Opinion: Bitcoin [BTC] is, by far, the most popular and well-known cryptocurrency. It also has absolute dominance over the cryptocurrency market, as seen by its market share being over 50%.
However, there exists another coin that demonstrates a use-case that will always be in demand. Just like Bitcoin, this coin emerged as a response to governments and their invasion into privacy. This gives it a position as a coin that will not fail, as long it continues to keep up with developments in the space.
The coin in question is Monero [XMR]. Due to its focus on absolute privacy, and culture of anarchy and anonymity that surrounds it, the coin has carved out a niche for itself. At the same time, it represents a darker side of cryptocurrencies, functioning as the flipside of Bitcoin.
Bitcoin itself grew to prominence due to its use on the famed Dark Web marketplace known as the Silk Road. This site was a hotspot for the trafficking of illegal substances, firearms, and even featured hitmen for hire. A marketplace like this demonstrates significant privacy concerns, a use-case the budding Bitcoin was willing to fill.
Due to the only identifying factors of a Bitcoin transaction being the wallet addresses, the pseudonymity it offered became a natural fit for the shady transactions that took place on the marketplace.
Dealers on the website began accepting Bitcoin in great numbers, leading to countless headlines and contributing constantly to Bitcoin’s image as a coin used for illegal transactions.
However, as exchanges began to tie identities to wallet addresses, which can be clearly traced through the transparent nature of the blockchain, Bitcoin’s illicit use dwindled. This created a space for a new coin to come to the forefront, and it did.
Released in April of 2014, Monero was originally called BitMonero and was a fork from the codebase of Bytecoin [BCN]. It later grew to be based on the CryptoNight Proof-of-Work algorithm, an evolution of the CryptoNote protocol. It is different from Bitcoin, as this algorithm has significant differences relating to its privacy features.
The privacy of Monero comes mainly from its ring signatures and stealth addresses. The former allows for the privacy of transaction inputs by mixing them with a group of similar ones. This makes it difficult to establish a link between transactions.
There are also stealth addresses to be considered, which are generated for every transaction. This effectively makes it impossible to discover the actual destination address of a transaction. Only those who sent and received the transaction are aware of the true addresses. There is also a feature known as ring confidential transactions, which hides the transferred amount.
These features drove Monero as the premier option for anonymous transactions. Moreover, those who wished to conduct anonymous transactions “tumbled” their coins through Monero for absolute privacy.
The coin saw a sharp rise in usage in the year 2016, coinciding with the increased usage of Monero in ransomware attacks and scripts mining the coin.
While cryptocurrencies are beginning to conform to regulatory norms and grow as an asset class, Monero retains the anarcho-capitalist vision that created Bitcoin. Functioning on the dark side of the markets which will always exist as long as things are illegal, Monero remains as cypherpunks’ last bastion.