As we have seen during the last installments of articles on cryptocurrency training, the crypto asset ecosystem is in a delicate situation. After the collapse and the domino effect it has caused in the ecosystem, investors have become more aware of both self-custody and privacy. One of the best options available for these two factors is the use of the Monero cryptocurrency. So in today's cryptocurrency training we are going to learn what Monero is and why it has gained popularity recently.
What is Monero?
Let's start the cryptocurrency training by first explaining what Monero is. Monero's origins date back to Bytecoin, the first implementation of CryptoNote, which was an application layer protocol intended to solve several Bitcoin problems, such as traceability, mining centralization, and irregular token issuance. Bytecoin was launched in March 2014 after a controversial 80% premining of the tokens. At that time, a Bitcointalk forum user known as thankful_for_today forked the Bytecoin codebase into a new project called BitMonero, a composite of Bit (as in Bitcoin) and Monero (which means "currency" in Esperanto).
Post on the BitcoinTalk forum announcing the launch of BitMonero. Source: BitcoinTalk Forum.
The launch of BitMonero was poorly received by the community that initially supported it, leading seven community members to fork BitMonero into a new project called Monero. This group led by Fluffypony (Riccardo Spagni), eventually became the first Monero Core team. Monero launched its project in April 2014 without any premining.
How does Monero work?⚙️
Let's follow the cryptocurrency training to discover how this blockchain works and what makes it so special. Mainly, the Monero project allows anonymous transfers through a series of features, such as:
Ring signatures.
En cryptography, a ring signature is a type of digital signature which can be created by any member of a user group, in which each user has his or her password. One of the security properties that ring signatures must meet is that it must not be possible to find out which specific key of the users in the group was used to calculate the signature.
Zero-knowledge proofs.
Zero-knowledge proofs were first developed in a paper written in 1989 by Goldwasser, Micali, and Rackoff. Zero-knowledge proofs have three main characteristics; Integrity, which symbolizes honesty within the network. Solidity, which represents the strength in not allowing fraudulent evidence. Finally, zero knowledge, which means that no information should be shared except with the supplier.
Scheme of operation of zero-knowledge proofs. Source: Good Audience.
Bulletproofs.
Bullet proofs are short, non-interactive zero-knowledge proofs that do not require a trust setup. A bullet test can be used to convince a verifier that an encrypted plaintext is well formed. For example, proving that an encrypted number is in a certain range, without revealing anything else about the number. In comparison with the snark, Bulletproofs do not require a trusted configuration. However, verifying a bullet test requires more time than verifying a SNARK test.
Bulletproofs operation diagram. Source: Medium.
Hard forks every 12 months.
Monero undergoes scheduled hard forks each year in order to allow Monero to evolve at a regular cadence, while leaving users enough time to upgrade before being forked off the network. Initially these hard forks were performed every six months. These hard forks tend to include everything from patches and bug fixes to hashing algorithm changes and functionality updates. In the pursuit of decentralization, Monero continually changes its proof-of-work algorithm to prevent miners from dominating and centralizing the mining process.
History of hard forks since the Bytecoin genesis project. Source: Medium.
Why has Monero gained popularity recently?
As we have seen throughout this entire year 2022, the privacy and custody of crypto assets has become a topic of great debate and, in turn, a very valuable lesson for our training in cryptocurrencies. Let's see what are the reasons why Monero (XMR) has gained popularity:
1. Tracking users' IP addresses.️
Recently, the company Consensys (developer of Metamask) has updated its privacy policies to begin collecting the IP addresses of users who carry out transactions from its application. This will affect those who use Infura, the popular RPC (Remote Procedure Call) tool. He is not the first to do so; Uniswap (DEX with the highest trading volume) also announced that it was collecting data on users' transactions and IP addresses…
Infura statement announcing the collection of IP addresses. Source: Infura.
2. Regulatory policies⚖️
As we have seen over the last few years, regulatory policies within the cryptocurrency ecosystem are taking a long time to come. We can see the clear example in our country, where politicians without any notion about the technology that makes up cryptocurrencies claim that users contribute to fraud and cybercrime with the use of cryptocurrencies.
Announcement of approval of the MiCA law. Source: Council of the European Union.
It is curious that they make these statements about cryptocurrencies, when a few years ago they withdrew the 500 euro bills from the market because they are linked to the Money laundering. Spanish politicians perhaps lack a bit of training in cryptocurrencies. Not to mention that perhaps they should not want to adopt the technology since they could get their fingers caught in the door (referring to the fact that corruption could be much more controlled), something that does not interest them at all... Let's hope that with the application of the MiCA law everything starts to stabilize a little.
3. Adoption of CBDCs.
Another of the controversial points surrounding the cryptocurrency ecosystem is the adoption or, rather, imposition of CBDCs (Central Bank Digital Currency in English). Central bank digital currencies are the digital representation of currencies, where countries like China (e-Yuan) have been testing blockchain technology for years to apply it to the monetary system. Although the problem is that this tax adoption does not seem to be precisely to make life easier for users.
View of the interface of the Sesame app, the Chinese social credit app to monitor and punish its population. Source: Foreign Affairs Latin America.
Central banks are accelerating the design and creation of such CBDCs since it facilitates complete control over the population, where everything is recorded on the blockchain. The controversy over Chinese social credit has set off alarm bells worldwide, where users could be subject to total martial control by governments over their population.
How can I create a Monero wallet?
As we have already learned throughout our training in cryptocurrencies, when we want to access the services of a crypto asset protocol, as is the case with Monero, we must go to the official website to find the official distributions they have. available for download. I contrast what is said by officials since it must be verified that the source of the distributions of the wallets or applications is the original, in order not to fall into potential scams.
Monero GUI wallet interface. Source: Monero official website.
In the case of Monero, we can see the distributions it has in the “Downloads” on its official website. The most recommended is the Monero GUI Wallet, an open source graphical user interface (GUI) wallet developed by the Monero community, completely free to use, suitable for both beginners and advanced users.
Conclusions from this cryptocurrency training on Monero.
Before finishing this training on cryptocurrencies and drawing conclusions, I want to state that at no time during the entire writing of the article did I want to express my displeasure towards the regulation of cryptocurrencies or want to promote anonymity on the Internet. Simply from my point of view I think that they should try to develop fair regulations for both parties, both for the States to collect taxes and contribute to society, and for the users who are protected by regulation and are not protected at the mercy of fate, just as is happening with the big Kuailian pyramid scam occurred in our country.
As we have seen throughout this cryptocurrency training, Monero is one of the most important protocols in the cryptocurrency ecosystem, both due to its experience and its innovative technology. Without further ado, it would be correct for you to stop associating the concept of cybercrime with this asset, given that no one really likes anyone gossiping about what we do or don't do with our assets and it is unfair to only show the bad uses that occur. in this project. We can blame this on the tabloid press, which only seeks to provoke tension by writing from ignorance, and that should also be regulated and penalized.