Monero - $XMR, Asset Review
…Monero will undergo a network upgrade… (GetMonero, 2022)
General Information-What is Monero
Monero Background
Monero Scrutiny
Token Information-Tokenomics
Consensus
Additional Information-
On-chain Analysis
Technical Analysis
Conclusion
General Information-
What is Monero?
Monero (XMR) is a decentralized, private, and secure cryptocurrency. It is an open-source digital currency that was created in 2014 with the primary goal of offering a secure and private alternative to other cryptocurrencies, such as Bitcoin. Monero is based on a blockchain technology and uses a cryptographic algorithm to secure transactions, making it resistant to government censorship, hacking, and other security breaches. One of the key features of Monero is its privacy-focused approach. Unlike other cryptocurrencies, Monero uses ring signatures and stealth addresses to hide the identity of the sender, receiver, and the amount of the transaction. This makes it difficult for anyone to track the source of the funds or their destination, providing users with a high level of privacy and security. Additionally, Monero has a strong community of developers and users who are actively working to improve the security and privacy features of the currency. These efforts have made Monero one of the most popular privacy-focused cryptocurrencies in the world.
2. Monero Background
Monero was created in 2014 by a group of seven individuals who used the pseudonym "thankful_for_today". The true identity of the creators remains unknown, but they have a strong background in cryptography and software development. The creation of Monero was a response to the lack of privacy in other cryptocurrencies and a desire to provide a secure and private alternative. The team behind Monero has continued to develop and improve the cryptocurrency, and the project is now maintained by a large community of developers from around the world. These developers have a wide range of skills, including expertise in cryptography, blockchain technology, and software development. They are committed to the goals of Monero and work tirelessly to improve its security and privacy features, making it one of the most advanced and secure cryptocurrencies in the world. The fact that the identity of the creators is unknown has added to the mystery and excitement surrounding Monero, and has contributed to its popularity and success.
3. Monero Scrutiny
Monero was delisted from some exchanges due to regulatory concerns. Cryptocurrency regulations vary from country to country, and some countries have stricter laws surrounding privacy-focused cryptocurrencies like Monero. In some cases, exchanges have been forced to delist Monero and other privacy-focused coins due to concerns about potential illegal activities such as money laundering, fraud, and tax evasion. These exchanges are concerned that they may be held accountable for any illegal activities that occur on their platform, so they have chosen to delist certain coins as a precautionary measure. Another reason that Monero was delisted from some exchanges is its association with mining malware. Monero has been popular among malicious actors because of its privacy features and the fact that it can be easily mined using malware. This has led some exchanges to delist Monero as a measure to protect their users from the potential risks associated with this type of malware. In addition, the increased scrutiny of privacy-focused cryptocurrencies by regulators and law enforcement agencies has also led some exchanges to delist Monero and other privacy coins in order to comply with these regulations.
Figure A
Token Information-
Tokenomics
$XMR is the native token for the Monero blockchain. Currently, the circulating supply is 18,235,749 with an uncapped supply. According to a report from Messari, $XMR has entered a decreasing issuance phase per below. While it remains inflationary due to the consensus, most of the inflation has already been factored into the supply schedule. $XMR is used mainly for peer-to-peer transactions, is seen as a store of value and is used to pay fees for transactions. $XMR was launched by developers with no tokens to avoid any unwanted attention from regulators. Each token was mined and there was no money raised in any sort of manner giving Monero pure privacy in almost every aspect.
Figure B
2. Consensus
Monero uses a Proof of Work (PoW) consensus mechanism to secure its network and validate transactions. This means that Monero relies on a network of computers, or nodes, to compete with each other to solve complex mathematical problems in order to validate transactions and add new blocks to the blockchain. The node that solves the problem first is rewarded with a certain amount of Monero, incentivizing others to participate in the network and maintain its security. Monero uses a unique PoW algorithm called CryptoNight, which was specifically designed to be resistant to ASIC mining. This means that Monero can be mined efficiently on personal computers and laptops, making it more decentralized and resistant to centralization of mining power. Additionally, the CryptoNight algorithm is designed to reduce the energy consumption of mining, making it more environmentally friendly compared to other PoW algorithms. The use of PoW consensus, combined with the CryptoNight algorithm, helps ensure the security and stability of the Monero network, while also promoting decentralization and fairness in the distribution of rewards.
Additional Information-
On-chain Analysis
For this on-chain analysis, we will look at a few charts like transaction count and hash rate. The first thing I want to discuss is transaction count (daily). Transaction count is a critical element to understand whether or not the blockchain is being used or not. According to a chart from Bitinfocharts, the transaction count has only gradually increased since 2014 and is currently sitting at around 14.5k transactions daily. Another chart to focus on is the hash rate. According to a chart from CoinWarz, the hash rate is 2.58 GH/s. Hash-rate is a direct sign of the strength of the network as it measures the security and mining difficulty of the blockchain. As you can see below the hash rate has only grown which is a great sign for the continuous growth of the network. Both indicators display strength as per on-chain metrics is concerned.
2. Technical Analysis
Figure C
$XMR has had an amazing run from $.37 to $518 yielding ~1,140x + returns. Ever since $XMR hit all-time-highs, we have seen the price fall towards a high time frame demand zone (grey line) which has acted as a support region. Price has already consolidated at this level and to me it looks like bullish consolidation. The way the correction subdivides will give hints on how the next move plays out. Bottom structures typically take a long time to form and reverse when the bears are exhausted, so it's best to stay patient for a clear pattern. Currently, there are two scenarios that I believe will play out. (1) XMR goes to 200 dollars and then retrace to 96. (2) XMR consolidates above the 150 dollars range which turns into support leading to new highs. No matter what scenario plays out, one thing stands out ultimately. $XMR has been going sideways for almost 1900 days which means when it goes up again it will be a sharp rise. All in all, the price action of this chart is bullish over the long term, and holding the support will be crucial.
Conclusion
Monero has a unique advantage in the world of cryptocurrency as it offers privacy and anonymity features that protect users from government overreach and surveillance. In the most recent upgrade, the Monero community have only worked to strengthen the networks security. With concerns about government surveillance and data privacy becoming increasingly prevalent, the demand for privacy-focused cryptocurrencies like Monero is likely to grow. The use of ring signatures, stealth addresses, and Kovri in Monero's transaction process makes it difficult for governments or other entities to track and monitor financial transactions. This, in turn, gives users more control over their financial privacy and security. As a result, Monero has the potential to succeed as a blockchain in a world where privacy and freedom from government overreach are becoming more important to individuals and organizations alike. The fundamentals of Monero remain strong, along with a strong technical chart, I believe that it may* lead $XMR to new highs. While I am bullish on Monero, that doesn’t mean it’s correlated to the value of $XMR.