There was a time when cryptocurrency started and ended with the word “Bitcoin”. This is no longer the case now, as many currencies have emerged and have grown significantly. With the price of Bitcoin skyrocketing, alt-currencies have also been rising in value significantly. Monero, a private cryptocurrency is one of them.
What is private cryptocurrency and what makes it different from Public coin?
Private cryptocurrency is a different type of cryptocurrency that blurs the transaction information and hides the person’s real identity. Private coin is different from the standard blockchain-based cryptocurrencies like Bitcoin which are referred to as “Public coin”. Although public coins do offer some sort of privacy and anonymity, it does not fully maintain your privacy.
Bitcoin (and other cryptocurrency) transactions can be traced. The addresses can be linked through which the transaction amounts can be traced which can then lead to the possibility of one’s real identity being revealed, given an adept hacker. The very nature of blockchain transactions makes them traceable. All the transactions that occur are available to everyone that has access to blockchain.
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However, private cryptocurrencies deploy several methods using the TOR and i2p systems to protect user information. Transaction information is secured under different layers which are not available to the public and according to how they’re advertised: “untraceable”. That gives a big edge to cryptocurrencies like Monero which is a private cryptocurrency over its competition.
What’s so special about Monero?
Monero is an open source and crowdfunded project which was originally named “Bitmonero”. It has grown quite a lot recently and is one of the most popular cryptocurrencies today. Monero currently trades for $404, growing almost 3000% in 2017 with its value at only $14 in January 2017.Its market cap currently stands at 6.2 Billion as well.
What could be the reasons for this massive increase in value? What does Monero have to offer? For starters, it’s private. Only you can see your transactions and no one else. You have complete control over your currency, it is yours and only you are responsible for it.
It is also “fungible”. Fungibility, according to Investopedia is: “Fungibility is a good or asset’s interchangeability with other individual goods or assets of the same type.”
So, a simple example would be if someone borrows a few dollars let’s say $50. They can return the $50 using one note, or several smaller notes. But if someone rented out a car, they can only give the company back the exact same car that they rented out, not even the clone of that car. That’s the difference between fungible and non-fungible assets.
What does fungibility have to do with cryptocurrency? For example, in the case of Bitcoin, if someone used their Bitcoin to purchase something illegal or something which has a negative stigma around it then that person will be holding “tainted” Bitcoin and this is totally possible because as discussed earlier, Bitcoin transactions can be traced.
In many exchanges and service providers, these tainted coins will never be worth the same as clean coins which kills fungibilty. Since Monero is totally private, it is fungible.
Monero also has no pre-set size limit. Miners can mine huge blocks but Monero’s internal system has ways to regulate that as well, so the technology is much more advanced and superior to many cryptocurrencies as well. There are multiple keys available in Monero as well and it is also ASIC (Application Specific Integration Circuit) resistant.
Advantages of Monero
With all the features discussed above, it is clear how these give Monero an edge over other cryptocurrencies. It’ll be great for businesses and their negotiating positions as suppliers won’t be able to trace or find out how much customers or money the business has so they won’t be able to manipulate negotiations that way.
Similarly, firms won’t be able to manipulate customers whose transactions will be private as well so there would be no way to find out what the customer spends their money on. Moreover, due to fungibility, there won’t be a need for anyone purchasing Monero off someone to worry about whether the currency is “tainted” or not.
Monero also has a superior mining algorithm compared to Bitcoin and has adaptive Block size limit. This allows for the block size limit to be constantly changed and not stay fixed unlike Bitcoin and other cryptocurrencies. Monero also has an impressive integration of the i2P layer which adds greater privacy and keeps your transaction information secure.
How to Buy Monero
Of course, before buying any cryptocurrency, it is recommended that you do your own research as well. It is never recommended to buy something without fully understanding or knowing about it first.
This guide will show how to buy using Coinbase and Binance, which won’t accept fiat currency for Monero currently. Bitfinex is an option if you would like to purchase using fiat currency but at the time of this writing, Bitfinex has paused the creation of new accounts temporarily, so Coinbase it is:
- Sign up on their website and fill in your details. Coinbase is very strict about following US regulations so they will take the task of verifying your identity very seriously.
- Verify your account. To verify, you must provide your phone number, upload an image of your photo ID and verify debit/credit card details. Credit/debit card have more transaction fee but offer instant purchases whereas Bank transfer takes a few days.
- Once everything is set up, click on “buy/sell”. Choose Bitcoin or Ethereum, for this guide’s purpose we will use Ethereum. Specify the amount you would like to purchase/ the amount you’d like to spend of your local currency and then purchase.
- Confirm purchase and proceed to next step.
- Now go to Binance and register an account there.
- Once registered and all account information has been filled (and verified), go to “FUNDS”. Once there, click on “Deposits”. Choose your wallet or type in Ethereum to narrow down which of your wallets has the Ethereum. Click Deposit and you’ll be given a deposit address. Save that somewhere as we will use this later.
- Return to Coinbase, click on ‘Accounts’, find your wallet containing the Ethereum and press ‘Send’.
- Paste the address you copied earlier in the recipient box. Specify how much you want to send and click continue. Coinbase may ask for additional authentication for confirming the transaction, keep that in mind.
- The coins should reach your Binance wallet somewhere in between 20-60 minutes unless there’s huge traffic or some network issues on Binance’s side.
- Once the Ethereum is available for use in your Binance market, jump into the XMR/ETH market in Binance.
- There are two ways to buy coins now, through “Limit Order” or “Market Buy”. The limit order lets you specify what price you want to buy the coins at. Market Order just buys the coins at the best prices available. For now, lets take the market buy option.
- Click on the green “buy XMR” button, then click the ‘Market’ option. In the amount box, specify how much you’d like to buy. Alternatively, you can also specify what percentage of your Ethereum you’d like to use when buying. Once done, press buy.
- Your order will be filled immediately, after which go to the top menu and click ‘Deposits Withdrawals’. Type XMR in the search and there you will see your Monero wallet.
- Congratulations, you have purchased Monero!