Planning To Trade Monero Cryptocurrency? Here Are The Basics To Get You Started
One of the core precepts of the blockchain technology is to provide users with unwavering privacy. Bitcoin as the first ever decentralized cryptocurrency relied on this premise to market itself to the wider audience that was then in need of a virtual currency that is free from government meddling.
Unfortunately, along the way, Bitcoin proved to be rife with several weaknesses including non-scalability and mutable blockchain. All the transactions and addresses are written on the blockchain thus making it easier for anyone to connect the dots and unveil users’ private details based on their existing records. Some government and non-government agencies are already using blockchain analytics to read data on Bitcoin platform.
Such flaws have led to developers looking into alternative blockchain technologies with improved security and speed. One of these projects is Monero, usually represented by XMR ticker.
What is Monero?
Monero is a privacy-oriented cryptocurrency project whose main aim is to provide better privacy than other blockchain ecosystems. This technology shield’s users’ information through stealth addresses and Ring signatures.
Stealth address refers to the creation of a single address for a solo transaction. No two addresses can be pinned to a single transaction. The coins received go into a totally different address making the entire process unclear to an external observer.
Ring signature, on the other hand, refers to mixing of account keys with public keys thus creating a “ring” of multiple signatories. This means a monitoring agent cannot link a signature to a particular account. Unlike cryptography (mathematical method of securing crypto projects), ring signature is not a new kid on the block. Its principles were explored and recorded in a 2001 paper by The Weizmann Institute and MIT.
Cryptography has certainly won the hearts of many developers and blockchain aficionados, but the truth is, it’s still a nascent tool with a handful uses. Since Monero uses the already tested Ring signature technology, it has set itself apart as a legitimate project worth adopting.
Things to know before you start trading Monero
Monero’s market is similar to that of other cryptocurrencies. If you wish to purchase it then Kraken, Poloniex, and Bitfinex are a few of the exchanges to visit. Poloniex was the first to adopt it followed by Bitfinex and lastly Kraken.
This virtual currency mostly appears pegged to the dollar or against fellow cryptos. Some of the available pairings include XMR/USD, XMR/BTC, XMR/EUR, XMR/XBT and many more. This currency’s trading volume and liquidity record very good stats.
One of the good things about XMR is that anyone can take part in mining it either as an individual or by joining a mining pool. Any computer with significantly good processing power can mine Monero blocks with a few hiccups. Don’t bother going for the ASICS (application-specific integrated circuits) which are currently mandatory for Bitcoin mining.
Despite being a formidable cryptocurrency network, it’s not so special when it comes to volatility. Virtually all altcoins are extremely volatile. This should not worry any avid trader as this factor is what makes them profitable in the first place-you buy when prices are in the dip and sell when they are on an upward trend.
In January 2015, XMR was going for $0.25 then did some jogging to $60 in May 2017 and it’s presently bowling above the $300 mark. Monero coin recorded its ATH (all-time high) of $475 on January seventh before it started slumping alongside other cryptocurrencies to $300. At the time of this writing, virtually all decentralized currencies are in price correction phase with Bitcoin teeter-tottering between $10-11k from its glorious ATH of $19,000.
Fungibility and adoption
Thanks to its ability to offer reliable privacy, XMR has been adopted by many people making its coins to be easily substituted for other currencies. In simple terms, Monero can be easily traded for something else.
All Bitcoins in Bitcoin Blockchain are recorded down, and therefore, when an incident like theft transpires, every coin involved will be shunned from operating making them nonexchangeable. With monero, you cannot distinguish one coin from the other. Therefore, no seller can reject any of them because it’s been associated with a bad incident.
Monero blockchain is currently one of the most trending cryptocurrencies with a significant number of followers. Like most other blockchain projects, its future looks great albeit the looming government crackdown. As an investor, you need to do your due diligence and research before trading in any Cryptocurrency. Where possible, seek help from financial experts in order to tread on the right path.