Intro to Bitcoin vs. Monero
In this post we are going to compare Bitcoin vs. Monero. Both projects promise users the ability to exchange value anonymously using a decentralized database that records transactions on a public ledger making it difficult if not impossible to create fraudulent transactions or manipulate their respective blockchains in any way, shape or form. It’s this idea of building a peer-to-peer decentralized network that remains anonymous that is acting as the vehicle pushing the mass adoption of cryptocurrencies further forward as the years go by.
Bitcoin’s creator is both anonymous and infamous at the same time. His/her/their name is Satoshi Nakamato of course. Outside a small number of pioneering cryptocurrency developers (often referred to as cypherpunks), and American computer scientist Craig Wright (who claims he himself is Nakamoto), nobody on the planet is successfully convincing the public of the creator’s identity.
In contrast, seven different individuals lay claim to being the ones responsible for creating Monero. Two of those individuals are publicly known. Riccardo Spagni, also known as Fluffypony, and David Lapatie. The other five inventors remain completely anonymous by choice to this very day.
Like many other cryptocurrencies, the basic principles that govern Monero’s coding structure are similar to that of Bitcoin. One key difference however is that the coin the developers used as their direct template is actually Bytecoin. We’ll dive deeper into comparing Monero to Bytecoin later.
What’s more important to understand for now is that Monero’s reason for existence involves taking the public ledger that Bitcoin is famous for and making transactions private so that only the constituents involved in completing a transaction truly know all of the details of the value being exchanged and the reason behind the transaction. The developers of Monero accomplish this using several unique approaches. It’s safe to say five years since the project’s inception, Monero continues to demonstrate its value, ranking as the 14th most valuable cryptocurrency in the world according to market capitalization. The project is valued at just under $2 billion Canadian at the time of this writing.
As you read on and continue to learn more about how the fundamental principles, mechanisms and coding implementations of both bitcoin and Monero compare and contrast, hopefully you’ll realize that privacy is at the root of it all. Both projects will likely continue to maintain staying power for many years to come. That’s saying a lot in a fast-paced, dynamically changing market like cryptocurrencies where last year’s talk of the town can quickly become the project nobody talks about anymore.
Monero and Other Privacy Coins
When Monero launched in 2014, another privacy coin called Dash launched alongside it. These two projects began the cryptocurrency industry’s journey into finding ways to build on top of Bitcoin’s initial promise of anonymity. Several instances of Bitcoin transactions being traced back to original users by sophisticated investigators exposed an opportunity to grab hold of a segment of the cryptocurrency market left begging for a more robust approach to transacting anonymously.
Dash offers users privacy by way of a feature called PrivateSend. PrivateSend allows users to hide data at their discretion within Dash’s mixing mechanism. This makes it difficult if not impossible to both uncover and unscramble data, which means hackers and forensic technology experts have a tough time unraveling all the details. Dash’s coding structure is a fork of Bitcoin’s with this PrivateSend feature standing as the key differentiator between the two.
Monero on the other hand uses a proof-of-work algorithm that markedly different from Bitcoin’s. It’s called CryptoNight. CryptoNight goes beyond mixing up data and hiding it. The protocol uses ring signatures to totally confuse in disguise data being registered on the project’s blockchain. This means it’s impossible to know who is sending XMR tokens, who is receiving them, and the specific details of that transaction as they are recorded on the public blockchain. This means the blockchain maintains its function as an immutable decentralized database without making all of the details public.
Aside from Dash and Monero, Zcash (ZEC) is arguably the most well-known and respected privacy project in cryptocurrency. One of the core believes of the Zcash team is that privacy and legality are not opposites. This belief explains why Zcash offers two different transaction types to its users. One that allows for anonymous trading and keeps ZEC addresses shielded from one another. The other transaction type allows exchanges of value to remain on a public ledger. In short, users get the best of both worlds, and they get to choose between the two. The Zcash blockchain launched in October of 2016. While the technical aspects and overarching merits of the project were highly touted, the value of ZEC tokens plummeted well below the price offered to users at the time of the initial coin offering before bouncing back thanks to the solid fundamentals of the project.
Other privacy focused projects such as PIVX and Verge garnered brief moments in the cryptocurrency spotlight, but the latter project is often the focus of hackers. Last year, an estimated $1.4 million in XVG tokens were stolen thanks to two separate hacking attempts that occurred within less than two months of each other. It’s perhaps for this reason that privacy projects introducing themselves to the world after Monero’s launch struggle to maintain higher valuations over a sustained period of time.
Monero vs. Bitcoin: Privacy and Perspective
The strengths, weaknesses, opportunities and threats presenting themselves within the modern day cryptocurrency industry are oftentimes misunderstood by both government bodies and the general public. Even though it has now been well over a decade since Bitcoin launched, people still talk about digital currencies the way they talked about the internet in the 1990’s. It wasn’t too long ago that the Internet was viewed as a gateway for criminal activity and largely unregulated and unmonitored content that would spiral out of control and cause all sorts of undue harm to users. Today, browsing the Internet is part of everyday life in Western society. The one thing about the Internet that has never changed is that privacy with regard to the storage and exchange of data is an ongoing concern for most users.
As cryptocurrencies continued to evolve, both the privacy -related capabilities at the disposal of users and their perspectives surrounding those capabilities will continue to change too. It’s this ongoing change that saw early adopters begin to ask themselves whether Monero and its privacy-focused counterparts are beginning to win the Monero vs. Bitcoin privacy debate.
Is Bitcoin Really Anonymous?
The idea of being able to transfer value from peer-to-peer without the need for a central authority governing the transaction is clearly the chief value proposition that early adopters of Bitcoin hoped would one day revolutionize economies and render the traditional banking system obsolete. Shortly after Bitcoin’s initial release the underbelly of the crypto world quickly discovered that Bitcoin could be used to facilitate criminal activity.
Bitcoin and Silk Road
Ross Ulbricht began working on a website called Silk Road. Silk Road mission was to facilitate the exchange of illicit goods and services online. Guns, drugs, stolen credit card numbers and the like were made available through the marketplace using a special browser known as Tor. Ulbricht created and managed the website, earning himself a substantial amount of money. In order to disguise the origin of those funds, Ulbricht allowed users to pay for products in Bitcoin.
Fast forward to 2013. Government authorities collapse on Ulbricht and shut down Silk Road. To do this, they surveyed the website through the Tor network for an extended period of time and ultimately traced Bitcoin transactions back to Ulbricht. He would later be convicted in court for his actions and be sentenced to life in prison.
News of Ulbricht’s impending incarceration sent shockwaves through the cryptocurrency space. The incident functioned as an awakening to anybody using Bitcoin to facilitate illegal transactions. The world realized Bitcoin transactions can indeed be tracked, or at least to a degree.
In the years that would follow, more and more companies and investigative services dedicated to uncovering blockchain transactions began to pop up. Thus, the savviest of crypto users understood that other cryptocurrencies and their respective approaches to allowing truly anonymous transactions and impenetrable levels of privacy.
Monero Gains Popularity among Criminals
With Ulbricht’s case in the rear-view mirror and a hefty prison sentence handed down, the take down of Silk Road was perhaps the tuning point criminals needed to clue in to the idea that Bitcoin transactions could indeed be tracked. Criminals needed to find new ways to disguise the origins of funds, even with the benefits of partial anonymity that digital gold offers.
Another reason Monero gained popularity among criminals is the profitably of mining XMR tokens. Investing in a Monero mining rig or mining pool can yield more than $50 USD per day in profits at the time of this writing. Depending on a miner’s hashing power and the percentage of pool fees paid out, its possible to earn over $1,500 per month mining Monero while mining on a relatively small scale.
A Bitcoin vs. Monero mining comparison shows that using a similar hashing power while mining on both blockchains, a user mining on the Bitcoin network will yield less than $10 per day (all numbers based on 100 KH per second mining power). That means it’s roughly 80% more profitable to mine Monero as opposed to Bitcoin, criminal activity or not. Speaking of criminal activity…
While Ross Ulbricht began to face the prospect of spending life in prison, AlphaBay launched at the end of 2015. Within 90 days the website attracted more than 14,000 users. Criminal activity on the darknet was alive and well. AlphaBay quickly became the largest and most profitable website on the darknet. Over that same time, Monero stood as the most popular cryptocurrency used for transactions on platform. Though the founder of AlphaBay died of an apparent suicide attempt in 2017 (when authorities were well aware of the illegal site), many AlphaBay users lost their money thanks to pending transactions that were never fulfilled and Monero transactions that remained private.
The WannaCry Ransomware Attack
Silk Road and AlphaBay definitely prove Monero’s value as a privacy focused cryptocurrency. However, the WannaCry ransom ware attack that spread across an estimated 200,000 computers in 150 countries with most of those computers being infected within 24 hours.
The attack used programming tactics used by the United States National Security Agency and compromised major agencies around the world, including the National Health Service in England and Scotland. The hackers who created WannaCry were out to disrupt Windows computers across Western society, ultimately attempting to disrupt large public agencies and corporations.
In the months after news of the WannaCry attack spread across global media outlets, hackers and phishing scam artists began sending emails to hackers demanding Bitcoin and Monero payments, threatening a WannaCry attack as the penalty for non-compliance.
While other instances of criminal activity surrounding Monero payments were pinned on individual hackers, WannaCry has been attributed to North Korean dictator Kim Jong Un and other notable figures. Even U.S. President Donald Trump stood by the accusations. North Korea denies any involvement.
Bitcoin vs. Monero: Who’s going to win the Privacy Race?
While more people use Bitcoin than Monero at the present moment, nobody knows if and when that will change. Another thing worth considering is that not every crypto user values privacy enough to switch from a respected grandfather like Bitcoin to a privacy token. Bitcoin is still the de-facto king of the industry after all.
A person’s outlook on Monero’s future as the king of privacy is a matter of perspective. If you belive governments will eventually catch up to what’s trending in technology as they have many times before, perhaps privacy tokens won’t prove to be as anonymous as enthusiasts believe. If on the other hand you believe the common theory that criminals are always at the forefront of the latest technology and thus a sign of mass adoption to come, perhaps you find the idea of learning about and trading Monero intriguing.
Only time will tell if that mass adoption really is around the corner for Bitcoin, Monero and the like.
As time passes on and your desire to trade Bitcoin vs. Monero grows, do it right here at Bitbuy.