Hi Steemians, this is my assignment post for Professor @levycore. I hope you enjoy it
- Choose a Privacy Coin and do a detailed fundamental analysis of the coin.
I chose Monero because it is uniquely different from other private coins. Unlike Monero, other private cryptocurrency offer option for private transactions. While all the transactions on Monero are all private without exception. Thus, they are all about private transactions.
Monero is a private oriented decentralized peer to peer cryptocurrency, that is built on special blockchain technology.
Transactions on Menro are untraceable and cannot be linked.
Monero aims to be a private cryptocurrency that does not reveal who sends, how much and to whom.
Monero started in 2014 as a fork (Breakaway) of Bytecoin, the very first private cryptocurrency to be created.
It's is mined through computers that guess the solution to complex math problems also known as Proof of Work. However, the algorithm used to mine XMR, called CryptoNight is completely different from the SH-256 algorithm used in mining Bitcoin.
CryptoNight is an ASIC resistant algorithm. This means that you will not be able to mine more XMR if you have a powerful computer. This makes it possible to mine XMR with personal computer, whis is not an option when mining Bitcoin and Ethereum.
Since CryptoNight allows the use of personal computers to mine XMR, it now became a popular option for browser mining (the use of a user's CPU to mine in the background as the user is on the site).
New XMR is issued each time a block is mined, every 2 minutes on average and there is no limit to how many XMR can be produced.
As of May 30th 2021. Monero traded at $262.33 and had a market capitalization of 4.7 billion which significantly improved from the 31st Dec. 2020 where the closing price was $156.57, Market Capitalization 2.7 billion, which is over 100% increase.
Monero protocol obfuscates (make unclear) the very three parts of cryptocurrency transactions, which is:
Obfuscate The Sender:
to obfuscate the senders signature, Monero uses the ring signature, what do I mean? When you sign Monero's transaction, your signature is combined with past signatures from the Monero's blockchain. This action is a decoy to make it impossible for outsiders or observers to determine who sent the transaction.
Obfuscating The Amount Sent: the amount being sent is obfuscated by Ring Confidential Transaction (RingCT). Here, instead of broadcasting the amount being sent, the user transmits only small random piece of information. This information is enough to verify that what is being sent is legit while keeping the actual amount private.
Obfuscating The Receiver:
This is done via the use of Stealth Addresses. A public Monero address is a 95 character string that starts with 4. However, when you send fund to that address, that very fund will be sent to a different address. Example, if I'm the recipient, the funds are sent to a one time stealth address, that is generated from my public address. This creates a separation between my public address and the funds sent to me. Only the recipient private key can access the fund.
However, while all the transactions data maybe obfuscated, the senders IP address may still be tracked. This is why there is one additional feature on Monero's roadmap called Kovri.
Kovri reroutes the transactions through multiple virtual nodes, to obfuscate the IP address.
- Explain the steps in creating a wallet for the Privacy Coin of your choice. (Screenshots required)
The following are the steps to access Monero.
1. Go to Monero. Select the download option by the top left.
2. Select the type of wallet you want. I chose GUI.
3. Select download option that is suitable to your device. I use windows os
4. You wait as it download.
5. Having downloaded, install it by following the instructions.
6. Having completed the installation. Open the wallet app.
7. Select your preferred language and click next.
8. I chose the simple mode.
9. Tick the privacy agreement box and click next.
10. Click on create a new wallet.
11. Here, you will copy and secure your mnemonics seed and numeric code in a safe place. Then click on next.
12. Here, you are required to create a strong password, that will enable you access the wallet. Click next.
13. Click on create a new wallet.
14. Here, you need to re-enter your newly created password to continue.
15. Here is you wallet. It has been successfully created.
- Provide an explanation of the reason you chose the Privacy Coin. (Mention the advantages and disadvantages)
I chose Monero because of its rare uniqueness you don't see in other cryptocurrency. It offers complete privacy in all the transactions, it's only a matter of time until the rest of the market wakes up to realize the risk posed by completely transparent blockchain. Thus, Monero is now leading the charge towards financial privacy and has increasingly strong market capitalization as I have mentioned earlier.
The following is the position of Monero in the coinbase chart.
Personal Safety: since all crypto addresses are completely transparent, you may become subject to attack if you hold large amount of BTC.
To Avoid Behavioral Analysis:
with the amount of data being displayed on blockchain like that of Bitcoin and Ethereum, it has become easier to identify patterns, map real life identities and uncover behavioral information about user's. In order to avoid this, privacy coins like Monero is the answer.
Monero has complete fungibility because it cannot be traced.
It's non-traceability has made it easier for criminal entities to utilize it.
With the ease in mining (browser mining), hackers has been creating malicious softwares to infected computers to mine Monero for them.
Illicit activities can be carried out through Monero to evade law enforcement agencies.
Monero's aim to provide a complete private transactions, has a great potential in the future. For other cryptocurrencies like BTC and ETH, I believe they have lots of work to do in adjusting their blockchain algorithm to promote privacy and also improve other areas, in order to remain relevant in the future. However, Monero is not without challenges especially in the area of illicit activities by hackers.