Monero is a cryptocurrency that aims to be secure, private and untraceable. It tries to achieve these goals through a combination of protocols that allow transactions to have their receiving addresses and amounts cryptographically hidden away, and a sender’s address to be obfuscated with ring signatures.
By Taotao He and Jorge Go
Monero is a cryptocurrency that aims to be secure, private and untraceable. It tries to achieve these goals through a combination of protocols that allow transactions to have their receiving addresses and amounts cryptographically hidden away, and a sender’s address to be obfuscated with ring signatures. Ring signatures present a mechanism wherein a sender’s identity is hidden within a group of other fake senders.
One of Monero’s goals is to be more egalitarian than coins like Bitcoin. In practice, this means that Monero’s proof-of-work algorithm is resistant to ASIC mining, and should be efficient when mined on consumer grade GPUs and CPUs. This is great in theory, but it also opens a new issue (that isn’t necessarily limited to just Monero) where malicious actors can hide code in websites or employ botnets to force unknowing computers to mine Monero for them (the degree of which is currently notable in Monero’s network, see Smominru Monero Mining Botnet Making Millions for Operators). If this issue does get out of hand it could lead to a situation where it’s not feasible for everyday consumers to mine the cryptocurrency, and botnet operators may accrue a large amount of undue influence in the network.
The ability for the blockchain to scale to thousands of transactions per second is a topic relevant to many blockchain projects and Monero is no exception. The good news is that Monero has some nice built in properties that already help it with scaling. It has a dynamic block size that allows throughput to change with demand. Its block time is currently 2 minutes, meaning it takes around 20 minutes to get to a recommended 10 conformations.
There’s currently a good amount of headway before scaling becomes a major bottleneck for Monero. Barring a significant step-change in the influx of volume, it is reasonable that improvements in computing and storage keep pace with Monero and that additional scaling solutions aren’t needed. Still, there are significant scaling solutions being explored both in the short and long term. One such solution currently undergoing testing is “bulletproofs”, which would significantly increase transaction speed by decreasing transaction sizes, and in turn, decrease fees as a result.
Monero has been running since 2014, and has only been successfully attacked once in Sept. 2014, though the flaw that allowed the breach has been patched. Since then, Monero has grown considerably and gained a lot of popularity, so we can reasonably say that its security is quite battle tested.
There has been research literature showing that there are potential issues with Monero’s transaction linkability, but Monero’s developers have already acknowledged or addressed most of these issues. As it stands, the security behind Monero is solid, but it’s important to keep in mind that this is still new technology and could still have vulnerabilities that have yet to surface.
One important aspect of Monero is that is fully fungible, meaning that each unit of Monero is equal. Compare this to coins like Bitcoin or Ether, where the transaction history stays with the coin, and people can potentially treat coins differently because of it (e.g. units used in illegal transactions).
Monero is also the only popular privacy coin that implements its fungibility at the protocol level. Projects like DASH or Zcash make their private sends “opt-in”, meaning that they won’t always be fungible. Monero institutes privacy by default.
Monero is an open-source project and its primary repository can be found at https://github.com/monero-project/monero. At this point, Monero is already a very well-established project and their open-source repos reflect that as well.
We can see that Monero has a very active community reporting issues and writing pull requests as well. The codebase is actively being updated and the majority pull requests from the community are reviewed and responded to in a timely fashion. Most of the reported issues have meaningful discussion on them as well. They have a handful of regular contributors writing a large volume of code and a long tail of other community contributors coming to a total of more than 140, which is a good sign as well.
There are plenty for resources on how you can build the code that they have and contribute to the code as well. They also have an automated build system and automated testing (although their code coverage isn’t perfect). All in all, their GitHub projects look very healthy and active.
From a technology perspective Monero is in a healthy state. It is already well established and has been able to prove an extent of its security and throughput over that last few years. Development is still very active with a sizable open source community. Although scaling could still be an issue if Monero gains a significant amount of momentum in the future, it’s currently less of a pressing issue compared to other popular coins.
Some of Monero’s larger challenges aren’t directly related to its technology. For instance, there are many other privacy coins on the market that can fill the same niche as Monero, and differences in technological performance among them aren’t large enough to point to any clear winners. Nonetheless, Monero does have arguably the largest community and most momentum at the moment.
Although botnets may be considered a threat to Monero, especially regarding its egalitarian mining, botnet operators are still economically incentivized not to completely degrade the network. It would take something closer to an operation run by a group such as a government three letter agency to significantly cripple Monero. Government intervention, either publicly or through furtive methods could have significant consequences for Monero, but seems unlikely in the near future.
For greater adoption over a much longer term, it is important to consider how far Monero will be able to distance itself from its reputation as being used for illicit transactions, and how much average consumers will ultimately want to leverage the privacy provided by Monero compared something like Bitcoin in the end.