Monero (XMR)

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Monero
TypePrivacy Coin, a CryptoNote coin
Ticker symbolXMR
Consensus mechanismProof-of-Work (PoW)
Total supply18.300.000
Websitehttps://getmonero.org/

Basics

  • Short explanation: Private, fungible money, untraceable digital cash.
  • Longer explanation:

Monero is a crowdfunded, open source and community driven privacy coin. Unlike Bitcoin, whos users aren’t fully anonymous, Monero claims to be 100% private, secure and untraceable. It uses different algorithms to any other crypto that mix transactions and randomly generate fake addresses.

This means that it should be impossible to see the sender and receiver of a transaction, as well as the amount being transferred.

History

  • Was created out of bitmonero, one of the first CryptoNote coins, which was created out of bytecoin, which turned out to be a premine scam, and the community took over and created bitmonero.

Audits & Exploits

Bugs/Hacks/Attacks

"On September 1, 2023, hackers made off with 2,675.73 monero (XMR), worth over $3 million at the time, from the Monero CCS donation wallet [of XMR contributors] in nine separate transactions. The Moonstone Research postmortem details how the firm identified one of the hacker’s transactions that contained outputs from all nine of the initial withdrawals from the CCS wallet. While XMR transactions are designed to be private, this transaction’s rings contained one matching output from each of the nine hack transactions. Moonstone’s investigation demonstrates, under certain circumstances, XMR transactions can sometimes be partially traced despite their privacy features."

  • Had flaws in their anonymity that have since been fixed — researchers were able to deanonymize 62% of all Monero transactions.
  • Announced fixing a severe vulnerability. If detected by hackers, the bug could have allowed to cause significant damage to crypto exchanges and online merchants, accepting payments in XMR.

Reportedly, the bug was discovered after a community member described a hypothetical attack on the subreddit of monero. It was found lying in the wallet software would have potentially allowed a user to “burn” XMR by sending multiple payments to the same stealth address. For those unfamiliar with the term, stealth address is a payment proxy, adding an extra layer of privacy. The user, sending the crypto, can transfer it to a stealth address, which then re-routes the funds to the intended real address.

  • "The official site of Monero was hacked (20-11-2019) to deliver currency-stealing malware to users who were downloading wallet software, officials with GetMonero.org said on Tuesday."
  • From Decrypt (10-11-2020):

"“Recently, a largely incompetent attacker bumbled their way through a Sybil attack against Monero, trying to correlate transactions to the IP address of the node that broadcast it,” Riccardo Spagni, a maintainer of Monero and co-founder of Tari Labs, tweeted today. The attack has been ongoing over the last 10 days and the nodes have since been blacklisted. “This attack, whilst novel in that it is a live Sybil attack against a network, was simply not large enough to be broadly effective against Dandelion++,” tweeted Spagni, adding that “the attacker would have had to launch many thousands more nodes.”

“If users spend funds immediately following the lock time in the first 2 blocks allowable by consensus rules (~20 minutes after receiving funds), then there is a good probability that the output can be identified as the true spend,” Monero developers tweeted today. According to the developers, the bug is currently present in Monero’s official wallet “until a fix can be added in a future wallet software update.” However, a potential fix would not require a hard fork of Monero’s blockchain, they pointed out. Additionally, the bug reportedly poses no threat to users’ funds."

Governance

Token

Launch

Token allocation

  • Coincap: 18.300.000 XMR, after that money supply will stop decreasing and stay at a constant rate of 0.3 Monero per minute. Highly deflationary economic model. Update (7-7-2020):

"Critically, the Monero community settled on implementing a ‘tail emission’, which will distribute 0.6 XMR (~$38 at current prices) to miners in perpetuity in the form of block rewards starting around May 2022. In other words, the tail emission will only come into effect when the main emission has been completed. The rationale behind the tail emission was to compensate competitive miners who have to participate with Monero’s dynamic block sizes - by rewarding miners with a small nominal inflation rate forever, it is hoped that the fee markets will be able to develop more effectively on the network."

Utility

  • Private transactions.

Token Details

Stablecoin

Tech

  • Whitepaper can be found here (17-10-2013).
  • Code can be viewed here.
  • Built on: Uses the CryptoNote technology built on top of ring signatures and Confidential Transactions.
  • Programming language used:

Transaction Details

How it works

"Monero is a proof-of-work (PoW) privacy-focussed cryptocurrency that uses technologies like ring signatures, ring CT, and stealth addresses to obfuscate transaction details from outside observers, such as receiver, sender, and amount."

Mining

  • From Formal Verification (7-7-2020):

"The Monero community has historically taken a stance against the usage of ASIC mining. The introduction of ASIC miners on the network before 2018 meant that the CPU and GPU based miners were becoming increasingly unprofitable through their relative inefficiencies. The Monero community responded to this ASIC development with a number of hard forks throughout 2018 and 2019. Two notable drops in hashrate are clearly visible during the Lithium Luna hard fork in 2018 as well as the hard fork in early 2019 (declines of 74% and 70% respectively) suggesting a reduction of ASIC usage on the network.

The most recent hard fork introduced the RandomX mining algorithm, which was chosen because of its random code execution and memory-intensive techniques. The net effect being a significant competitive advantage of CPU mining over ASICs using Monero’s CryptoNight and general GPUs. Moreover, the implementation of RandomX is expected to reduce the presence of botnets and malware mining due to the hash function’s storage requirements although this is hard to validate.

Importantly, CryptoNight and RandomX hashes cannot be compared directly, but there does seem to be increased mining interest since the introduction of RandomX in November last year - notice how hashrate has climbed 86% since the initial spike when RandomX was implemented. Hashrate is now at a near-ATH standing at 1.5 GH/s."

Fees

Upgrades

Oxygen Orion

"This upgrade contains only one major change: a new ring signatures construction called CLSAG. That feature will improve Monero’s scalability and performance. By some estimates, CLSAG will reduce transaction sizes by 25% and improve transaction verification times by 10%. This marks the project’s most significant scalability improvement since the project introduced bulletproofs in 2018."

Staking

  • "PoS isn’t possible for Monero because it reveals account balances which reveals user data. This is directly contrary to the social contract of which privacy is the key goal."

Interoperability

Implementations

Other Details

  • New compressed LSAG signatures will offer ~25% reduction in rate of blockchain growth, and around 15-25% speedup in verification times, first draft here.
  • Will switch (10-2019) to RandomX PoW; "RandomX is a new Proof-of-Work (PoW) algorithm that Monero is scheduled (30 November) to begin using in the next network update. RandomX is designed to be ASIC resistant by using random code execution and memory-hard techniques to prevent specialized mining hardware from dominating the network. Because RandomX is optimized for general-purpose CPUs, the network will become more decentralized and egalitarian in the distribution of block rewards."

Privacy Method

"Intelligence firm CipherTrace announced today that it has developed a toolset for tracing Monero (XMR) transactions—and that it has done so at the behest of the United States Department of Homeland Security (DHS)."

"In a Friday blog from CipherTrace, the firm states that the patents would include forensic tools to explore Monero transaction flows to assist in financial investigations, statistical and probabilistic methods for scoring transactions and clustering likely wallet owners, as well as visualization tools and ways to track stolen or illegally used XMR."

Oracle Method

Their Other Projects

Roadmap

  • Can be found [Insert link here].

Usage

Projects that use or built on it

Competition

Coin Distribution

  • Due to its private nature it is impossible to have a Rich List of Monero users.

Secret ASIC Mining

"A few months ago, it was publicly exposed that ASICs had been developed in secret to mine Monero. My sources say that they had been mining on these secret ASICs since early 2017, and got almost a full year of secret mining in before discovery. The ROI on those secret ASICs was massive, and gave the group more than enough money to try again with other ASIC resistant coins.

It’s estimated that Monero’s secret ASICs made up more than 50% of the hashrate for almost a full year before discovery, and during that time, nobody noticed. During that time, a huge fraction of the Monero issuance was centralizing into the hands of a small group, and a 51% attack could have been executed at any time.

Monero’s hardfork appears to have been successful in shaking the ASICs. I don’t believe that the ASIC designers attempted to build flexibility into their ASICs, but now that Monero has announced a twice-annual PoW change, we may see another round of secret ASICs with more flexibility. The block reward for Monero is high enough that even if you think you have only a 30% chance of your ASIC surviving the PoW hardfork, it’s more than worthwhile to pursue a hardfork resistant ASIC."

Pros and Cons

Pros

Cons

  • The technology and team behind Monero are very sound. The project has been around for a long time and the team are all volunteers. However, due to the high level of privacy in Monero, it attracts a lot of hackers, criminals and others trying to evade the law, and is therefore being more frequently associated with these sorts of activities, which hurt its future prospects due to law enforcement restrictions on exchanges.
  • Monero’s main focus is on privacy and true decentralisation. The development team have prioritised the improvement of their privacy technology over marketing and user friendliness which allows it to focus on its niche. It can bundle transactions together in such a way that provides anonymity to the users. While the obvious implications are that Monero will be used for less than legal transactions many people do and will value privacy, especially in light of current developments around net neutrality etc. Monero has created a protocol where ordinary consumer computers can still remain competitive whilst mining, as opposed to Bitcoin which required specialised ASIC computers (Update: ASIC's have been developed for Monero, and MXR is now trying to counter it with regular forks). It should also be noted that Monero transactions are 25 times larger than Bitcoin’s which may prove difficult to scale going forward (LSAG Signatures have reduced the tx size). There will be no immediate issues with this as the block size scales dynamically but the main issue becomes bandwidth.
  • Has no smart contracts. Therefore it has a large chance of being outcompeted by other projects that are more programmable (like Zk-Snarks on top of Ethereum or smart contract protocols like Secret Network).

Team, Funding, Partnerships, etc.

Team

  • Team can be found here.
  • Cabañas, Francisco aka ArticMine, Monero Core team member “holds a PhD in Physics and brings extensive business and non-profit experience to the table. He has actively researched and invested in cryptocurrencies, since 2011, and focuses on the economic, social, regulatory and long-term viability aspects of cryptocurrencies.”
  • 'Diego'
  • 'Mitchell'
  • Spagni, Riccardo aka fluffypony; Monero Core team member. Most well known public figure.
  • Smooth, Monero Core team member “A software developer, entrepreneur, and investor, smooth has been involved in several cryptocurrency projects since 2011, including development of the first multicurrency exchange (initially supporting Bitcoin and Namecoin).”
  • Othe, Monero Core team member “Currently he works as an independent consultant for various cryptocurrency-related businesses. He is known for his previous work as a core Vertcoin developer.”
  • Luigi1111, Monero Core team member and a sysadmin
  • Tacotime, Monero Core team member “A bioinformatics enthusiast and software developer from Toronto, tacotime has been involved in cryptocurrency since 2011. He is well known for his work on MC2, a hybrid PoS/PoW cryptocurrency, and his contributions to various Conformal projects such as btcd.”
  • NoodleDoodle, Monero Core team member “A former Silicon Valley engineer, NoodleDoodle is a seasoned hardware and software developer. He started his involvement with cryptocurrencies in 2012 and currently spends his time working on "cool aerospace stuff" for a university.”
  • Maxwell, Greg; CTO right after he resigned at Blockstream got invited by Fluffy Pony.

Funding

Partners

(:

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