Welcome to CTA’s Fundamental Analysis of Monero. As always you can follow us on our Forums, Twitter, Steemit, and Discord. We are also open to any feedback on these articles, if you feel certain sections are lacking then feel free to comment and we’ll look to improve on it!   

What is Monero? 

Monero is a block chain based currency that aims to provide a secure, private, and untraceable currency that is decentralised and scalable. Above all Monero aims to be an untraceable currency; the aims of security, privacy, and decentralisation are all in the pursuit of Monero being an untraceable currency. 

Monero achieves this goal of being untraceable through a technology called ‘Ring Signatures’ which in the most basic of terms provides a way of multiple people signing a transaction so that it’s impossible to tell who the original sender of the transaction was, this also makes the currency as a whole fungible. If you want to understand Ring Signatures in depth then we recommend reading the white paper and this explanation, be warned it’s quite technical.  

Monero also uses other features such as Stealth addresses in order to hide the sending addresses and receiving addresses of any transaction, and RingCT in order to hide the amount of the transaction. Both of these technologies are father explained in the Moneropedia, and require in depth explanation beyond the scope of this article to fully understand. All together these technologies are what create Monero as being a secure, private, and untraceable currency. 

Another aspect of Monero that is important to note is how it was initially distributed, Monero didn’t have any ICO (Initial Coin Offering) or premine, instead opting for a mining based approach of distributing coins. The mining and distribution of Monero is set into two phases, firstly the main emission phase which will issue about 18.4 million coins to be mined within around 8 years of initial network launch, at the time of writing this is predicted to be around early 2020s. After this phase the tail emission phase will launch at a rate of 0.6 XMR per 2 minutes block. This produces an inflation rate of roughly less than 1 percent a year; the reason for this is to provide a consistent incentive for miners once the primary supply is distributed. 

Specifications 

• PoW algorithm: CryptoNight (CPU + GPU Mining)  
• Max supply: Infinite (Less than 1% annual inflation) 
• Block reward: Smoothly varying
• Block time: 120 seconds
• Difficulty: Retargets at every block

History of Monero 

Monero has been in development since 2014, with a core team of founders featuring Riccardo "fluffypony" Spagni, luigi1111, NoodleDoodle, smooth, tacotime, Franciso "ArticMine" Cabañas, and othe. The team behind Monero will be touched on in a later section, it is to be noted that the development of Monero is open source and thus has had many people work on it over its time. 

Monero was decided to be based on the CryptoNote protocol, a protocol which focused around being privacy-centric. Monero launched around April in 2014 with no pre-mine or ICO (Initial Coin Offering) instead Monero opted for a mining based approach of distributing coins, as aforementioned in the “What is Monero” section. This means that the Monero project isn’t funded by any large backing, a lot of the developers work for free or on low incomes, what funding Monero gets comes in the form of donations from the community, and through funding systems like the Forum Funding System. If you enjoy this article, and think you would like to support Monero then please consider donating at their donation page. 

What Monero aims to solve

 Monero aims to solve the problem of transactions being traceable. The goal is to create a currency where no one can see how much money a person has, where it is spent, or who it is sent to. Transactions are not traceable even in the case that a person knows your wallet address. 

Examples of useful situations for Monero’s privacy may be transferring money while living under the control of an oppressive government, or an author who wishes to retain anonymity but also wishes to accept payments for something they have written; Monero can facilitate this need so that the author can accept payments and then transfer said payments into their own usable fiat currency without being traced. Of course Monero also has ‘less legal’ options of usage such as on darknet markets, where Monero’s privacy shines as a way of paying for illegal goods such as drugs, adult paraphernalia, leaked classified documents, and so forth.

The team behind Monero 

Monero has a core team of developers. At the time of writing this core team features seven people of which five are pseudonymous, as can be expected from a coin focusing on privacy. The two public faces of Monero development are Riccardo “fluffypony” Spagni, and Francisco “ArticMine” Cabanas. The other 5 members who remain anonymous are smooth, othe, luigi1111, tacotime, and NoodleDoodle. Each of these developers has their own areas of expertise that they bring to the project, for an understanding of each developer’s area of expertise refer to this link.  

Monero also has had many individual contributors to the project, of which are too numerous to list. Monero being an open source project means that anyone can read and contribute to the code of Monero, which if found to be useful to the project is often committed to it.  

Future of Monero 

Monero future development has been outlined in their Roadmap. Currently a major development in progress for Monero as an example is the development of Kovri usage. Kovri support would allow for Monero communication over I2P, so that any attempt to track users using IP addresses would be futile. An obvious major advantage for a privacy based coin. 

Further long term design goals for Monero include additions such as Smart Mining, Core GUI, improved wallets, proxy support, and so forth. Monero will also soon be getting Ledger Nano S support in the coming months, allowing for secure hardware wallet storage of Monero. Overall the future of Monero seems bright, and there are many areas where Monero can continue to develop in order to improve itself as a cryptocurrency. 

Criticisms of Monero 

Monero as a cryptocurrency has little to be criticised about; it set out to achieve a goal of an untraceable currency and has for the most part achieved that, although there are still various improvements to be made. However a primary criticism of Monero would be the handling of press relations, in particular to no surprise to anyone knowing Monero, the Fluffypony incident.  

Around late May of 2017 Fluffypony teased that there would be a major announcement for Monero which lead to a speculative increase in Monero price. As seen in the following picture on 22-26th of May.  

Prices soared up from 35usd a coin to 60usd a coin, before crashing back down to the original price of 35usd a coin. The reason for this crash is that the announcement was one giant “troll/prank” by Fluffy pony, he released a video parodying the Ethereum Alliance announcement, but instead being the Monero Enterprise Alliance, before ending the video on an announcement  of all this being one big troll. Fluffy pony phrased this as a way of teaching speculators a lesson that they shouldn’t speculate based on preannouncements, a practice that was common in the markets at those time. A full understanding of the prank can be found here where Fluffy pony explains his reasoning for his actions. 

Outside of this incident however the Monero development team has generally remained professional, and is consistent in interacting with the community over the future of Monero. So don’t let this one incident taint your view of Monero completely.   

Should you invest?  

Monero is another coin that CTA recommends for the long term, while there may be many chances for shorting Monero throughout the future it is up to the reader if they want to take that risk. Overall CTA believes that longing Monero is the best choice. At the time of writing this article, the overall crypto market is continuing to be sluggish, meaning that currently Monero has a good market opening for entry. Monero is by far the leader in providing a currency that is untraceable and private, with no projects currently coming anywhere near the levels of Monero’s privacy. Monero continues to be a strong project with continued development and improvements happening by the update. CTA does not have any predictions for an exact exit point, although does expect that Monero will continue to rise for years to come, likely being the Gold Standard in terms of privacy for cryptocurrencies. 

As always before investing ensure that you do your own research into the coin, do not take our word or the word of anyone else as truth, trust only your own research!