash
These three components are combined together to form a blockchain. Everyone here has heard of blockchains but few really know what that means.
Well, a blockchain is made up of chunks of data known as a block. Each block contains at a bare minimum: A hash of the previous block, a hash of all transactions contained within the current block, a timestamp, all transactions within the current block plus a special "generation" transaction awarding the block creator, and some special arbitrary data used to cryptographically prove that processing time was spent to verify the block.
Generating this extra bit of data is the essence of mining. Here's a simplified example of what that means.
Any bit of data can be turned into a hash, for example, the string Hive has a SHA256 hash of af48338f0994e599f5b7151532b2fe118e14c9fb6369a7e976ed7387da04d175
Now let's figure out how to make the hash start with 4 null bits, or a single 0. What a miner does is try random combinations over and over until it arrives at a hash with the required number of preceding null bits.
Lets start with Hive_a and work our way up until we get a hash that starts with a zero.
In this case, the first combination that gives us a leading zero is Hive_y, with a hash of 0759be8344926db2434e0d560fd1c01b6ab0f84c32d63f4cfeaed59460a04175
SHA256 is a special kind of hash, known as a cryptographic hash.
A cryptographic hash is a one way function that produces an unpredictable result, and as a result, the more preceding null bits that are required, the harder it is to find a solution. This is referred to as mining difficulty.
Now you know how mining works. Now why can't an existing block be modified? Well, as mentioned earlier, every block contains a hash of the previous block, so in order to modify a block. You would need to either find a value that gives the modified block the exact same hash it had before being modified, something that's considered to take longer than the universe will exist, or solve every single block following that block. Now, solving every following block is possible, but only if you have control of more than 51% of all mining hash rate. This is referred to as a >51% attack and with today's bitcoin hash rates being as high as they are, is a near impossible feat and would not go unnoticed.
Congratulations, now you know the very basics of how a Proof of Work blockchain works, how it's mined, any why it's secure. At the end of this post I'll link a great video made by someone else which goes into much more detail about PoW blockchains for those that are interested.
I'm not going to go into detail about how transactions are secured, as they're secured using the same fundamental reasoning behind PGP Signatures, and it's not too important as all cryptocurrencies use variations of the same idea. That being Asymmetric Cryptography.
The problem with Bitcoin
Alright, because Bitcoin uses a public ledger, that means that all transactions are public and traceable by anyone. That essentially means everyone knows how much money you currently have, how much you've received, and how much you've spent.
Imagine if anyone could go to your bank and get a copy of your bank statement without your permission, that would be a huge privacy issue. Yet that's the case with Bitcoin.
Now while it is true that a Bitcoin wallet isn't tied to your name, the moment you actually use it to receive or send money, anyone involved will immediately know it belongs to you.
The end result of this means that Bitcoin is non-fungible, as coins can be marked as bad and all transactions made with those coins traced so they can't be exchanged. While workarounds, such as Bitcoin mixers, exist, they are not perfect and the problem remains.
Alright, how do we fix this?
Enter Monero
Monero was created in 2014 with the primary goal of fixing this privacy issue and creating a true, 100% fungible, digital analogue of cash. Monero also fixes some other issues Bitcoin has, such as transaction fees becoming unusably large for casual usage as the network grows.
You might be wondering, how do you combine a public ledger with privacy? Monero accomplishes this by using a bit of cryptographic magic known as Ring Signatures.
A ring signature obscures the main signer by combining multiple signatures together in a manner where it is impossible to tell which of the signatures is the true signer. This means that it's impossible to tell where a Monero transaction is from, protecting the identity of the sender and guaranteeing fungibility.
Monero makes use of even more cryptographic tricks to provide even more privacy, such as generating unique destination addresses for every transaction and extending ring signatures to be able to hide transaction amounts from non-recipiants.
In addition to that, the Monero team has been working on a project that would further increase the privacy and security of Monero, making it so that not even your ISP or government can tell you're using Monero.
Why you should be using Monero
Monero is, in essence, what people think Bitcoin is. An anonymous digital currency that can function like cash without the need for any middlemen such as banks or governments. It brings fruition to the term "be your own bank" and provides even better privacy than banks do. On top of that, Monero is only 6 years old. Bitcoin was only at $240 when it was as old as Monero is now.
For this reason, Monero, not Bitcoin, is the future of digital payments.
Feel free to send me some Monero if you found this helpful: 8B6dwnDX4Kp6ALqSv9T8rgBWHp4xaEqLu2rUQAU7HEuaPVGAa9S8ksW1sXpL25FVr7KLqbu2Cc2eaamCqagDBx3P6FLGLtR
@death-and-taxes. Do you prefer a certain Monero wallet over the others? I currently have my XMR stored on mymonero.com. I'm concerned sending large amounts of Monero via Binance for the mere fact they could pause large transactions at any moment.
Do you prefer one wallet over the other, if so, which one? If you could recommend a Monero wallet from the App Store than has no limits as far as amounts sent or received, I'd appreciate your info.
Thank you.
I use the official Monero GUI wallet on a computer, it's available for Linux, Windows, and macOS. If you're dealing with any significant amount of money than you're going to absolutely want to use the dedicated wallet software as it gives you full control over your money.
If you want a wallet for small transactions, like payments from a phone, I've heard good things about monerujo. I haven't had any chance to test it though.
They also have an F-Droid repository, if you don't trust Google's store.
Before trusting a software wallet with money, I make sure it ticks these boxes:
The official wallet and monerujo both fit these requirements. MyMonero also looks safe, but I haven't looked too much at it.
As for iOS devices, I've heard Cake Wallet works well. However, there are no viable alternative stores for iOS due to Apple maintaining a strict monopoly on apps. Due to this I can not recommend using an iOS device for cryptocurrency transactions at all.
As general good advice with dealing with crypto, don't store anything you wouldn't mind losing on mobile devices or any potentially insecure computer, and use a hardware wallet if you've got one.
If you've got more than USD$1k in cryptocurrency, I would highly recommend getting a Ledger Nano X for use as your wallet. It supports dozens of currencies including Monero, as well as Ethereum and all ERC-20 tokens. The official Monero software wallet and monerujo support the Ledger hardware wallet.
If you've got more than USD$10k in cryptocurrency, I'd recommend getting two hardware wallets and using one as a cold Wallet which you keep securely in a water and fireproof safe. Treat it like a bar of gold, because it might as well be one.
Also, never store anything long term in a wallet you don't have full control over, that means any centralised exchange or service. I may make a post on decentralised exchanges soon if there is interest in it.
Thanks for this info @death-and-taxes. I do hold all my assets on a Nano. 👍🏿
The only Monero wallet I have right now is MyMonero and it's on PC. I just downloaded the MyMonero wallet from the App Store in my iPhone, I know, I know.. apple but that's the device I'm using.
Are you saying you wouldn't recommend using that app to transact? Have you heard of anyone experiencing issues while transacting the MyMonero app from iOS?
Thank you.
It's more so that you should treat it as if Apple has control of anything on your device.
While true for an unmodified Android device as well in terms of Google, you can actually modify Android to be far more secure.
If you're using a hardware wallet in conjunction with your device, it should be all safe, as the hardware wallet verifies transaction details with you.
I haven't heard of any problems with MyMonero on iOS, but the risk is there. As Monero has the potential to threaten existing banks and governments, it's possible that a government might force Apple and Google to remotely uninstall any Monero related apps from users' devices.
You can set up an Android device without using any Google services at all, but you can't set up an iOS device without Apple services.
It looks like MyMonero is trustworthy, but major companies like Apple, Google, and Microsoft certainly aren't.
Thanks a lot for sharing what you know with us @death-and-taxes. I see you've just recently began blogging here, welcome to Hive!
Keep your content comin, there's a lot of people on here who will appreciate your articles, it takes some time and practice is all. Your engagement level is clearly fine tuned. With interactions like this and original content you're releasing, it shouldn't take too long to gain traction.
The more developers around here, the better. Especially developers who aren't scared to say what they think and have a genuine interest in making hive a choice platform.
Monero is nice and more stable in an unstable market as crypto is.
Monero was 3% of my assets and Ethereum 97%
Now Monero is near 50% of my assets. Love it and recommend it!
Posted Using LeoFinance
Make sure you keep it in wallets you control yourself and not an exchange, Monero has the potential to be a serious threat to banks and the first thing they would go after is centralised exchanges.
In fact, some governments have already started to. Australia has banned Monero from being listed on exchanges. If anything, that's a stamp of approval saying they can't control it.
Make sure your Monero wallet is up to date, there's a hard fork in a few weeks that increases network capacity 25% and increases verification speed by 10%.
Ι farm Monero now
Interesting. I didn't consider the fungibility problem.
I will certainly do more research on Monero.
Posted Using LeoFinance
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