In a world of advanced civilizational dependence on technology, the advent of decentralized distributed currencies backed by cryptography only seems like the next reasonable step in the evolution of money. As the first of its kind, Bitcoin completely redefined how we look at finance. A child begotten by the Cypherpunk movement of the 90’s, Bitcoin served its purpose as a novel, anti-establishment and censorship-resistant medium of exchange.
However, the Bitcoin protocol is not as nearly as anonymous as people tend to think. For this reason, a community in dire need of privacy had to come up with something that truly honored the libertarian ideals that Bitcoin was initially inspired by. After months of hard work by many core developers and even more contributors, the results came in; Monero, the most obfuscated cryptocurrency on the market was born.
Monero is the currently the most secure and private cryptocurrency, making it highly sought after by the people that cherish independence, individual dignity, integrity and all the values that we as humans conceptualize as one wholesome and essential thing — privacy.
What is Monero
The idea of Monero can be summed up in one short paragraph from their official website:
“Monero is a secure, private, decentralized and untraceable cryptocurrency. It is open-source and accessible to all. With Monero, you are your own bank. Only you control and are responsible for your funds. Your accounts and transactions are kept private from prying eyes.”
Introduced in 2014 as a grassroots project that forked out of the Bytecoin blockchain, Monero (initially Bitmonero) exists to serve only one purpose – to create a protocol that facilitates completely untraceable transactions in a truly decentralized manner.
It does this by the implementation of several key technologies:
- Ring Signatures – A technology created to maintain the sender’s anonymity during transactions. Without going into much detail, the Ring Signature tech works by merging the senders signature with the signatures of four random people from the network, which makes it impossible for people to know exactly who out of the five people made the transaction.
- Stealth Addresses – A technology devised to keep the receiver’s address far from the eyes of the public. Stealth addresses are one-time addresses that make sure that only the sender and the receiver of XMR can determine the source and destination of the payment. The payments are sent to a unique stealth address created by the sender that cannot be linked to the recipient’s public address, or to any other public address for that matter.
- Ring CT – Besides concealing the sender’s and the receiver’s addresses, Monero maintains the confidentiality of the transactions themselves. This groundbreaking protocol created by Gregory Maxwell prevents privacy leaks by obfuscating transactional amounts in the blockchain, which builds one additional layer of privacy on top of the previous technologies.
- Kovri – A free, decentralized technology based on I2P’s open specifications that aims to create a protocol that hides the IP addresses and the geographical locations of Monero users and miners. “Kovri tunnels traffic through the I2P network utilizing ‘garlic encryption’ and ‘garlic routing’.” Information travels within a private overlay-network by way of messages, which are encrypted in layers each time the signal is passed along peers in the network, similar to a Matryoshka doll.
The strengths of Monero
The real power of Monero is that it goes beyond merely making a transaction. It keeps the sender, receiver, the amount sent and, soon, the IP address and geographical location of its users completely anonymous. As the first cryptocurrency to take privacy to the next level, it makes it a favorite among many, including tax avoiders, all sorts of dark web trolls, and even criminals. Additionally, Monero is strengthened by its exceptional team of more than 270 developers and contributors collaborating to create, update, and maintain the protocol. Rehashing the vast benefits this cryptocurrency offers to the ecosystem, it is easy to see why a lot of people prefer using Monero, generating a tightly-knit and an uncommonly friendly community surrounding this cryptocurrency.
- ASIC Resistant
Monero was designed to be resistant to Application Specific Integrated Circuit (ASIC) mining (unlike Bitcoin), and instead, it’s mined with cheaper and easier-to-manufacture computer hardware such as GPUs. This significantly lowers the barrier to entry and aids the decentralization of the network.
The Monero protocol can run on Linux, MacOS, Windows, Android, and FreeBSD. However, the wide range of everyday applications on which it runs has made it easy for hackers to embed exploits and viruses on various websites and remote computers, enabling them to exploit the computational power of the victim and use it for Monero mining.
Fungibility is the crucial feature that makes the coin untraceable. Individual XMR coins cannot be marked with an identifiable code, which makes every XMR coin identical and indistinguishable from the rest.
Getting Your First Monero
By now you are probably sold on Monero, and are looking for a way to jump in. It’s an enticing cryptocurrency that offers a lot of perks, to say the least. Therefore, the next stop on your journey to mastering this valuable asset is learning how to acquire it, store it, receive it, and sell it. However, to do any of this you must first equip yourself with a Monero wallet, and that is what we’re going to look into next.
While the Monero architecture is in fact safe and immune to attacks by malicious actors, you still have a responsibility as a user to take additional steps to protect your XMR tokens and further ensure the security of your account. This chapter of the guide will provide you with relevant information and advice regarding wallet choices, account security, and making sure that your Monero stays in your ownership.
- Paper Wallet
Making paper wallets is one of the safest ways to store the private keys to your Monero account. There are both safe and unsafe ways of doing this, but the key idea behind printing your private key on a piece of paper air-gapp it. The safest way to get your paper wallet is to download and run the Monero blockchain. Another way is by going to MoneroAddress.org. For more information follow this guide.
- Mobile Wallet
At the time of writing this article there aren’t any mobile Monero wallets available. Some development is supposedly on its way and we will update when official releases are available, so remember to check this guide every once in a while.
- Exchange Wallet
Cryptocurrency exchanges allow you to trade any cryptocurrency to and from Monero, and for this they provide you with a wallet. However, because a lot of people store their cryptocurrencies on exchanges, they are the prime targets for hacking attempts. Some of these attempts are successful, and end up costing people millions of dollars worth of coins. If you still choose to store your funds on an exchange, make sure to activate 2FA (Two-Factor Authentication) for your account to get that additional layer of protection.
- Web Wallet
Accessing your currency on the internet through a web wallet is fairly easy and convenient. All you need to do is write down or memorize a 13-word phrase that allows you to log in to your account. While the advantage to web wallets is that they are easily accessible from any device with a browser and an internet connection, they come with a disadvantage. Hackers can, and often do, brute-force their way into web wallets. Having this in mind, feel free to create your wallet at MyMonero.com and use it responsibly.
- Monero Core Wallet
Running a full Monero node comes with a variety of benefits, but can be difficult to setup properly, especially for the less technically adept. Connecting to a remote node is great for starters, but running the complete blockchain is the best way to guarantee security. Installing and running a full Monero node is pretty simple as well, but requires a sizeable disk space investment in order to download the entire Monero blockchain.
You are the only responsible party for keeping your Monero coins safe from theft, loss, or any other form of corruption. Dealing with decentralized currencies means that you are your own worst enemy, as there is no one you can call to fix your errors. Assume and accept this responsibility, and take the necessary precautions to ensure maximum protection of your account:
- Generate your wallets using a local Monero Node.
- Backup your recovery phrases and keep them safe.
- Avoid keeping your currency on an exchange (especially Monero).
- If you are going to keep it online, make sure to use unique and difficult passwords.
Follow these tips to the best of your abilities and you probably won’t have to deal with any major security issues regarding your Monero.
Similar to one of the most popular Bitcoin marketplaces localbitcoins.com, this website is connecting Monero buyers and sellers, and acts as an escrow between both parties. The process of using this website is very simple. You either create an ad and wait until you are matched with somebody that is interested in what you are offering, or you find a suitable ad and reach out to that person to initiate a trade.
Depending on your location, you will have a variety of different offers available to you. Some countries have a lot of activity, and the number of offers you will find on the website will reflect how popular Monero is in your region. If there are no offers, do not despair, as there are other ways of getting XMR.
There are a couple of rules that need to be followed to ensure that all transactions are going to be safe. Keep all communication on the platform, so that you have the message history to show in case of an issue or a dispute. Check out the most frequently asked questions to make sure that you understand everything there is to know before making a trade.
LocalMonero.co provides you with a XMR wallet, but it is recommended that you do not keep most of your crypto on an exchange wallet. As we mentioned before, there are numerous risks associated with doing so, the biggest among them being the risk of a hacker attack.
Exchanges are the main source of liquidity for any currency, so naturally you will always find a way to trade and buy into Monero. Regardless of whether you are looking for a fiat-to-crypto transfer, or a simple crypto exchange you will find what you are looking for on the exchanges.
There are a few well established exchanges that have stood the test of time, and have proven themselves to be reliable. The golden rule is to do research and start small. The list below contains some of the most reputable exchanges according to the community.
Bitcoin to Monero
Combine the power of exchanges with a tool such as Changelly, and you can achieve almost anything for a minimal cost. Changelly could come in useful if you use CoinBase to buy BTC and exchange it to XMR. It is a rather effective way to get XMR.
This is also useful if you don’t want to leave a trail, as Changelly does not need your personal information to facilitate exchanges for you. We are not encouraging tax avoidance, but there are many other reasons why you would want to enhance your privacy.
Musicians, bands, and buskers have embraced the crypto economy and are regularly seen accepting payments and donations in various cryptocurrencies, including Monero. Whether or not you are a working professional, when you find yourself exploring a digital marketplace it’s useful to know how to accept Monero payments.
All you need is a wallet that comes with a public wallet address; provide the sender with your public address (or broadcast it on your website as a means of accepting donations) and they can use it to send you funds in XMR.
Monero is a currency after all, and a very useful and flexible one. It protects your financial activity from the watchful eye of the government, and keeps your business private. Depending on your end goal, there are many different ways to go from Monero to fiat. The best solution will be in accordance with your particular situation.
A. Paying taxes is not a problem, and you have nothing to hide.
The best solution for you is a an online cryptocurrency exchange, where you can easily find buyers for your Monero, and exchange the currency to another type of crypto, or back to fiat.
You live in a location where you can’t legitimately use online crypto exchanges, or you don’t want to use one for whatever reason.
Use your local crypto network to set up a local exchange, either for a bank transfer or a direct exchange for cash. Bank transfers will probably get taxed, while cash exchanges are tax-free due to the fact that they are done in person, completely circumventing the banking system. We are not recommending this method, but we are aware that Monero, being a privacy-first currency, will attract people looking to avoid paying taxes.
As you can see, the way you sell your Monero largely depends on who you are, where you are, and how connected you are. Analyse your situation thoroughly to find the most suitable option.
It’s only human nature to protect one’s financial investments and keep them hidden from prying eyes, so naturally Monero is a favorite among cryptocurrencies; it offers a secure and untraceable way to store value that emphasizes the user’s right to privacy. Whether you are in search of a currency that allows incognito transacting, or one that holds significant value for individuals and companies due to its proven track record, Monero is a safe bet and it should be taken under serious consideration.
Getting started with Monero is a very simple endeavor most of the time, and we hope that our guide helped answer some questions you had about the process.