Newcomers to the crypto scene who are looking for viable investment options would do well to consider Monero (XMR), an open-sourced coin that’s fast-growing into a market forerunner. Over the last few years, these coins has gained a devoted following due to its unique privacy and security features. To top it all off, Monero has the third-largest developer pool of all cryptocurrencies available today, trailing behind only the two largest coins, Bitcoin (BTC) and Ethereum (ETH).
With such a unique claim to fame and the support of a large, active pool of developers, there’s a high chance that Monero’s value will only grow and its technology continue to improve over time. That having been said, it’s wise for would-be Monero traders to learn all they can about the coin before they decide to invest in it. To start with, this article provides in-depth answers to seven of the most frequently asked questions about XMR.
How Is Monero Stored?
Like other cryptocurrencies, Monero tokens are stored in and traded from a dedicated XMR wallet. Besides keeping track of the value of the coins that users currently own, the wallet also generates and stores the single-use public and private keys they need to conduct transactions.
When it comes to choosing a Monero wallet, look for one that’s private, fast, and easy to use. The ideal wallet for these coins should also afford you a high degree of control over your coins. These qualities will ensure that you have the smoothest and most convenient Monero transactions possible.
How Do Monero’s Privacy Features Work?
The strongest source of Monero’s user appeal is that it’s one of only a small handful of coins that facilitates truly confidential, untraceable transactions. This intense focus on privacy differentiates Monero from more popular cryptocurrencies and has allowed it to establish its own solid niche within the market. In particular, the following features are responsible for creating the high levels of privacy and anonymity that Monero users enjoy:
- All transactions make use of stealth addresses, which are automatically generated single-use wallet addresses for buyers and sellers. Each stealth address is unique and usable only for the transaction it was generated for. Even users sending each other Monero multiple times must generate a new self-address for every exchange.
- Monero transactions also use a cryptographic ring signature system, which executes and authenticates user transactions through a “ring” of multiple user keys. Because multiple users gather to sign off on each individual Monero transaction, it’s impossible for outsiders to identify the true user’s account key.
- Ring Confidential Transactions (RingCT) Technology, meanwhile, is a function that allows Monero users to hide their transaction amounts from outsiders. Although any transactions will be visible on the network’s blockchain ledger, no one but the official buyer and seller can see the exact amount that has been sent and received.
How Fungible Is Monero?
Monero is one of the truly fungible cryptocurrencies out there today. This means that individual Monero units are completely interchangeable and devoid of any distinguishing characteristics. This quality distinguishes Monero from traditional currencies, which feature serial numbers and other identifying markers on bills or coins, as well as from other crypto coins, which can usually be identified and traced through their transaction histories.
Monero’s full fungibility means that XMR traders face no risk of coming into contact with individually blacklisted or otherwise “corrupted” coins. Investors can’t be penalized for using coins that have potentially been involved in illegal activities, because there’s simply no way to track or verify how and when XMR tokens have been used.
Is It Safe to Use Monero?
Monero’s blockchain is supported by such extensive and sophisticated obfuscation technologies that it’s all but impossible to hack, making the coin quite safe to use. In locations with high crime rates or those experiencing extensive political or social unrest, in particular, untraceable XMR transactions may serve users better than any other coin. Anonymous Monero transfers can help users living in such risky conditions protect their assets and even prepare for emigration if necessary.
How Is Monero Performing on the Cryptocurrency Market?
Monero is counted among the top 40 cryptocurrencies in the world as of late 2021 and has achieved a market capitalization of over 5 billion USD. While its current value puts it well behind the market’s greatest power players such as Bitcoin and Ethereum, experts have tagged it as a coin with immense growth potential. Many speculate that XMR will only grow in value in the coming years as more users see the need for its specialized privacy features.
While Monero’s current value may not put it on the same level as the biggest names in cryptocurrency, it’s recognized as a relatively inexpensive investment with immense potential to appreciate in value over time. This potential, as well as its unmatched security capabilities, make it a worthwhile investment option to consider, especially for crypto traders looking to diversify their portfolios.
