Monero Investment Analysis

Monero is a secure, private, untraceable, open source currency that has been created to offer the anonymity that couldn’t be achieved with Bitcoin.
Built upon strong set of ethics and principles of decentralization and scalability, Monero was launched in the first quarter of 2014, without pre mine, insta mine and not even with an Initial Coin Offering. Even just from these basic indicators it’s easy to understand how different this token is, compared to what we are used to in the blockchain backed crypto currencies world (especially in this later stage of this kind of technology, with all the ERC20 alt coins that have popped up recently).

The community approach behind the development of this crypto currency is completely based upon donations from the token users themselves, blockchain technology enthusiasts and other people that want to influence the future of digital banking.

As they aim towards creating a digital currency that works just like cash, Monero developers’ goal is to provide complete privacy of transaction and the parties involved in it.The problem with BTC and other crypto currencies is how open the system is, every fund transfer can be traced back to the original wallets from which bitcoins have been sent and the wallet to which they arrived, along with the exact amount of currency that has been involved.

Within the Monero ecosystem, things are different: casual onlookers have no way to discover who sent the funds, who received them and what the transferred amount would be. This means that, on the Monero blockchain, transactions are private and untraceable.

But secure, private and untraceable transactions of funds are not the only thing that this crypto currency ecosystem can offer. Other services offered on the same blockchain, which follow the same anonymity ethical principles of Monero, have been implemented. Smart contracts that have been made famous to the mainstream audience on the Ethereum blockchain can be implemented here as well, but with added anonymity and confidentiality which are not to be seen anywhere else. This will progressively become more useful in the future when internet of things devices that are backed up by blockchain technologies will begin to be adopted by the mainstream market. One example of such devices could be the the small size, physical wallets that several crypto currency exchanges are starting to market to their public.

 

 

 

 

Another important privacy aspect that has been ignored in the creation, implementation and development of Bitcoin is upon which set of regulations the networking infrastructure used to access it is based. To ensure that the networking aspect of trading within this ecosystem is as secure, private and untraceable as possible, Monero developers have been teaming up with Privacy Solutions and began developing a way to incorporate i2p (Invisible Internet Protocol, a garlic routing overlay network and dark net that permit pseudo anonymous communication, web surfing and file transfers) routing within the Monero platform. This will permit the creation of a secure exchange marked and a private communication platform that cannot be circumvented by internet service providers or government willing to censor citizens that are willing to protect their own privacy and their digital assets

Thanks to the heavy testing and extensive analysis by reviewers and penetration testers that are among the best in the crypto currency and cypherpunk circles, within the Monero ecosystem transaction of funds are secure and private by default. Users can decide how private they want their account to be, from completely secure, to partially obfuscated and even completely visible by auditors that might need to be granted total, view only access to one’s Monero account, its funds and its status.

Being able to decide and easily set the amount of transparency needed for one’s account is a valuable tool that can be useful in several user cases. While most currency traders might opt for a fully anonymous and obfuscated account, no profit organizations might want to opt for a completely transparent setup to guarantee clarity of fund transfers to their donors.

In most blockchain backed crypto currencies ecosystems, complete decentralization is just a theoretical goal which is hardly implemented in the correct way. As long as there is even just a part of the system that requires a centralized, focal point to operate, decentralization fails on all aspects.

By the way they are implemented, Proof of Stake (PoS) crypto tokens necessarily favor a group of whales that gain an incredible power and can leverage on it to modify the market and other traders’ behavior; all this while gaining massive traction in terms of contractual power and returns in the long term, given the higher amount of available funds they have.

In Proof of Work (POW) tokens, such as Bitcoin, the whole mining process is necessarily centralized within a closed group of available pools, which progressively gain power and can influence the way such tokens get developed. One clear example of such power is the amount of drama that is connected to the discussions regarding Bitcoin’s SegWit, which will happen on the first day of August 2017. Bitcoin mining pools, especially from parts of the world where mining is less expensive such as China and areas of South East Asia, do not want to see their power diminish and are actively trying to influence the market with their decision by carteling and trying to build a cohesive front. This centralization of power is extremely risky, especially when it’s coupled with a system that lets anyone see which are the Bitcoin wallets involved in a transaction and what is the amount of funds that are moved on the blockchain.

A third common instance of centralization within the crypto currency world is the closed source approach that several “alt crypto coins” sometime take. This means that only a restrict, approved group of developers and other people can operate on the problem solving and future development of a given token, effectively creating not only a central bottleneck which can slow down bug fixes, but also a very important security pitfall. Closed source systems cannot be publicly audited for back doors or be reviewed by third party IT security experts. Trusting one’s funds with a closed source token means actively delegating its future to the decision of someone else, giving them complete control and without having a way to check how malicious their actions are going to be.

The way Monero token tackles these three crypto currency problems is first of all by strictly being powered by Proof of work, employing an algorithm that, thanks to its efficiency and Smart Mining, does not exclude as many people from mining as in other crypto currencies. Owners of huge mining pools are finally not the only ones profiting from this and anyone can participate, effectively being able for the first time to mine a coin for several years without having to rely on extremely expensive mining hardware; any modern x86 CPU can be used and this means the end user and newcomers in the mining market do not have to collect a hefty amount of funds and have to take on a huge, risky investment in order to begin.

Transactions along the Monero blockchain being strictly private and obfuscated by default, this system is — by design — impossible to censor. The development team is very active and anyone can participate and become part of a 30 developer contributor team. Discussion about the future of the core technology is actively promoted by the team and everyone gets a say on how this project should evolve. The open source approach and the publicly available source repository on GitHub allow anyone to check the code upon which Monero is built and avoids any kind of malicious code to be implemented in the main development branch without the whole team of coders noticing.

For what concerns scaleability, most tokens that have been created by forking the source of the original Bitcoin core have what is called a “block size limit”. Such limit in block size is a problem that has only been discussed recently in the BTC community and it’s one of the focal problems that will be addressed during the Bitcoin’s Segregated Witness decision which will happen on the first of August 2018.

Monero’s dynamic block size limit tackles this problem at its core and and nips it at the bud by automatically recalculating said limit and making sure it doesn’t grow out of control thanks to a penalty system implemented within this ecosystem. Together with the block size debate come a series of fee problem and the possibility that miners could deviate from the standard longest chain mining and start a fork to try to cash in high transaction fees. The way Monero tackles this problem is by having a “permanent block reward” that never goes below 0.3 XMR, actively turning this token in a deinflationary currency: inflation in this ecosystem will reach 1% by 2022 and then continue to drop while nominal inflation will continue at the set rate. Having such an array of features implemented in a coin means that its miners will always have a reason to operate on this currency, keeping it active and secure from forks, all without the need of a fee market.

Fungibility in Monero has been implemented at protocol level, effectively turning this crypto currency in digital cash. In fact Monero’s transaction have what is called a plausible deniability which turn all your funds into a non transparent set of assets which nobody can flag as definitely spent or unspent during a certain transaction. This opacity helps avoiding censorship by some ill intentioned governments trying to blacklist certain tokens or some traders or miners flagging your transactions as suspicious. Such problems happen only on non fungible currencies, and the lack of such problems within Monero helped it become the digital correspondent of untraceable fiat cash.

What is going to be implemented within this ecosystem in the near future has been pushing Monero’s market price further up: the community behind this token has well received the latest news about multisig being soon implemented in Monero. Multisig is an extremely important for the future of this token, and a huge incentive to make it adoptable by the mainstream market. Needing more than one associated private key in order to spend funds makes transactions secure, arbitrage more streamlined and the possibility for mainstream users to have a chargeback in case there are problems with the operation or with what the customer paid for (such as a defective product, wrong service, technical problem during the transaction process or item not being sent by a fraudulent merchant) . Such level of guarantees are an important missing piece from the puzzle that will lead the general public to adopt this currency.

Another important factor in general user adoption are the desktop and mobile MyMonero apps which are soon to be released, allowing even non technically oriented users and people outside of the crypto currency markets to begin trading and stacking funds on a blockchain wallet with ease.

At last, integration of Monero into wallets like Coinomi, Exodus and the Ledger Nano S hardware wallet will definitely help this token gain the trust required for global end user recognition as a great alternative to less secure, centralized blockchain technologies. In fact, wallets that are accessible to non tech savvy users are in my opinion what the whole crypto currency economy needs right now to make the big jump between the dark side of the net and being able, in an hopefully very near future, to spend one’s tokens the same way we do with cash; the advantages of the structure we use in the current economy has to be exploited to introduce the general public to this groundbreaking technology, and simplifying user adoption is the effective strategy towards gaining media exposure that can be similar to Bitcoin’s. It’s only when people will get used to it and to the use of crypto wallets that other aspects of Monero will begin to shine, such as the impossibility to censor it, the well developed security behind this currency and the blockchain platform behind it and finally the complete anonymity that it can offer.

INVESTMENT REVIEW

Investment Rating :- A+

Investment Risk :- Low

Short Term Investment Risk/Reward Ratio :- 4/6

Long Term Investment Risk/Reward Ratio :- 1/9

 

 

 

 

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