Bitcoin is the King of crypto currencies. It’s the original, the first, the template and the foundation on which a new paradigm of currency and exchange was built. Satoshi’s white paper laid the ground for a brilliant architecture that evolved into what today know as the modern Bitcoin blockchain and ecosystem. Bitcoin investors have done very well as their investment paid back. The currency helped create a massive online free market and a number of web sites selling and buying drugs, weapons, services and other tangible and intangible items people want or desire.
In addition to being the standard currency for black markets, Bitcoin has also been adopted by mainstream commercial entities, like Overstock.com, Experia and even Tesla dealerships. With Purse.io you can buy any item on Amazon’s website using Bitcoin and with Coinbase’s Shift debit card, you can literally use Bitcoin at any retailer accepting Visa cards. Bitcoin was adopted early on as a means of untraceable, pseudo-anonymous, fungible currency and means of exchange.
But this started in 2008. Now it is 2016. In the last 8 years Bitcoin has grown but has also lost two of its biggest attributes: fungibility and pseudo-anonymity. Fungibility is the property of goods whose individual units can be mutually substituted. For example, a few silver coins are indistinguishable for each other as long as they all weigh 1 oz. It doesn’t matter which one of these coins you use to buy a loaf of bread with…they are interchangeable with each other. This is fungibility, and Bitcoin is no longer fungible because it is no longer pseudo-anonymous. As specific Bitcoin transactions have been connected to nefarious activities, various Bitcoin exchanges now have the ability to blacklist Bitcoin, in essence tainting specific Bitcoin and making them unusable.
Bitcoin also was promoted as a pseudo-anonymous currency where parties in a transaction cannot be traced or identified. At one time that was probably a true and valid characteristic, but that is no longer the case. In just the recent few months many operators and drug dealers running Tor sites have been arrested as a result of their Bitcoin transactions being traced back to their real-life identities. Even the corrupt DEA agents involved in the Silk Road investigation were caught after a prosecutor used Wallet Explorer to track down and identify transactions and then tie these transactions to real individuals. Since then the ecosystem revolving around Bitcoin blockchain analysis has evolved a great deal. Chainalysis and other startups offer their advanced AI analysis services to governments and others willing to pay for it in order to track transactions, identify users and even assist in their criminal prosecution. Many of these users are involved in victimless crimes such as tax evasion, drug use and firearm purchases. Bitcoin anonymity is non-existent. In fact, using Bitcoin for online transactions is more of a liability rather than convenience.
But there is hope. Enter Monero (XMR). I heard about Monero over a year ago when a friend recommended it as an investment opportunity. I passed at the time, and I regret it a great deal after I read the Monero original announcement post and studied its architecture in detail. It is true. Monero is everything Bitcoin wanted to be when it grew up, and then more.
Monero has been designed from the ground up to maintain privacy, anonymity and fungibility, characteristics that Bitcoin no longer has. Without getting into too many technical details, Monero has innovated in several areas helping the currency maintain its anonymity. The Monero protocol is using one-time ring signatures and stealth addresses to obfuscate details about transactions and the amounts involved.
As a result of its many privacy-centered features, Monero has an opaque blockchain. Unlike other crypto currencies, the Monero blockchain cannot be analyzed by government entities or other parties attempting to identify transaction parties. Users can opt into making transactions visible if they so desire, making financial audits possible, for example.
If these core features were not enough, the development team is currently working on integrating a C++ I2P router straight into the Monero stack, further anonymizing traffic at layer 3 and further obfuscating the users accessing the blockchain.
Unlike Bitcoin, Monero also does not have a hard-coded block size of 1M which limits scalability so it does not face the scalability problems currently plaguing Bitcoin. Monero does not employ master nodes like Dash does, limiting the possibility of compromised network nodes participating in attacks against miners or users.
But technical features, ring signatures and I2P means very little to average users. To add to the list of enticing reasons to adopt Monero, two of the largest dark market websites out there recently announced support for Monero. Both Oasis and AlphaBay either already implemented or are in the process of adding support for XMR payments to their checkout workflow. This is huge news for the Monero community, and while not everyone involved in investing or using Monero is a drug dealer, the recent success of Monero demonstrated that users thirst for a crypto currency that is built to protect their privacy, regardless of what they are purchasing online.
After the Oasis and AlphaBay announcements, Monero quickly rose in price from about $2 to over $5, within a matter of days. The success of this currency is a result of the fantastic technical work and list of features developed by the Monero team, and while Monero may not dethrone Bitcoin overnight, I am confident that it will displace it in most online market places that value the privacy and anonymity of their users and operators.
One drawback to Monero right now is the fact that it lacks a GUI/graphical wallet, especially for mobile users. This lack of a wallet that can be used by average users likely keeps many away, but a GUI wallet is in the works and from what I hear, we should see it before the end of the year. Until then, you can use MyMonero as your online wallet and will do just fine.
Give Monero a shot if you want, and you will not be disappointed. Think of it as Bitcoin all grown up and ready to face the dangers of abusive governments and financial institutions on your behalf. Here is a quick guide on how to buy Monero that can help.