A quick beginner’s guide to Monero (XMR)

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A quick beginner's guide to Monero (XMR)

You might have read that the infamous WannaCry ransomware creators have been converting their Bitcoins to Monero. This is because Monero focuses on keeping your transactions private and your currency details virtually untraceable. It makes use of incorruptible cryptography to maintain the privacy of your transactions and conceal your information even to individuals that have your respective wallet address. This is unlike other cryptocurrencies such as Bitcoin or Ethereum. These cryptocurrencies can reveal your entire transaction history to everyone. I have created this beginner’s guide to Monero (XMR), so hopefully you find it useful.

Introduction to Monero (XMR)

monero-logo

Monero is simply a private, secure and untraceable cryptocurrency. Not only is it open source, but it is also freely accessible to everyone. With Monero, you act as your personal bank. You are the sole controller of your own accounts and funds with your transactions concealed from public access and alteration. With a practically incorruptible cryptographic capacity, Monero protects your privacy with all your receipts, purchases and transfers remaining concealed.

The Monero currency was established in April 2014 and was called BitMonero earlier. Monero is based on the CryptoNote protocol and has some algorithmic differences in order to provide blockchain obfuscation.

Lets look at this video below for some more details. After that you can continue reading this guide.

Characteristics of Monero

  1. Private: With a cryptographic system that seeks to maintain privacy and uphold censorship resistance, Monero ensures that your transactions are not publicly visible to anyone accessing the blockchain. While it is common with some crypto coins to compile a ‘Rich List’ that makes the account with the highest amount of coins available for public access. However, with Monero, a rich list is not possible.
  2. Untraceable: By making use of their exclusive ring signature, Monero is able to facilitate untraceable transactions. This means that it maintains the ambiguity of the users and it is unlikely that any transaction can be traced back to the user.
  3. Secure: By making use of the capacity as provided for by consensus peer-to-peer distributed network, each transaction becomes cryptographically secure. Individual accounts boast a special 25-word mnemonic seed that is displayed on the creation of an account. This mnemonic can be drafted down for the backing up of the account. When creating wallets, passwords are mandatory to guarantee the privacy of documents even when stolen.
  4. Fungible: All coins share similar value and are equal. Any vendor, user, or entity cannot blacklist or block any Monero owing to the ambiguity of the transaction history. This is one property that has made the WannaCry ransomware creators attempt to covert their Bitcoins to Monero.
  5. Decentralized: Every Monero node is equal. The equality eradicates any superclass or exclusivity of a node ensuring that no node has more control or influence over the transactions than any other node. No entity or individual has the capacity to trace back transactions on virtual of owning several nodes. This, therefore, means that the trust in an entity or person is no longer an essential factor. The only vital component is a source code not to mention math, all which are verifiable.

From inception, Monero has always been completely open source, meaning that users can peek through to identify the source code of the software to validate the security and validity of the software. Moreover, Monero comprises peer-reviewed study papers that systematically and mathematically verify each of its features.

Where and how to buy Monero?

Distinct marketplaces known as ‘exchanges’ are the platforms where you can purchase and sell Monero using various currencies. There are a select few Monero exchanges. Some of the places you can buy Monero include:

Kraken

I love the Kraken exchange. Although the exchange is not very user friendly for beginners, I rate it amongst the top cryptocurrency exchanges. On Kraken, you can buy XMR or trade XMR from Euros, US Dollars or Bitcoins (XBT).

Monero on Kraken

ShapeShift.io

Shapeshift.io provides an easy way to exchange altcoins or Bitcoin for Monero. While it may not boast the best exchange rates around, it is unfailingly convenient for anyone that is purchasing small amounts since it requires no email sign ups or personal identifying information.

Monero on ShapeShift

Using Shapeshift to buy Monero is a fairly easy process that only requires you to select the cryptocurrency of your choice for payment through clicking on the ‘Deposit’ alternative then ensuring that the consequent ‘Receive’ choice is at Moreno.

Next, it will require you to key in your individual Monero address (you can copy paste it from the initial.address.txt file) plus your individual Bitcoin refund address (in the event something unexpected occurs). If you are withdrawing from your Monero wallet, then you ought to leave the field on Payment ID blank. You will also need to agree to all the terms of Shapeshift.

NOTE: It is important you pay special attention to both the minimum and maximum deposit (Bitcoin) amounts (or other preferred cryptocurrencies) you need to send. Ensure you are within that range so as to avoid issues.

On completion, Shapeshift will consequently display your payment address for Bitcoin. Some moments after your particular payment is broadcasted across the blockchain, your XMR is released.

Shapeshift was in the news recently due to the WannaCry ransomware creators using it to convert their Bitcoin to Monero (XMR).

Monero Direct

Monero Direct is a registered exchange that lets you buy Monero in fiat currency. The way that it used to work is that you pay using OKPay and get Monero in your wallet.

At the time of writing, Monero Direct’s service was unavailable due to OKPay being acquired. They do not know when the service would resume.

BitSquare

A decentralized app platform, Bitsquare facilitates currency trading between individuals. It automatically connects through Tor, ensuring optimal privacy for all your Monero purchases. Only your trading partner can ever see your payment information details.

Nonetheless, this platform is somewhat complex and has no liquidity especially for trading XMR. It can take significantly longer to identify XMR sellers with your preferred method of payment and at your location.

Monero on BitSquare

Poloniex

By far the largest Monero trading market, Poloniex.com offers the deepest liquidity and the lowest of prices although this is accompanied by lowest privacy prospects. This platform requires you to provide your email address to facilitate signup. It is recommended to connect to it through Tor and preferably via an email account compatible with Tor. And similar to other online exchanges, you can withdraw funds from it to your exclusive wallet.

That leads us nicely in to the next section on Monero wallets.

The Best Monero Wallet

Every crypto coin user stores their funds by use of an exclusive provision known as a wallet. Every wallet boasts an exclusive receiving address which you subsequently relay to other people so that they deposit funds there.

There are various classifications of wallets-those that are linked to the internet and those that rely on computers or a trusted gadget through an air gap.

“Hot wallet”: This term describes a typical account connected directly to the internet. This one allows easy sending of funds but with a lower security assurance. It is advisable not to store a significant amount of funds.

“Cold wallet”: This is an account generated on a computer or trusted device through an air gap. If this gadget is to subsequently be reused, its data storage ought to be overwritten securely. Immediately a cold wallet gets connected to the internet, or its spend key or mnemonic keyed in, it ceases to be ‘cold’.

Monero accounts and paper-wallets can be stored on any media – paper, USB drive, CD/DVD, or a hardware wallet device (none available for Monero as of July 2017).

Monero Wallet CLI

Moreno wallet CLI allows you to safely store all the relevant information and subsequently receive and send Moneroj. Aside from the receiving and sending, the software (Monero Wallet) safeguards a confidential history containing all your transactions while also enabling you to sign messages cryptographically. The official Monero Core wallet has support for Windows, Mac, Linux, Arm, and BSD.

Monero Core GUI beta 2

The Core GUI beta 2 adds a Graphical User Interface to the Core wallet listed above. As the name state, the wallet is still in beta. It currently supports only the Windows, Mac and Linux platforms.

MyMonero

MyMonero is a website that offers free hosted Monero accounts. If you do not wish to run the entire blockchain on your machine, you can obtain easy access to funds to your XMR.

I have also written on wallets for other cryptocurrencies.

What is Monero mining?

‘Mining’ in crypto currency and especially refers to the process of running a special program on computers that not only verifies but processes cryptocurrency transactions announced by other people to the global network. Monero is centered on Proof of Work. Moreover, it is also characterized by a smoothly varying block reward. Each block is re-targeted by the difficulty with a comprehensive 60s block target.

Mining is the process of acquiring cryptocurrencies where a ‘miner’ uses special software and a computer to solve complex mathematical puzzles in order to acquire ‘tokens’ in the form of cryptocurrency in this case Monero. It only requires computational power either from a GPU or CPU which therefore means that it can be done by anyone.

The process of mining

When mining, it is important that you understand that you can either do it solo or by means of a pool. While mining solo seems appealing, it can be very difficult especially for starters. In a pool the process gets slightly easier. Why? users collectively contribute in efforts to ensure a steady income flow and reduced variance.

· Pools: As earlier mentioned, among the commonest ways of mining Monero is joining a pool although solo mining is also encouraged and possible. It is recommended that you join smaller pools in order to spread around the hashes’.

· Hardware: Rather than joining a pool, you can also decide to invest in advanced mining hardware. This eases your task and boosts your mining hash rate.

· Mining Software: Depending on what type of hardware you settle for, there is multiple software you can go for. The best way to get the best one is working with different ones and subsequently verifying what influences your hash rate.

How to Mine:

1. Selecting your Mining Pool

To ease your mining process and smooth out the expected rewards, joining a pool is the best choice. A full list of Monero pools can be obtained from Moneropools.com. Unless you have invested in special mining hardware, solo mining is not the options since you can wait for long periods even years prior to getting any rewards. You can go for the numerous mining pools many that charge absolutely nothing!

2. Download Exclusive Mining Software

If you are using NVidia GPUs, you can download ccminer-cryptonight, XMR Stak NVidia or XMR Miner for Windows. Similarly, for owners of AMD GPUs, you can download CryptoNote GPU Miner v9.6. by Claymore, XMR Stak AMD or Wolf’s AMD Miner.
If you wish to use CPU for mining, you can try Monero Spleunker for Windows, XMR Stak CPU or Wolf’s CPU Miner.

3. Key in Your Pool Info and start Mining

The miners are run right from the command line, with very few GUI based miners. All you need is to follow the documentation for the software and run it with the address of your pool and subsequent ‘miner’ information.

For example for ccminer, the command would be:

ccminer -o stratum+tcp://[your chosen pool & its port]-u [your Monero address]-p [your password, as set in the pool]

How does Monero work?

Monero has a principal emission curve that issues approximately 18.4 million coins that can subsequently be mined over an 8-year period. By 2022 May, the curve will have issued more than 18 million coins. Soon after, a consequently steady tail emission (0.6 by MR per 2 minutes’ block) will establish a 1% sub perpetual inflation with a yearly 0.87 % inflation from May 2022.

This currency’s emission utilizes a reward which smoothly decreases without block halving. Monero’s Proof-of-work algorithm (CyproNight) is AES intensive and memory heavy therefore significantly minimizing GPU and CPU advantage.

Monero protects every transaction that happens on the network in three major ways.

  1. First it makes use of ring signature that functions as privacy promoting provision that hides the sender’s address.
  2. Moreover, it also conceals all information related to the transaction amount. Currently, it functions by default but will by 2017-end be mandatory.
  3. Finally, it uses stealth addresses that conceal the receiving address of transactions.

Thus the system has also set in place provisions geared towards concealing the original node of the transaction. A process is in motion to develop a device-Kovri router to support this particular operation.

What is in the future of Monero?

Check out this video of Riccardo Spagni, a core developer of Monero talking about the future of Monero.

Currently, Monero is tenth place as indicated by its exclusive market capitalization ($657,832,982), a few places below Bitcoin, Dash, and Ether.

Monero on CoinMarketCap

Created in 2014, Monero soon doubled and subsequently quadrupled in price. This significant interest in this currency might have been sparked by the low scalability of Bitcoin. As a matter of fact, not only is it faster, but it is also attained at lower fees compared to Bitcoin.

This is, therefore, to say that assuming the Bitcoin scalability issue is not resolved early enough; altcoins will consequently increase in their popularity, market cap and of course value.

Nevertheless with respect to future prospects, soon after its incorporation of RingCT back in 2017 January, this cryptocurrency seems to be effectively living up to its promise of guaranteed privacy. While no one can accurately pinpoint exactly what will become of this digital currency, unlike other cryptocurrencies, this particular unit has exhibited a steady display of maturity remaining fairly stable in the cryptocurrency market.

This together with other exclusive features of Monero such as easy deployment, it’s fungible characteristic and the fact that Bitcoin seems to be in an unsteady state make it a relevant digital currency that can find use in various avenues.

Its usability is not just restricted to the financial sector but may in future also extend to other industries such as Technology and Insurance. Its underlying control system dispatches confirms and settles transactions fast which have made it an option worth consideration even in global firms that not only seek to boost the transparency and security of their operations, but that also want to improve the efficacy of their operations.

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