Monero (XMR) is a cryptocurrency that introduced innovative cryptographic features for enhanced privacy and fungibility compared to existing options. One of its standout characteristics is its capacity to enable users to conduct transactions while keeping their transactional information hidden from those scrutinizing the blockchain.
At its core, SHIB operates as a decentralized cryptocurrency that enables peer-to-peer transactions with very low fees. The total supply at launch was 1 quadrillion SHIB, of which 50% was locked permanently on Uniswap and the other 50% was burned to Ethereum co-founder Vitalik Buterin’s wallet as a gift. This burning has made SHIB deflationary. Thus, Shiba Inu is a type of digital currency, which exists only online. It experienced a significant price increase in 2021 but still trades for tiny fractions of a dollar.
Background of Monero
Monero’s history is marked by unique circumstances, including mysterious creators, claims of deception, and several iterations of the project. The journey began in 2013 when the CryptoNote whitepaper, penned by developer Nicolas van Saberhagen, attracted attention within the cryptography community. Notable figures like Gregory Maxwell and Andrew Poelstra contributed their insights on the potential impact of CryptoNote on cryptocurrencies. However, initial success eluded these groundbreaking concepts. In 2014, Bytecoin emerged using the same codebase as CryptoNote, but faced accusations of manipulated supply. This led to the development of Bitmonero, which later became Monero, derived from the Esperanto term for ‘coin.’
Despite its controversial beginnings, Monero shares similarities with other privacy-focused cryptocurrencies like Zcash (ZEC), addressing issues related to Bitcoin’s lack of privacy. While Zcash received widespread media coverage and financial support from investors, Monero’s growth can be likened to Bitcoin’s early days, driven by a dedicated online technology community that gradually expanded as the project gained recognition and market presence. In addition to privacy enhancements, Monero stands out through its frequent updates, allowing for the introduction of advanced cryptographic features like stealth addresses and ring confidential transactions.
“What makes Monero fundamentally different is that it ensures the anonymity of users
For example, Monero’s software is programmed to update every six months, a regular schedule that has helped it more aggressively add new features without much controversy. This has meant that Monero has been able to continue to introduce cryptographic advances like stealth addresses (which allow users to create one-time addresses) and ring confidential transactions (which hide transaction amounts).
How does Monero work?
What makes Monero fundamentally different is that it ensures the anonymity of users via privacy-enhancing technologies like ring signatures, stealth addresses and ring confidential transactions (RingCT). Monero is the only major decentralized cryptocurrency where every user is anonymous by default. It inherently obscures details about the sender, the receiver and the amount transacted.
Often categorized as a privacy coin, the laser focus of the Monero network on anonymity and confidentiality has been both a curse and a boon for cryptocurrency. On the one hand, it is regarded as the epitome of privacy-centric cryptocurrencies, emulating the anonymity of transacting in physical cash.
Aside from its privacy features, Monero works similarly to other major cryptocurrencies, using proof-of-work mining to control the issuance of XMR and to incentivize miners to add blocks to the blockchain. New blocks are added roughly every two minutes.
Notably, though, hobbyists may find that mining XMR is easier than on other cryptocurrencies, as the algorithm that governs this process is designed to prevent against specialized hardware. This means users may be able to generate XMR when mining with a laptop (CPU) or graphics card (GPU), lower-cost forms of hardware that are more widely available.
Key Features of Monero
Let’s look at some of the key features and functionalities of the Monero blockchain that enables it to do what it does best.
- RingCT (Confidential transactions)
Transactions are combined with several other transactions in a “ring,” making determining the exact amount being sent difficult.
- Ring signatures
This obscures the sender’s identity, who would be rendered as a part of a group (or “ring”) of possible senders, making it impossible to determine which one sent the transaction.
- Stealth addresses
This help to protect the privacy of both senders and recipients. A one-time address is generated for each transaction, making it difficult to link multiple transactions to the same recipient.
This is a form of zero-knowledge proof used by Monero transactions to reduce the size of confidential transactions. Bulletproofs helps to improve scalability and reduce transaction fees.
This decentralized mining pool allows miners to pool their resources and mine XMR together. This helps to promote decentralization and prevent the concentration of Monero mining power.
This is a central processing unit (CPU)-optimized proof-of-work algorithm to enhance the network’s security and prevent ASIC mining, which makes mining Monero within reach of CPUs and general processing units. It prevents mining centralization via behemoth mining rigs, which is a challenge facing Bitcoin.
- Smart mining
Smart mining is a way of mining Monero cryptocurrency meant to be less intrusive and more energy-efficient than regular mining. The idea is to allow as many people as possible to mine Monero using their computer’s unused processing power without causing drawbacks like overheating or draining the battery.
One compelling reason to master Monero usage lies in its exceptional privacy features. Since transactions cannot be effortlessly tracked on its blockchain, users can confidently engage in various activities involving cryptocurrency transactions. This attribute not only ensures security and anonymity but also contributes to the fungibility of Monero (XMR).Key benefits of Monero include:
- Unmatched Privacy: Transactions on Monero’s blockchain remain private, enabling users to participate in diverse crypto-related activities without fear of exposure.
- Fungibility: Due to its privacy properties, Monero maintains its value regardless of past transactions or involvement in questionable activities, ensuring acceptance across platforms.
- Potential Investment Value: For investors anticipating increased demand for privacy in cryptocurrencies, Monero serves as a strategic asset to diversify portfolios.
- Advancements in Cryptography: By embracing Monero, users contribute to pushing the frontiers of cryptography in digital currencies, fostering global financial freedom without censorship or oppression.
The XMR token can be considered Shariah compliant. It’s used for sending payments. XMR token holders do not hold equity in the underlying activities, and therefore token holders cannot be responsible for all and every activity that occurs on Monero.
Based on and subject to the foregoing information, and for the purposes of this conclusion, nothing has come to our attention that causes us to believe that XMR is in breach of Shariah* principles and rulings as adopted by the scholars conducting this research.
*Your Attention is drawn to the term ‘Shariah’ and ‘Shariah compliant’ and its interpretation thereof as expressed in the following link https://shariyah.net/glossary/