What Is Monero?
Monero (XMR) is one of the most exciting new cryptocurrencies out there. When you compare Monero to other cryptocurrencies, you’ll notice that Monero has a different focus. Some cryptocurrencies focus on smart contracts, others seamless transactions. But Monero emphasizes protecting and enhancing its users’ privacy.
Monero has also taken the interesting step of putting itself in direct opposition to Bitcoin, stating on its website, “Monero is not a Bitcoin clone.” Monero also admits that it is not user-friendly, and it also concedes that it is still a work in progress. While Monero compares its unfinished beginnings to those of Bitcoin, that is where the comparisons stop.
History of Monero
XMR came into existence in 2013. The cryptocurrency gained attention when it was accepted as a form of payment by Alphabay, the dark web market. Monero’s attraction was its anonymity, and, since then, there have been notable improvements with the currency. Even its administrators and creators are anonymous, preferring to be named only by their online screennames.
It’s worth noting that while Monero provides a level of privacy and anonymity that hasn’t been seen before with other cryptos, it still allows authorities to audit and view funds if allowed by the user. Furthermore, the association of Monero with criminal activity is not completely true even though the altcoin does provide users with a way to avoid high taxation on cryptocurrency.
What is Monero?
Now that the foundation of Monero has been laid out, it’s time to get to the real topic: what is this?
Monero is a cryptocurrency that runs on the blockchain. It is mined by the community. However, despite operating via a ledger, Monero does not allow others to view fellow coin holders’ holdings. Someone who wanted to see what you spend your money on would be hard pressed to do so. When you send coins, they are routed through an address that has been randomly created. This is a one-time address recorded by Monero that does not link the sender or recipient. You’re totally anonymous.
XMR also uses the Ring signature. The Ring signature scrambles the two parties’ transaction with the transactions of other users. The original transaction is moved to a different part of the blockchain, mixing it with other transactions and making it nearly impossible to identify the original. This is different from Dash’s private-sender operation.
Monero does not let its users peek into others’ accounts. Even if the user sends someone else the view key, that other person cannot spend any funds. Monero’s original code is an offshoot of Cryptonote, but, since then, it has developed a track all its own.
How to Buy Monero
Buying Monero from a brokerage is possible, despite the secretive nature of XMR. While using an exchange such as Kraken or Bitfinex is a possibility, it’s worth noting that this is not the only way to get your hands on Monero. These exchanges are risky. To illustrate that risk, it’s important to look at a previous instance of why and how they are problematic. Brokerages are the better choice.
If you look back years ago at MtGox, the largest cryptocurrency exchange that controlled more than 70% of the market in 2013, you’ll see the dangers of an exchange. MtGox was hit by a massive hack–possibly the worst in the history of cryptocurrency. Around $500 million of Bitcoin was stolen by the hackers. Bitfinex, which had touted its own security, was recently hit by a hack that stole $75 million in Bitcoin. The security of these exchanges places you at the mercy of the owners of the exchange (as well as their competency level).
When it comes to how to buy Monero, brokerages are the answer.
Where to Buy Monero
Brokerages will allow you to avoid the aforementioned weakness. Brokers trade in CFDs (Contracts for Difference), which is an agreement between you and the broker that you will take a short or buy position on the CFD. Though you do not own the underlying asset, if the market shifts in your favour, you will be able to profit. You can take advantage of the unique nature of Monero without placing yourself at risk.
When it comes to price, that is where Monero does tend to move in similarity to its rival, Bitcoin. Monero’s prices are, as you may expect, very, very volatile. There are dramatic highs and lows with this cryptocurrency. Some factors that affect Monero’s price include its availability, as well as its legitimacy. Though Monero needs to retain its anonymity–that is what sells so many of its buyers on it–it still needs to have at least some form of media attention; otherwise, it won’t be well-known enough to become popular. If XMR shows signs of approval on major markets, that also will affect the price.
Monero v. Bitcoin
No article about this cryptocurrency would be complete without more information on why exactly you may prefer it to Bitcoin. An understanding of Bitcoin’s operations is necessary to see this. When you make a transaction with Bitcoin, the recipient must divulge their information (public address) to the Bitcoin sender. The transactions are also recorded in a public ledger. If someone really wanted to see how you spent your money, they easily could. They have a window into your wallet. In this day and age, with privacy slowly slipping out of society’s grasp, Monero seeks to change that.
XMR hides transaction addresses between recipient and sender, scrambling the data so that no one knows who is sending what. Even other cryptocurrencies such as Dash cannot compete with this level of anonymity. While there may be similarities in price volatility, mining, and blockchain technology, those similarities are few and far between.
In short, XMR is perfect for those seeking anonymity and privacy with their transactions. Monero is used legitimately, and its reputation as a dark web favourite is not necessarily accurate, as the majority of people use this legally. Monero may, someday, even be accepted on major markets as its legitimacy grows and more of its foundation is laid by its creators. A brokerage is the best place to buy Monero, providing security that allows you to safely take advantage of this volatile, exciting, new cryptocurrency.
How to Find the Best Broker to Buy Monero Online
With such a high level of market competition and massive volume of exchanges and brokers, it may be difficult for beginners to decide which to choose. Before picking the right online broker to buy Monero, keep these things in mind:
Ensure that the Broker or Exchange you use is regulated by an organisation such as the Financial Conduct Authority in the UK (also known as the UK’s FCA). These types of authorities and regulatory bodies develop rules and services that protect the integrity of the market and safety of traders and investors. Due to safety concerns, make sure to open your Monero trading account with a regulated broker.
Cryptocurrency trading happens online 24 hours a day, which means that customer support needs to be available at all times. Primarily, you will want to speak to a live support person. Many brokerages have a local UK office. When checking out support, ask pertinent questions to find out if the representative is reliable or not.
Also, the details of a trustworthy broker should be out in the open, either online or otherwise, for the public to see.
Your ideal online broker for buying or trading Monero should offer either multiple account options or an element of customizability with your account. The broker may even have a separate account for beginning traders. Look for a broker that provides competitive spreads and easy deposits and withdrawals.
Many people concentrate on just one asset class when selecting a broker. However, keep in mind there are many other types of investment alternatives with which you can explore. These include stocks, shares, Forex, ETFs, CFDs, options, or futures.
Buying and selling Monero costs money. CFD brokers usually charge a percentage, but you may choose to find a broker who charges a flat fee instead, as opposed to a percentage model.
Because Cryptocurrency is traded in a market where people are always looking to both buy and sell, make sure you consider the amount of liquidity an exchange has. Liquidity is the ability to sell an asset or currency without wrecking the price.
For more information on Cryptocurrency trading, please see our tutorial: The Basics of Cryptocurrency.