Many electronic transactions in the existing financial system are structured such that hackers, spies, insiders, or other motivated third parties could discover a user’s purchase history, spending habits, or financial relations. Monero is a cryptocurrency network that provides guarantees against de-anonymization processes at the protocol level, facilitating fully private transactions. While many consider cryptocurrencies such as Bitcoin to offer an anonymous alternative, in reality, almost all are pseudonymous, as a record of each transaction is publically available on-chain and many participating wallet addresses can be de-anonymized with off-chain tools.
Monero uses a combination of stealth addresses and ring signature technology to obfuscate transaction details among participants and the network. At a high level, parties to an XMR transaction cannot access each other’s address or history, yet retain strong cryptographic guarantees that transactions are valid and XMR cannot be double-spent. The Monero blockchain is secured by Proof of Work (PoW) mining using the CryptoNight hash algorithm.
The Monero community has been resistant to allowing Application Specific Integrated Circuits (ASICs) mine on the network, out of concern that ASIC-dominated PoW networks become centralized over time. In April 2018, Monero hard-forked to implement a hash algorithm code change that rendered Bitmain’s recently announced Monero ASIC miner obsolete. The block size is dynamic according to transaction demand and has a target block time of 1 minute. Monero employs a decreasing block reward structure to pay miners, which incentivizes their participation in securing the network and stabilizes at a 0.6 XMR reward per block in 2022.
Monero’s Core Team facilitates development by vetting donation-soliciting proposals on the project’s semi-official forum, allowing donors to anonymously back development initiatives. Monero is an open source cryptocurrency and the Core Team’s relation to the project is not hierarchical. Although the Core Team is a set of distributed pseudonymous individuals with loose affiliations to the open source currency, the Team also supports the project in several substantial respects on the de facto Monero website. The Core Team coordinates donation-based development funding, manages the project’s Github merges, and conducts scheduled hard forks every six months. Details on hard forks are announced via the Monero website. This practice of regular hard forking has made forks more a norm than exception with Monero and can speed up upgrade adoption periods. Monero has departed from the scheduled forking in certain cases, such as with the release of RingCT functionality.
The Monero network token, XMR, functions as a medium of exchange and potential store of value. Monero launched in mid-2014 as an implementation of the CryptoNote protocol. There was no pre-mine or token sale of XMR and codebase development is facilitated by a group of independent, generally anonymous contributors, currently led by Riccardo ‘fluffypony’ Spagni. Monero’s privacy guarantees allow users to more freely engage in activities such as tax evasion, money laundering, and the use of darknet markets, making Monero one of the more controversial cryptocurrencies.