Monero is a “privacy coin”: a cryptocurrency offering anonymity, confidentiality, and data protection. Find out everything you need to know about the favorite crypto of Dark Web hackers and cybercriminals…
Bitcoin confers certain anonymity, and many criminals exploit it for this reason. However, this cryptocurrency is based on a public ledger. This means that all transactions are stored in history accessible to everyone.
By following the path of a bitcoin, the police can theoretically find the owner. It happened in June 2021, when the FBI analyzed the blockchain to hack a Bitcoin wallet held by Colonial Pipeline hackers.
Faced with this risk, cybercriminals are now turning to other cryptocurrencies such as dash, cash, and Monero. These different cryptos have one thing in common: they offer enhanced anonymity compared to BTC. Monero is particularly popular for Ransomware attacks and other cybercriminal activities…
What is Monero?
Monero or XMR was launched in 2014 by a consortium of developers. Many of them chose to remain anonymous. Through a white paper, the developers explain that confidentiality and anonymity are in their eyes the most important aspects of digital currency.
To provide this protection, Monero relies on its own blockchain. This hides the details of all transactions. The identity of the sender and recipient is masked, as well as the amount of the transaction.
This anonymity provides cybercriminals with increased freedom, allowing them to evade surveillance tools and mechanisms. Even though Bitcoin remains the most widely used cryptocurrency for Ransomware, hackers are increasingly asking for Monero.
This is particularly the case of the REvil group, which offers reduced ransoms in the event of payment by Monero. This crypto is also highly valued on Dark Web marketplaces, for buying drugs, fake documents, stolen data, and other illegal products.
The history of Monero
It all started on April 9, 2014. That’s when Bitcointalk user thankful_for_today posted about the creation of BitMonero. This name is composed of the word Bit (for Bitcoin) and Monero (which means “currency” in Esperanto).
The project was created as a fork of Bytecoin, improving some features. However, this project was initially poorly received. The community quickly took care of correcting its weak points.
The name of the project was changed to “Monero”, and the story of this cryptocurrency began. Thanks to the use of the CryptoNight algorithm, this cryptocurrency offers a high degree of privacy which will be largely responsible for its success.
In 2017, a new algorithm was included to make transactions even more confidential. This hiding algorithm called “Ring Signatures” was developed by Greg Maxwell based on recommendations from Shen Noether. Soon after, the Ring Confidential Transaction concept was one of the major advancements introduced by Monero.
In 2017, Monero experienced a new boom. This can be explained in particular by its “cross-platform” compatibility and by its ease of programming.
However, the quirks of Monero can be exploited for better or for worse. If Change.org was able to raise funds through the adoption of this crypto, hackers were able to use Coinhive to mine Monero by exploiting the resources of an Internet user’s computer without their knowledge via a browser page.
Either way, each of these events, good or bad, has had an impact on the history and evolution of Monero. Today it is one of the most renowned cryptocurrencies.
How does Monero work?
Like Bitcoin, Monero is based on block mining. However, unlike BTC, this cryptocurrency uses other specific technologies.
First, while Bitcoin uses the HashCash system for mining, Monero relies on the CryptoNight PoW algorithm. It is designed to run on a regular computer processor rather than graphics cards or specialized ASIC hardware.
The goal is to make the mining process more affordable and rewarding, in order to encourage decentralization. The CryptoNight algorithm is designed to rely on random access to data stored on RAM.
Each new block is dependent on previous blocks, which means continuous memory access. The process slows down mining exponentially on GPUs or ASICs without RAM, but not on CPUs.
So, everyone is equal for Monero mining. Even specialized mining equipment will not bring major benefits to the user. However, currently, Monero no longer relies on CryptoNight for mining, but on a new system called RandomX.
Transmission and maximum volume
In terms of issuance, the main curve is 18,132 million XMR coins for the end of May 2022. Thereafter, 0.6 XMR will be issued for each block. The maximum volume of Monero will therefore be unlimited.
Currently, Monero miners receive more than 3 XMR per block. This amount decreases over time, and penalties apply beyond the average size of the last 100 blocks. The system is designed so that miners can always receive at least 0.3 XMR per block.
Another key Monero technology is Ring Signatures. This advanced cryptography technique mixes the sender’s address with a group of other addresses. It, therefore, becomes exponentially difficult to trace every new transaction.
Additionally, each transaction generates “secret addresses” that make it impossible for anyone other than the sender or recipient to discover the true address of a transaction’s recipient.
The “Signature Circles” make it possible to prove that a signatory belongs to a group without necessarily identifying it. It is possible to determine that a signatory belongs to a circle, but not his identity. The origin of the funds for each transaction is therefore masked.
A private key can be used to bind two different messages together. The goal is to avoid double send attacks that could impact the blockchain. Finally, no hacker can create fake signatures. A mechanism called “Ring Confidential Transaction” also conceals the transferred amounts.
Fungibility is also an essential feature of Monero. This means that it can be exchanged for any other currency with identical properties. This contributes to making it untraceable. There is no register to verify the use of this currency during a transaction.
A Monero address is made up of 95 characters starting with the number 4. These addresses are created with the CryptoNote process, which is very different from the one used by Bitcoin. The cryptography used is ECDSA, guaranteeing a unique and confidential address creation process.
In order to maintain user privacy, Monero also uses the concept of a “stealth address”. The sender must create a random unique address for each transaction. Thanks to this address masking system, only the sender and the recipient can know where the payment has been sent.
Speed and cost of transactions
In terms of scalability, Monero can process almost 1000 transactions per second at its maximum capacity. Its transaction speed is 2 minutes on average to confirm and add a new block to the chain. To secure a transaction, a block requires 18 validations.
It takes between 10 and 30 minutes to validate a transaction. The transaction cost currently ranges from $0.05 to $0.01. It is the lowest cost per transaction among all cryptocurrencies today.
Random X: the new Monero algorithm
Monero is growing very quickly thanks to a large and growing user community. This cryptocurrency is evolving, always with the aim of offering better security, privacy, and increased anonymity.
To achieve this, it is necessary to apply major updates to the entire blockchain. These updates also aim to provide the highest ASIC strength.
The goal is to simplify mining on CPU or GPU, so that the decentralization of Monero protects the principles of the community. In order to achieve this goal, Monero has changed its CryptoNight mining algorithm several times.
More recently, CryptoNight was finally completely abandoned in favor of the new RandomX algorithm. It was activated on the Monero network on December 1, 2020.
This new algorithm aims to prevent ASIC mining and improve CPU mining. Its new mining scheme uses a virtual machine, and the operation is totally different from CryptoNight.
The operation of RandomX is based on the creation of a random mining core. This kernel is executed inside a virtual machine specially designed for RandomX.
It allows the mining interaction between the virtualized mining algorithm and the CPU running the virtual machine. The latter is also the first point of defense against ASICs. This is because these computers are not designed to run virtual machines or very advanced instructions.
The RandomX algorithm also ensures that virtual machine instructions can be executed by any CPU. However, many of these instructions consume large volumes of RAM.
This process begins by creating a workspace called Cache. The cache is generated using the argon2 cryptographic function, allowing it to adjust its memory consumption and can occupy up to 2 GB of RAM during the generation process. This is another barrier against ASICs, as these machines often have little RAM.
Subsequently, RandomX begins to generate Scratchpad workspaces for mining. These workspaces are used to exchange data between the RandomX virtual machine and the CPU running it. The mechanism is created for RandomX to use the CPU for mining.
Again, the generation of these spaces relies on advanced instructions. ASICs can hardly implement them, unlike CPUs.
ASICs do not have the characteristics required for RandomX, and the memory consumption is too high for these machines. Therefore, creating botnet networks using low-power devices like IoT-connected objects is very complicated for cybercriminals.
Another advantage: the improvements in the algorithm allow current CPUs to maintain or even increase their mining potential. The hash rate potential increases, without diminishing security and decentralization. The RandomX algorithm is very efficient and brings a great advantage to Monero.
Nevertheless, RandomX relies heavily on speculative execution and “out of order” execution. However, both of these runtimes have demonstrated serious security issues in the past that could negatively impact the algorithm in the future…
Who runs the Monero project?
The development of Monero is based above all on its community, and on a meritocratic vision. There is no project manager or leader.
All decisions are made jointly by the development team: the Core Team. The same goes for adding new features and developing new technologies.
In a statement published in 2018 on the official website, the developers of Monero made it very clear that they were not the “boss” of anyone. Their role is more to encourage initiatives to promote Monero.
Additionally, they call for distinguishing the Monero Core Team, which must remain a global movement to promote privacy through a fungible cryptocurrency. Even if the Core Team disappears, Monero must survive.
The development of Monero is therefore completely decentralized. However, several members of the development team are influential and recognized in the community. We can mention Riccardo “fluffypony” Spagni, Franciso “ArticMine” Cabins, “NoodleDoodle” and luigi1111.
This central team still has important responsibilities. He must manage the Monero code, and exercise the role of the arbitrator on the Forum Funding System.
What is the Forum Funding System?
The Forum Funding System (FFS) or Forum Funding System is a forum for anyone to submit ideas for Monero. The feasibility and relevance of these ideas are then discussed by the whole community.
Anyone who presents an idea must describe it, indicate how he intends to develop it and what his means are. The proposal must be broken down into stages and accompanied by overall completion date.
The community can then debate and propose changes. When a final version is approved, it is uploaded by a moderator in the Funding Required section.
Once funding is complete, the idea is moved to the “Works in Progress” section. The developer in charge of the project can thus share the progress of his work with the community.
Bitcoin versus Monero
Bitcoin is the number one cryptocurrency and the champion in terms of market capitalization and trading volume. However, Monero distinguishes itself as a “privacy coin” to protect data and privacy.
At the end of 2021, around 18.9 million Bitcoins were in circulation. The limit is set at 21 million, which means that there are approximately 2 million BTC left to mine. By comparison, 18 million Monero tokens were mined out of a total of 18.4 million. This milestone is expected to be reached on May 31, 2022. Thereafter, 0.6 XMR will be added for each additional block mined.
If anonymity is a priority for you, it is better to use Monero than Bitcoin. Keep in mind, however, that governments and authorities are after this crypto. In 2020, the Internal Revenue Service announced a $625,000 bounty to anyone who could crack the XMR code.
If the code is ever cracked, it will prove that Monero’s cryptography is less effective than expected. Its value could drop immediately following this discovery.
Note that many exchanges do not offer Monero, for fear of regulations. For example, Kraken removed it from its platform in November 2021, so most traders prefer to invest in Bitcoin.
Despite Monero’s success with hackers, Bitcoin remains the preferred crypto for Ransomware attacks. This is explained in particular by the rules of “cyber-insurance”.
Many insurance companies refuse to refund a ransom payment if it was made in Monero. Bitcoin is more easily traceable, so authorities will be able to trace the money.
However, some hackers use techniques to anonymize Bitcoin transactions. In particular, it is possible to “mix” Bitcoin on dedicated platforms, in order to combine illicit and legitimate funds.
What are the benefits of Monero?
Monero stands out in particular for its high level of confidentiality and decentralization. It is based on many technological advances made in the field of cryptocurrency. A large community of developers and users is forming around Monero.
In terms of security, Monero is both protected against theft and surveillance. Confidentiality is also a non-negotiable pillar of this project. It is a completely decentralized crypto.
Its main advantage is to offer a high level of security, confidentiality, and anonymity. It is not possible to link a transaction to a Monero user or to track transactions.
Conversely, it is possible to make transactions visible and transparent to the people of your choice. All you have to do is give them the private viewing key.
Moreover, the blockchain has no block size limit and can be dynamically extended. Even when total Monero is mined, 0.6 XMR per block will continue to be created.
Thanks to its success, Monero has already seen massive price growth. Finally, its development team is very competent and honors respectable values.
Moreover, Monero is one of the cryptos with the best “cross-platform” support. The software is compatible with Windows, MacOS, Linux or Android.