Monero, the popular privacy-focused cryptocurrency protocol, is gearing up for a major network upgrade this weekend (scheduled for Saturday, August 13). Monero, whose native token is monero (XMR), is an open source project launched in 2014 under the name “Bitmonero”. It claims that XMR is a secure, private, and untraceable cryptocurrency that keeps financial transactions confidential.
#Monero will undergo a network upgrade in less than 48 hours!
Set a reminder and join us for a Q&A on Twitter Space, and update those nodes and wallets! https://t.co/XaW5VfcyYy
– Monero (XMR) (@monero) August 11, 2022
The upgrade will be implemented through a hard fork – a permanent change to the blockchain that is not backwards compatible (nodes either accept the change or split off on a separate blockchain).
“Upgrade your software today to Monero v0.18,” a Monero developer said in an interview with CoinDesk on Friday. He added that users should familiarize themselves with the Monero blog post published in April which explains the upgrade in detail.
Read more: Monero: The Privacy Coin Explained
How does Monero work?
Monero uses innovative cryptography to provide a high level of privacy and security to its users. Some of the key cryptocurrency features include:
Ring signatures: digital signatures that can be produced by any member of a group. It should be impossible to determine which key (of this key group) was used to create the signature. Ring signatures make it impossible to trace the origin of a Monero transaction (untraceable).
Stealth addresses: unique addresses automatically generated for each new transaction. A Monero user can publish a single address while receiving all incoming funds at different addresses. These different addresses cannot be linked to the user’s published address (or any other transaction address for that matter). Only the sender and the recipient know the address to which the payment was sent (severability).
bulletproof: zero-knowledge proofs that enable confidential transactions on Monero and other protocols. A confidential transaction is a transaction where the transferred amount has been cryptographically concealed.
Dandelion++: a feature of Monero that hides the connection between transactions and node IP addresses. This increases the confidentiality of transactions.
Wallets and Exchanges: Several key exchanges such as Bittrex and Kraken have delisted monero (and similar privacy-protecting cryptocurrencies). Other exchanges such as Coinbase (COIN) will not even list monero. The reason is the inability to perform know-your-customer (KYC) and anti-money laundering (AML) checks on monero users.
Wallets that support monero include Ledger and Trezor, two popular hardware wallets. Cake wallet is a hot wallet that was originally exclusive to monero but now also supports bitcoin (BTC), litecoin (LTC) and heaven (XHV).
Read more: Bittrex removes Monero, Dash and Zcash from ‘Privacy Coins’
Saturday’s scheduled update will introduce several features. Here are some of the expected changes and improvements:
- The number of signers for a ring signature will increase from 11 to 16 for each transaction.
- Bulletproofs+, an upgrade to the current Bulletproofs algorithm, will be introduced. Bulletproofs+ reduces transaction size and increases transaction speed. Overall performance should improve by 5-7%.
- Show beacons will be a new way to speed up wallet synchronization by 30%-40%.
- The fee changes will minimize fee volatility and improve overall network security.
- Multisignature functionality will be improved and critical security fixes will be added.
Monero Use Cases
According to the Monero community site, Monero Outreach, people in regions with oppressive regimes or depressed economies benefit the most from a private, secure, and low-cost cryptocurrency like XMR.
Alex Gladstein, director of strategy at the Human Rights Foundation (HRF), praised bitcoin (BTC), monero and other cryptocurrencies as financial tools for journalists and activists. He wrote a blog post in 2018 titled “Why Bitcoin Matters for Freedom”. Gladstein’s article describes how Bitcoin protects citizens of countries like Zimbabwe against hyperinflation. He also praises Monero’s privacy-enhancing features, hailing them as a “counterstrike force” against censorship by oppressive regimes in Venezuela, Iran and North Korea.
Read more: Zimbabwe shuts down mobile transactions as hyperinflation spurs currency flight
Privacy is, of course, a double-edged sword, and Monero has seen its fair share of illicit use. Chainalysis, a blockchain security company, reported that XMR is the most popular cryptocurrency with “cryptojackers” – a form of malware that hijacks the computing resources of unsuspecting users and exploits those resources to mine XMR (the crypto -currency uses proof of work for consensus).
“…Funds move directly from the mempool to mining addresses unknown to us, rather than from the victim’s wallet to a new wallet,” Chainalysis wrote.
The Chainalysis article reports that 5% of all monero in circulation has been mined by cryptojackers, representing over $100 million in illicit earnings and making cryptojackers the most popular cryptocurrency-focused malware.
The Monero community
Riccardo Spagni, also known as “fluffypony”, is perhaps the person who comes to mind when the name Monero is mentioned. He joined the project in 2014 and left the senior manager role in December 2019. Spagni is currently facing legal issues following a fraud charge in 2021.
Read more: Monero’s Ricardo ‘Fluffypony’ Spagni to Visit US Marshals on July 5
The Monero project is obviously much bigger than Spagni alone. Over 300 developers from around the world have contributed to the Monero project. This latest update was a collaborative effort involving 71 developers, which speaks to the robustness of the Monero developer community.
Other privacy-focused projects, such as Tornado Cash, have had at least one developer arrested. Tornado Cash was recently blacklisted by the US Treasury Department. Could Monero suffer a similar fate?
“At this time, I am not concerned about immediate legal action,” a Monero contributor told CoinDesk in an interview. “There is no direct financial incentive … for developers, unlike [the situation with] the developer of Tornado Cash.
He also advised all open source contributors working on privacy preservation projects to seriously consider protecting their privacy and identity.
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