Planning to trade Monero Cryptocurrency? Here are the basics to get you started

One of the core principles of blockchain technology is to provide users with unwavering privacy. Bitcoin relied on this premise as the first decentralized cryptocurrency to market itself to a wider audience that then needed a virtual currency that was free from government interference.

Unfortunately, along the way, Bitcoin has proven to be riddled with a number of vulnerabilities, including non-verifiability and immutable blockchains. All transactions and addresses are recorded on the blockchain making it easy for anyone to connect the dots and uncover the personal details of users based on their existing records. Some public and private organizations are already using blockchain analytics to read data on the Bitcoin platform.

Such flaws have led developers to look for alternative blockchain technologies with improved security and speed. One of these projects is Monero, commonly represented by the ticker XMR.

What is Monero?

Monero is a privacy-oriented cryptocurrency project that aims to provide better privacy than other blockchain ecosystems. This technology shields users’ information through stealth addresses and ring signatures.

Stealth addressing refers to the creation of a single address for a single transaction. No two addresses can be pinned in a single transaction. The received coins go to a completely different address making the entire process obscure to an outside observer.

Ring signature, on the other hand, refers to the mixing of account keys with public keys thus creating a “ring” of multiple signatories. This means that a monitoring agent cannot link a signature to a specific account. Unlike cryptography (the mathematical method of securing crypto projects), ring signatures are not a new kid on the block. Its principles were explored and documented in a 2001 paper by the Weizmann Institute and MIT.

Cryptography has certainly won over many developers and blockchain enthusiasts, but the truth is, it is still a new tool with a handful of uses. Since Monero uses the already tested ring signature technology, it has distinguished itself as a legitimate project to accept.

Things to know before you start trading Monero

market of mind

Monero’s market is similar to other cryptocurrencies. Kraken, Poloniex and Bitfinex are some exchanges to visit if you want to buy it. Poloniex was the first to adopt it followed by Bitfinex and lastly Kraken.

This virtual currency is mostly seen pegged to the dollar or to fellow cryptos. Some of the available pairs include XMR/USD, XMR/BTC, XMR/EUR, XMR/XBT and more. The trading volume and liquidity record of this currency are very good statistics.

One good thing about XMR is that anyone can participate in mining it either individually or by joining a mining pool. Any computer with significantly better processing power can mine Monero blocks with few hiccups. ASICS (Application-Specific Integrated Circuits) which are currently mandatory for Bitcoin mining.

Unbelievable price

Despite being a strong cryptocurrency network, it is not that special when it comes to volatility. Virtually all altcoins are highly volatile. This should not worry any avid trader as this is the factor that makes them profitable in the first place – you buy when prices are falling and sell when they are in an upward trend.

In January 2015, XMR was going to $0.25 then did some jogging to $60 in May 2017 and it is currently bowling above the $300 mark. The Monero coin recorded its ATH (all-time high) of $475 on January 7th before starting to fall to $300 along with other cryptocurrencies. At the time of this writing, virtually all decentralized currencies are in a price correction phase with Bitcoin tottering between $10-11k from its glorious ATH of $19,000.

Fungibility and acceptance

Thanks to its ability to offer reliable privacy, XMR has been adopted by many people and its coins can easily be exchanged for other currencies. In simple terms, Monero can easily be traded for something else.

All bitcoins on the bitcoin blockchain are recorded, and therefore, when an event such as a theft occurs, every currency involved will be immutably prevented from operating. With Monero, you cannot distinguish one currency from another. Therefore, no seller can reject any of them because it is associated with a bad event.

Monero blockchain is currently the most popular cryptocurrency with a significant number of followers. Like other blockchain projects, its future looks bright due to government crackdowns. As an investor, you should do your due diligence and research before trading in any cryptocurrency. Where possible, seek the help of financial experts to stay on track.