|Original author(s)||Nicolas van Saberhagen|
|White paper||CryptoNote v 2.0|
|Initial release||18 April 2014|
|Latest release||0.12.3.0 / 26 July 2018|
|Operating system||Windows, Linux, macOS, BSD, Solaris|
|Source model||BSD 3-Clause|
|Issuance||Decentralized, block reward|
|Block time||2 minutes (previously 1 minute)|
|Circulating supply||16,250,168 XMR (as of 22 July 2018)|
|Exchange rate||$131 (as of 22 July 2018)|
Monero (XMR) is an open-source cryptocurrency created in April 2014 that focuses on fungibility and decentralization. Monero uses an obfuscated public ledger, meaning anybody can broadcast or send transactions, but no outside observer can tell the source, amount or destination. Monero uses a Proof of Work mechanism to issue new coins and incentivize miners to secure the network and validate transactions.
The privacy afforded by Monero has attracted illicit use by people interested in evading law enforcement during events such as the WannaCry Ransomware Attack, or on the dark web buying illegal substances. This has been acknowledged by Monero, and not entirely disavowed. Despite this, Monero is actively encouraged to those seeking financial privacy, since payments and account balances remain entirely hidden, which is not the standard for most cryptocurrencies.
The egalitarian mining process of Monero has made it an alternative choice for websites and applications looking for substitute sources of income. In 2018, Change.org led the way by implementing a Monero miner on their screensaver to raise funds for the Change.org Foundation. While some organizations use Monero miners to cover hosting costs as an alternative to paywalls or advertisements, malicious hackers have also used it via covertly embedding mining code into websites and apps seeking profit for themselves.
Unlike many cryptocurrencies that are derivatives of Bitcoin, Monero is based on the CryptoNight proof-of-work hash algorithm, which comes from the CryptoNote protocol. It possesses significant algorithmic differences relating to blockchain obfuscation. By providing a high level of privacy, Monero is fungible, meaning that every unit of the currency can be substituted by another unit. This makes Monero different from public-ledger cryptocurrencies like Bitcoin, where addresses with coins previously associated with undesired activity can be blacklisted and have their coins refused by other users.
In particular, the ring signatures mix the spender's input with a group of others, making it exponentially more difficult to establish a link between each subsequent transaction. Also, the "stealth addresses" generated for each transaction make it impossible to discover the actual destination address of a transaction by anyone else other than the sender and the receiver. Finally, the "ring confidential transactions" mechanism hides the transferred amount.
Monero is designed to be resistant to application-specific integrated circuit mining, which is commonly used to mine other cryptocurrencies such as Bitcoin. It can be mined somewhat efficiently on consumer grade hardware such as x86, x86-64, ARM and GPUs.
History of Bytecoin
Bytecoin, the first CryptoNote based coin was launched on July 4th, 2012, shortly before the first CryptoNote whitepaper which was launched later that year. CryptoNote was the first cryptocurrency protocol to support Ring Signatures, a method of obscuring the sender in a cryptocurrency transaction.
Despite being written in 2012, Bytecoin only made its first public appearance in March 2014 along with the release of the CryptoNote v2.0 whitepaper. The community began to question how such a coin was unheard of for the past two years, along with why the whitepaper was on the second version. Upon closer inspection, Bytecoin was caught faking signatures, timestamps and staging references, all of which lead to believe that the Bytecoin developers forged their launch to cover up an 82% pre-mine of the total supply. Bytecoin entirely denies these accusations, and published a paper in early 2017 clarifying their actions.
The Controversial Launch of BitMonero
On April 18th, 2014 Bitcointalk forum user known as thankful_for_today forked the codebase of Bytecoin into the name BitMonero, which is a compound of Bit (as in Bitcoin) and Monero (literally meaning "coin" in Esperanto). The release of BitMonero was very poorly received by the community that initially backed it. Plans to fix and improve Bytecoin with changes to block time, tail emission and block reward had all been ignored, and thankful_for_today simply disappeared from the development scene. A group of users lead by Johnny Mnemonic decided that the community should take over the project, and five days later they did while also changing the name to be Monero.
The Beginning of Monero
After Monero was taken over and development was continued, thankful_for_today came back, re-claiming ownership and started pushing for merged-mining with Bytecoin. If implemented, Monero would be much more dependent on Bytecoin, which made notable developer Smooth threaten to resign. This was the final straw for user Tacotime who threatened to fork and take over the project from thankful_for_today.
Tacotime became the face of the Monero project once merged-mining had been overwhelmingly rejected by the community, and the smallest denomination of Monero was called a tacoshi, honoring Tacotime as the Satoshi of Monero.
In September 2014, Monero was attacked when an unknown party exploited a flaw in CryptoNote that permitted the creation of two subchains that refused to recognize the validity of transactions on each other. CryptoNote later released a patch for the flaw, which Monero implemented.
Monero experienced rapid growth in market capitalization and transaction volume during the year 2016, partly due to adoption in 2016 by major darknet market AlphaBay, which was closed in July 2017 by law enforcement.
On January 10, 2017, the privacy of Monero transactions were further strengthened by the adoption of Bitcoin Core developer Gregory Maxwell's algorithm Confidential Transactions, hiding the amounts being transacted, in combination with an improved version of Ring Signatures.
Today, Monero is composed of a Core team with 7 members, 49 developers and 3 researchers, with the unofficial figurehead of pseudonymous Luigi1111. Tacotime is no longer part of Monero, and was forced to step down on March 1st, 2018.
In April 2017 research highlighted three major threats to Monero users' privacy. The first relies on leveraging the ring signature size of zero, and ability to see the output amounts. The second, described as "Leveraging Output Merging", involves tracking transactions where two outputs belong to the same user, such as when a user is sending the funds to himself ("churning"). Finally the third threat, "Temporal Analysis", shows that predicting the right output in a ring signature could potentially be easier than previously thought.
Monero development team addressed the first concern in January 2017, prior to the actual release of the research paper, with introduction of Ring Confidential Transactions (RingCT) as well as mandating a minimum size of ring signatures in the March 2016 protocol upgrade. Monero developers also noted that Monero Research Labs, their academic and research arm, already noted and outlined the deficiency in two public research papers in 2014 and 2015.
A user needs client software, such as a wallet, to interact with the Monero network. The reference implementation developed by the Monero Project runs on Windows, MacOS, Linux, Arm (v7 & v8), BSD and Solaris/SunOS. There also exists several third party Monero mobile wallets such as Monerujo and Cakewallet, which support Android and iOS respectively. Finally, web wallets such as MyMonero allow users to interact with the network entirely through the browser using a third party website.
The feasibility of CPU mining Monero has made it viable for malicious actors to covertly distribute miners embedded in malware, using the victim's hardware and electricity for the financial gain of the malware developer as well as legitimate uses with user consent.
Monero is sometimes employed by Bitcoin users to break link between transactions, with bitcoins first converted to Monero, then after some delay, converted back and sent to an address unrelated to those used before. Researchers have reported that the operators behind the global ransomware incident WannaCry have converted their proceeds into Monero. It is also the payment method of choice for The Shadow Brokers. Exchanges ShapeShift and Changelly are cooperating with police after it emerged that the WannaCry attackers used it to convert Bitcoin to Monero. "Any transactions made through ShapeShift can not be hidden or obscured and are thus 100 percent transparent" stated ShapeShift.
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