Monero Analysis and Price Prediction

What is a privacy coin?

Cryptocurrency takes pride in the decentralization and anonymity of its users. However, these coins do not provide their users' anonymity; for instance, Bitcoin, although untraceable, does not produce anonymity. This is because users still have access to the ledger, meaning they will tell who made the transaction.

Privacy coins, therefore, are created to provide anonymity to their users. A privacy coin is defined as a coin that allows its users to make transactions without sharing their data, creating total anonymity.

This has a lot of advantages as well as disadvantages because criminal activity can also benefit from such.

How do privacy coins work?

As earlier mentioned, privacy cryptocurrencies provide anonymity but do function similarly to traditional cryptocurrencies we know. What distinguishes privacy coins from others is that transactions on the ledger prove it very difficult to trace individual wallet addresses responsible for the respective transactions.

Therefore, privacy coins are of great importance to traders and investors who value their transactions' privacy. There are several privacy cryptocurrencies in existence totaling over 60 different coins and a market value of about $2 billion combined. A few examples of such cryptocurrencies include; Zcash, Monero, Dash, PIVX, etc.

Importance of privacy coins

In such times where consumer data is practically invaluable, this has been made evident when big companies such as Facebook, Google, and others come under criticism to sell personal data of individuals. Therefore, privacy, especially in cryptocurrency, allows users to perform trades and transactions on their terms. The use of such cryptocurrencies prevents divulging personal information, which is not necessary.

The advantage of a privacy coin is its anonymity. But on the downside, p!]rivacy coins provide suitable conditions for fraud and scams.

Should you utilize privacy coins?

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As earlier mentioned, privacy coins are a good pick for investors or traders critical about maintaining their privacy. However, the main obstacle to utilizing such cryptocurrencies occurs due to the government's attempts to regulate their activities. This is expected as the privacy aspect can be utilized for the wrong purposes, such as fraud and funding terrorism.

Now that we comprehend what privacy coins are and how they function let us discuss Monero, our main topic.

History of Monero

Monero was created in 2014 by thankful _for _today as a fork from another cryptocurrency called Bytecoin.
Forks are forms of cryptocurrency created by copying the codes of another existing digital currency. There are two main types of forks;

• Hard fork: newly formed cryptocurrencies do not have a connection to the coins from which they were derived.
• Soft fork: crypto created are still connected to the parent currency from which they were derived.

Monero was initially called Bitmonero, a combination of Bit (from bitcoin) and monero ( the Spanish name for money), and was forked by a Bitcoin forum member, thankful _for _today. However, on its initial release, Bitmonero had no backing from its initial Supporters, and the creator left the project, not associating with it again.

After the failed release, a decision was arrived at to reboot the project under the name Monero, with the Bitcoin forum community acting as the developers.

Understanding the history of Monero takes us to what makes Monero unique from other cryptocurrencies.

Features of Monero

As earlier mentioned, Monero is a privacy coin, but what components come together to set it apart from the rest?
Monero uses a combination of 4 different features which work in synergy to provide the two main goals for its creation, not to be TRACKED and ANONYMITY. These four features strengthen different aspects of the network and include ;

• Ring signatures.
• Stealth address.
• Bulletproofs.
• Dandelion.

Ring signatures

Ring signatures form one of the key components of Monero and are especially responsible for providing users of this cryptocurrency with anonymity.
Ring Signatures create anonymity by hiding the sender's identity; this is achieved by combining the user keys with the public addresses of other users on the blockchain network, creating a unique set of keys that can't be used to identify the original creator of a transaction.

To better understand how ring signatures work, let's take an example:

Sender A wishes to carry out a transaction but is critical about being anonymous; to achieve this, sender A utilizes Monero for the transactions. On creating the transaction, Sender A's public key is mixed with different public keys on the Monero network. Therefore making it difficult to identify the sender's Wallet address.

Bytecoin first utilized this form of security and anonymity feature (before Monero was created).

Another variant of the ring signature is called ring confidential transactions; these variants are responsible for hiding the number of funds being transferred between users by only broadcasting random information, which indicates the transaction's legitimacy but prevents the main amount from being revealed.
Ring confidential transaction function but two main components;

MLSAG (multi-layered spontaneous anonymous group): responsible for obscuring the identity of the sender.

CT ( confidential transactions): these are needed to obscure the amount being transferred; it utilizes the Pedersen commitment.

Stealth addresses

These addresses are created for each transaction and are responsible for producing the untraceable destination feature of Monero.

This feature protects the identity of the receiver and is created by the sender. Stealth addresses can only be used for a single transaction; therefore, they are created multiple times for multiple transactions.

The creation of these addresses is made possible by using the DKSAP (dual-key stealth address protocol which the sender uses to create stealth addresses.
To successful hide an address using the above protocol, two main things are required;

• A shared secret derived from the key agreement, ECDH (Elliptic Curve Diffie Hellman).
• The recipient's public key scans the blockchain network for transactions meant for their addresses. After identifying transactions meant for them, private keys are derived, which are specific for the one-time public key to gain access to the received funds.

Bulletproofs

These serve to significantly reduce transaction sizes and increase the speed at which transactions are verified while providing lower transaction fees.
This feature was included by the development team in 2018 and improved the Borromean ring signatures used by confidential ring transactions (the bulletproof NIZKP protocol replaced it).

Dandelion

This allows users to make transactions while having their IP addresses hidden. Monero utilizes a rather unusual way of broadcasting transactions by initially sending a signed transaction to a single node which uses a method of probability to determine when a signed transaction will be sent to the remaining nodes.

From the above components, it's fair to say Monero's privacy features works by three main mechanisms, which are;

1. Obscuring the identity of the sender.
2. Obscuring the amount being sent.
3. Obscuring the recipient's address.

Now that we understand the components that makeup Monero's privacy and how it works, let us discuss how to get Monero.

How to get Monero?

Just like most other cryptocurrencies, Monero is also mined.
Mining is a process by which computers provide complex mathematical equations and get rewarded with newly minted coins
.
However, unlike Bitcoin, which requires complex, expensive equipment types, Monero can be mined with consumer-grade computers.
To further increase the resistance of mining with ASIC miners, Monero developers implemented the RandomX algorithm.

The block size of the Monero blockchain is considered adaptive, and this is due to the block size's ability to adjust according to the trading volume occurring. Therefore, if there are high trading volumes, the block size is increased to accommodate the increase and reduce network delay.

To learn more about mining, strategies, and incentives, read this article.

Is mining XMR profitable for investing?

Due to the ease at which Monero can be mined, everyone can participate. Mining on your personal computer can form a passive source of income. Coupled with utilizing mining pools, profits can be maximized by miners.

Monero vs. Bitcoin

Some terminologies

• Ticker symbol: these are symbols or abbreviations unique to publicly traded assets. They identify the asset.
• Block size: the maximum amount of data that a single block can contain.
• Block time: the average amount of time taken to create a new block or fill a block.

Now that we understand the differences between Bitcoin and Monero, let us look at the price analysis and make predictions based on historical data, recent occurrences, and future developments.

Monero price

The current price of Monero stands at $223.55 as of the time of writing this article. This price translates to a 5% increase in the last 24hrs, although currently in a downtrend.
Such price increase is recorded amidst the current bull run, which has seen Monero experience an increase from an initial price of $165 in December 2020 to $275 as of 20th February 2021.

## Monero price prediction: Will the price of XMR increase?

With all the challenges currently experienced by Monero, the cryptocurrency has still surpassed these to reach a new all-time high. However, there are several predictions of the price being expected to drop. We do expect the price of Monero to increase by the end of the bull run to the level of $500.

This might be due to the constant striving to regulate privacy coins and the controversy surrounding them.

Challenges faced by Monero

Monero became well known and utilized on the dark web as a privacy coin because it facilitated illegal transactions, as evidenced by the recent attack on computer company ACER for a ransom of $100 million.

Aside from the above, the CBNC stated malware that mined monero and sent the mined monero to North Korea.

Therefore, this cryptocurrency's major challenge is its use for illegal activities and constantly being in the government's crosshairs.

Situations occurred where Monero and certain other cryptocurrencies were delisted from exchanges, leading to a price fall.

Other developments include the recent adoption of Monero by a travel and booking agency, travala.com, as a payment channel.

Conclusion

Privacy and decentralization are key components of cryptocurrencies. Therefore as individuals become more interested in keeping delicate details about themselves private, privacy coins will be the best option. However, before choosing any, always carry out adequate research. To learn more about various cryptocurrencies, read this post by Remitano .