Monero

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This article is about the cryptocurrency. For other uses, see Monero (disambiguation).

Monero
Proof-of-work
Hash functionRandomX
Block rewardXMR 0.6
Block time2 minutes
Supply limitUnlimited
Website
Websitegetmonero.org

Monero (/məˈnɛroʊ/; Abbreviation: XMR) is a cryptocurrency which uses a blockchain with privacy-enhancing technologies to obfuscate transactions to achieve anonymity and fungibility. Observers cannot decipher addresses trading Monero, transaction amounts, address balances, or transaction histories.[2]

The protocol is

proof-of-work algorithm. The algorithm issues new coins to miners and was designed to be resistant to application-specific integrated circuit
(ASIC) mining.

Monero's privacy features have attracted cypherpunks and users desiring privacy measures not provided in other cryptocurrencies. It is used in illicit activities such as money laundering, darknet markets, ransomware, cryptojacking, and other organized crime. The United States Internal Revenue Service (IRS) has posted bounties for contractors that can develop Monero-tracing technologies.[4]

Background

Monero's roots can be traced back to CryptoNote, a cryptocurrency protocol first described in a white paper published by Nicolas van Saberhagen (presumed pseudonymous) in October 2013.[5] The author described privacy and anonymity as "the most important aspects of electronic cash" and called bitcoin's traceability a "critical flaw".[6] A Bitcointalk forum user "thankful_for_today" coded these ideas into a coin they dubbed BitMonero. Other forum users disagreed with thankful_for_today's direction for BitMonero, so forked it in 2014 to create Monero.[5] Monero translates to coin in Esperanto.[5] Both van Saberhagen and thankful_for_today remain anonymous.[5]

Monero has the third-largest community of developers, behind bitcoin and Ethereum.[6] The protocol's lead maintainer was previously South African developer Riccardo Spagni.[7] Much of the core development team chooses to remain anonymous.[8]

Improvements to Monero's protocol and features are, in part, the task of the Monero Research Lab (MRL), some of whom are anonymous.[citation needed]

Privacy

Ring signatures
create ambiguity in blockchain analysis

Monero's key features are those around privacy and anonymity.

crypto anarchists, cypherpunks, and privacy advocates.[6]

The transaction outputs, or notes, of users sending Monero are obfuscated through ring signatures, which groups a sender's outputs with other decoy outputs.[11] Encryption of transaction amounts began in 2017 with the implementation of ring confidential transactions (RingCTs).[5][12] Developers also implemented a zero-knowledge proof method, "Bulletproofs", which guarantee a transaction occurred without revealing its value.[13] Monero recipients are protected through "stealth addresses", addresses generated by users to receive funds, but untraceable to an owner by a network observer.[5] These privacy features are enforced on the network by default.[5]

Monero uses Dandelion++, a protocol which obscures the IP address of devices producing transactions. This is done through a method of transaction broadcast propagation; new transactions are initially passed to one node on Monero's peer-to-peer network, and a repeated probabilistic method is used to determine when the transaction should be sent to just one node or broadcast to many nodes in a process called flooding.[14][15]

Efforts to trace transactions

In April 2017, researchers highlighted three major threats to Monero users' privacy. The first relies on leveraging the ring signature size of zero, and ability to see the output amounts. The second, "Leveraging Output Merging", involves tracking transactions where two outputs belong to the same user, such as when they send funds to themselves ("churning"). Finally, "Temporal Analysis", shows that predicting the right output in a ring signature could potentially be easier than previously thought.[16] According to a blog post from Monero developers, they had already addressed the first concern with the introduction of RingCTs in January 2017, as well as mandating a minimum size of ring signatures in March 2016.[17] In 2018, researchers presented possible vulnerabilities in a paper titled "An Empirical Analysis of Traceability in the Monero Blockchain".[18]

In September 2020, the United States Internal Revenue Service's criminal investigation division (IRS-CI), posted a $625,000 bounty for contractors who could develop tools to help trace Monero, other privacy-enhanced cryptocurrencies, the Bitcoin Lightning Network, or other "layer 2" protocol.[4][6] The contract was awarded to blockchain analysis groups Chainalysis and Integra FEC.[6]

Mining

Monero GUI running on a remote node

Monero uses a

GPUs, a design decision which was based on Monero project's opposition to mining centralisation which ASIC mining creates,[23] but has also resulted in Monero's popularity among malware-based non-consensual miners.[24][25]

Illicit use

Monero's privacy features have made it popular for illicit purposes.[10][26][27]

Darknet markets

Monero is a common medium of exchange on darknet markets.[5] In August 2016, dark market AlphaBay permitted its vendors to start accepting Monero as an alternative to bitcoin.[5] The site was taken offline by law enforcement in 2017,[28] but it was relaunched in 2021 with Monero as the sole permitted currency.[29] Reuters reported in 2019 that three of the five largest darknet markets accepted Monero, though bitcoin was still the most widely used form of payment in those markets.[10]

Mining malware

Hackers have embedded malware into websites and applications that hijack victim CPUs to mine Monero (sometimes called

Kim Il-sung University in North Korea.[35]

Ransomware

Ransomware deployed in 2021 by REvil. The hackers are demanding payment in Monero.[36]

Monero is sometimes used by ransomware groups. According to CNBC, in the first half of 2018, Monero was used in 44% of cryptocurrency ransomware attacks.[37]

The perpetrators of the 2017 WannaCry ransomware attack, which was attributed by the US government to North Korean threat actors,[38] attempted to exchange the ransom they collected in Bitcoin to Monero. Ars Technica and Fast Company reported that the exchange was successful,[39][7] but BBC News reported that the service the criminals attempted to use, ShapeShift, denied any such transfer.[40] The Shadow Brokers, who leaked the exploits which were subsequently used in WannaCry but are unlikely to have been involved in the attack, began accepting Monero as payment later in 2017.[39]

In 2021,

DarkSide, normally requests payment in either bitcoin or Monero, but charge a 10–20% premium for payments made in bitcoin due to its increased traceability risk.[6] Ransomware group REvil removed the option of paying ransom in bitcoin in 2021, demanding only Monero.[6] Ransomware negotiators, groups that help victims pay ransoms, have contacted Monero developers to understand the technology.[6] Despite this, CNBC reported that bitcoin was still the currency of choice demanded in most ransomware attacks, as insurers refuse to pay Monero ransom payments because of traceability concerns.[8]

Regulatory responses

The attribution of Monero to illicit markets has influenced some exchanges to forgo listing it. This has made it more difficult for users to exchange Monero for fiat currencies or other cryptocurrencies.[8] Exchanges in South Korea and Australia have delisted Monero and other privacy coins due to regulatory pressure.[42]

In 2018, Europol and its director Rob Wainwright wrote that the year would see criminals shift from using bitcoin to using Monero, as well as Ethereum, Dash, and Zcash.[43] Bloomberg and CNN reported that this demand for Monero was because authorities were becoming better at monitoring the Bitcoin blockchain.[44][43]

On 20 February 2024, the cryptocurrency exchange Binance delisted Monero, citing regulatory compliance.[45]

On 11 April 2024, Kraken announced they would be delisting Monero for users located in Ireland and Belgium on June 10, 2024. As of the 10th of May 2024 Monero deposits and trades have been suspended.[46]

Publicity

See also

References

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External links

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