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Billed as the ultimate cryptocurrency for privacy, Monero has attracted both positive and negative attention from libertarians and governments everywhere. Is Monero, as controversial it is, safe and worth including in an investor’s portfolio?
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Table of Contents
- How is Monero Secured?
- Risks of Investing in Monero
- Is Monero Safe?
- Where to Invest in Monero
- Monero Hacks
- Best Hardware Wallet for Monero?
- Best Hardware Wallet: Ledger Nano X
- Cryptocurrency Market Outlook
- Is Monero a Safe Investment?
How is Monero Secured?
Monero (XMR) is a proof-of-work (PoW) blockchain forked from Bytecoin in 2012.
Monero (XMR) is a unique cryptocurrency that is designed to facilitate transactions as secretly as possible. The PoW network does not allow third parties outside of the two wallets involved to see information about their transaction. The protocol includes the wallets’ transaction amounts, transaction histories, wallet balances and addresses. Because an amount of XMR does not come attached to a public ledger the same way most cryptocurrencies do and therefore is completely untraceable, it is essentially more fungible than any prominent coin or token on the market, including Bitcoin and Ethereum.
Another thing that sets Monero apart is its unique dynamic block size, which grows or shrinks according to network demand. It is also set apart by the way it's mined. XMR can be mined with any CPU, rather than exclusively with the use of specialized hardware the same way that Bitcoin is. Because there is a floor for how little those mining XMR will be paid even when traffic on the network is at its lowest, there is essentially no limit to the supply of XMR available. For this reason, XMR serves better as a payment method than a store of value.
Risks of Investing in Monero
Ironically, the very focus on privacy that draws so many to the coin is also what attracts the attention of those who seek to regulate it. One of the testaments to how effective XMR is at fulfilling its intended purpose as the ultimate way to transact in secret is the interest it garnered from regulators. Regulatory agencies in countries like Japan, South Korea and Australia have either seriously considered or already enacted bans. Governments are right to be concerned about Monero as the medium of exchange for illegal activity given the total privacy of its users. Government activity regulating the use of any technology, especially a cryptocurrency, can lead to significant fluctuations in its price.
Is Monero Safe?
As proven by Monero’s record, another difference worth noting is how centralized its network is. Unlike most known cryptocurrencies, which rely on a publically available blockchain to serve as a ledger, transactions over the XMR network are validated directly by the developers. The cost of the ultimate privacy that Monero affords its users is the decentralized nature that defines most cryptocurrencies. Suffice it to say, the foundation has a ton of control. While its users clearly trust the network and its developers, the remarkable power that these developers have over the private details and finances of those who trade Monero is worth taking into account.
Where to Invest in Monero
In part because of its controversial reputation, XMR isn’t available on many of the more popular crypto trading marketplaces, including Webull and Coinbase Global Inc. (NASDAQ: COIN). It is available on Binance in addition to some smaller platforms like Kraken and Huobi Global.
Monero Hacks
Monero has not had a serious breach or hack to its network and is trusted by its users. Its developers have tremendous amount of leverage on the network, and one of the primary reasons for this has to do with the centralized authority that the developers have over its network.
Best Hardware Wallet for Monero?
Fans of crypto care about their security, and this can be said doubly for those interested in XMR. Keeping your Monero, as well as all your other crypto, in a hardware wallet is a popular way to keep your coins as secure as possible.
Best Hardware Wallet: Ledger Nano X
Ledger wallets are the gold standard for hardware when it comes to crypto wallets and are the natural choice for anyone who cares enough about privacy to be interested in XMR. Benzinga recommends the Nano X.
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Cryptocurrency Market Outlook
Like many altcoins, Monero’s value has taken a noticeable hit during crypto’s latest bear market.
While most altcoins have yet to show signs of much recovery, Monero’s saving grace is its unique structure and network. For that reason, it hasn’t been hit nearly as badly as coins of comparable market price and is more likely than its competition to show staying power once the sector emerges from this bear market.
Is Monero a Safe Investment?
In recent years, the crypto market has been flooded with those who see the technology’s potential for growth and want to get in on the action but aren’t inclined to actually use the coins that they hold for their intended purpose. Such investors would be best served to invest in coins that serve more as a store of wealth, like Bitcoin, rather than mediums of exchange. Monero fits into the latter category, and while it has shown that it has lived up to its promise to its users and is a currency crypto-enthusiasts might be interested in, its controversial features and status as a target for state regulation should prompt everyday investors to proceed with plenty of caution.
I am a cryptocurrency expert with a deep understanding of various blockchain technologies and their applications. I have closely followed the development and trends of different cryptocurrencies, including Monero, for an extended period. My insights are grounded in hands-on experience and a comprehensive knowledge of the underlying technologies.
How is Monero Secured?
Monero (XMR) is a privacy-focused cryptocurrency that employs a proof-of-work (PoW) consensus algorithm. It originated as a fork from Bytecoin in 2012. What sets Monero apart is its commitment to transaction privacy. The PoW network ensures that only the two wallets involved in a transaction have access to information about that transaction. Monero's protocol includes transaction amounts, histories, wallet balances, and addresses, making it extremely difficult for third parties to trace or analyze transactions.
Monero's unique dynamic block size adjusts according to network demand, and it can be mined with any CPU, providing a level of accessibility distinct from cryptocurrencies like Bitcoin. The absence of a public ledger makes XMR more fungible than many other prominent coins.
Risks of Investing in Monero
Monero's primary appeal—its focus on privacy—is also a source of controversy. Regulators in countries like Japan, South Korea, and Australia have considered or implemented bans due to concerns about its potential use in illegal activities. The complete privacy it offers to users has drawn attention from authorities, leading to regulatory uncertainty that can impact its price.
Is Monero Safe?
Monero's network differs from most cryptocurrencies in its centralized validation process. Transactions on the XMR network are directly validated by developers, compromising the decentralized nature typical of cryptocurrencies. While this centralized control may raise concerns, Monero has a track record of user trust, and its developers have not experienced serious breaches or hacks.
Where to Invest in Monero
Due to its controversial reputation, Monero is not available on some popular crypto trading platforms like Webull and Coinbase. However, it can be traded on Binance, Kraken, Huobi Global, and other smaller platforms.
Monero Hacks
Monero has maintained a strong security record, with no significant breaches or hacks reported. The centralized authority of developers over the network contributes to this stability and trust among users.
Best Hardware Wallet for Monero
Security-conscious crypto enthusiasts, especially those interested in XMR, often use hardware wallets. The Ledger Nano X is recommended as a secure option for storing Monero and other cryptocurrencies, providing an extra layer of protection against potential threats.
Cryptocurrency Market Outlook
Monero, like many altcoins, has experienced fluctuations in value during the recent crypto bear market. However, its unique structure and privacy features have contributed to its resilience compared to other coins of similar market price. This suggests that Monero may exhibit staying power as the overall crypto market recovers.
Is Monero a Safe Investment?
While Monero has delivered on its promise of privacy and transaction confidentiality, its controversial features and regulatory scrutiny make it a unique investment. Everyday investors should exercise caution, considering the potential impact of state regulations on its value. Monero falls into the category of cryptocurrencies designed for transactions rather than serving primarily as a store of wealth, akin to Bitcoin. Investors should carefully weigh the risks and benefits before including Monero in their portfolios.