This Anonymous Cryptocurrency Has Privacy Advocates Talking

Monero is an anonymous crypto-currency known for being preferred by dark net’s largest marketplaces, where drugs and illicit goods are sold. Darknet marketplaces were made popular by Ross Ulbricht’s Silk Road, which landed him a lifetime in prison.

The newest cryptocurrency craze preys upon modern privacy concerns. It cites how big banks, corporations, and governments keep tabs on everything in the marketing materials. This is very much similar to Bitcoin’s early marketing. Unlike Bitcoin, which has a 21 million market cap, Monero has none. It was forked from Bytecoin.

“There is no safe place to conduct private transactions,” a marketing video for the crypto-currency says. “Until now. Meet Monero. It’s private untraceable currency, only you control and are responsible for your funds.”

monero

The currency takes advantage of an arbitrage created by Bitcoin’s transparent network, where funds are sent on an open network, which has even caused concern among suits from the world’s foremost corporations, who lament just how transparent Bitcoin truly is.

There have been noted vulnerabilities in Monero in the past. Security firm MWR recently publicized a vulnerability in Monero, which might allow people to steal Monero from third-party digital wallets. An attacker must fool a Monero user into visiting a web page to initiate the attack first, however. MWR disclosed the vulnerability to the developers of leading Monero wallet, SimpleWallet. The issues was fixed in a software update.

Monero’s big break came earlier this summer when AlphaBay, a large online market for drugs and other illicit goods, announced the platform would support the digital currency starting September 1. AlphaBay remains online and accepting orders until this day, including in Monero.

Monero, unlike other crypto-currencies, was built from the ground up based on a protocol called CryptoNote described in a 2012 whitepaper written by Nicholas van Saberhagen, a presumed pseudonym. Many other crypto-currencies merely copy and paste bitcoins code base. 

Monero creates unique addresses for all transactions using a private “viewkey” so only the receiver has access to full transaction info. Monero “mixes” coins also, jumbling similar sized transactions with each other.

When AlphaBay announced Monero integration, Monero trading was at about $40 million USD. Monero’s market cap grew in the wake of the announcement, reaching $60 million the following day. Currently, the market capitalization sits around $100 million. At one point, it reached more than a $200 million market cap.

Monero runs on the CryptoNight proof-of-work algorithm. Designed to work with ordinary PC CPUs, there are no special purpose devices for mining devices currently available. The CryptoNight can only be CPU-mined for the time being.

A sign of how popular Monero has become: MoneroMarket recently opened, which represents the first XMR only darknet marketplace. Although, its not been easy for founders:

MoneroMarket is NOT associate in any way with Oasis. We have put lots of efforts to bring a new market that accept exclusively XMR and it’s actually a nightmare. We keep reading messages saying we are LE, we keep reading messages we are Oasis, we keep reading messages we are a scam, we keep reading shit about us.

MoneroMarket’s main goal was to create a simple to use darknet marketplace using only Monero thanks to its privacy advantages. Monero is not the only cryptocurrency which markets total privacy. Another option, one that’s quite popular actually, is Dash.

Monero functions with the consensus protocol called Proof of Work Anonymous, which is very much like bitcoin’s consensus algorithm, but with further anonymizing processes.

Some complaints lobbied against Monero are its instamine and unfair distribution in coins, as catalogued here on BitcoinTalk. Others include backhanded and troll-like marketing tactics by the Monero Marketing team in a concerted mis-information campaign.

Nonetheless, in appealing to the hardcore privacy advocates, Monero and crypto-currencies like it have carved out a niche left coin-less after revelations about Bitcoin’s true transparent nature trickled down to the mal-informed.

Author:
Justin O'Connell is the founder of financial technology focused CryptographicAsset.com. Justin organized the launch of the largest Bitcoin ATM hardware and software provider in the world at the historical Hotel del Coronado in southern California. His works appear in the U.S.'s third largest weekly, the San Diego Reader, VICE and elsewhere.