Planning to trade Monero cryptocurrency? Here are the Basics to Get You Started

One of the main principles of blockchain technology is to provide users with unbreakable privacy. As the first decentralized cryptocurrency, Bitcoin relied on this premise to market itself to a wider audience that needed a virtual currency that was free from government interference at the time.

Unfortunately, along the way, Bitcoin has proven to be riddled with a number of weaknesses, including non-scalability and a volatile blockchain. All transactions and addresses are recorded on the blockchain, making it easy for anyone to connect the dots and unlock users’ personal details based on their existing records. Some government and non-government agencies are already using blockchain analytics to read data on the Bitcoin platform.

Such drawbacks have led developers to look at 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 whose main goal is to provide better privacy than other blockchain ecosystems. This technology protects users’ data through hidden addresses and Call signatures.

A secret address refers to the creation of a single address for solo operation. Two addresses cannot be linked to one transaction. The received coins go to a completely different address, making the whole process ambiguous to an outside observer.

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

Cryptography has certainly won the hearts of many developers and blockchain enthusiasts, but the truth is that it is still an emerging tool that is underutilized. Monero has already distinguished itself as a legitimate project worth adopting because it uses the proven Ring signature technology.

Things you need to know before you start trading Monero

Monero market

The Monero market is similar to that of other cryptocurrencies. If you want to buy it, Kraken, Poloniex and Bitfinex are some of the exchanges to visit. Poloniex was the first to adopt it, followed by Bitfinex and finally Kraken.

This virtual currency seems to be mostly pegged against the dollar or cryptocurrencies. Some of the available pairings 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 of the good things about XMR is that anyone can participate in its mining, either individually or by joining a mining pool. Any computer with reasonably good processing power can mine Monero blocks in a few hiccups. Don’t bother going for ASICS (application specific integrated circuits) which are currently mandatory for Bitcoin mining.

Price volatility

Despite being a huge cryptocurrency network, it is not that special when it comes to volatility. Almost all altcoins are extremely volatile. This shouldn’t bother any avid trader because this is what makes them profitable in the first place – you buy when prices are falling and sell when they are in an uptrend.

In January 2015, XMR was going for $0.25, then in May 2017 it ran up to $60 and is currently bowling above $300. Monero coin recorded an ATH (all-time high) of $475 on January seventh before starting to fall to $300 along with other cryptocurrencies. At the time of this writing, almost all decentralized currencies are in a price correction, and Bitcoin is climbing to $10-11k from its spectacular ATH of $19,000.

Fungibility and acceptance

Due to its ability to offer reliable privacy, XMR has been adopted by many people to easily exchange their coins for other currencies. Simply put, 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 coin involved is disabled, making them immutable. With Monero, you cannot distinguish one coin from another. Therefore, no seller can reject any of them because it is associated with a bad event.

The Monero blockchain is currently one of the trendiest cryptocurrencies with a significant following. Like most other blockchain projects, its future looks great despite impending government crackdowns. As an investor, you should do your due diligence and research before trading any Cryptocurrency. If possible, seek help from financial experts to get you on the right track.