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Hey steemians
In this post I will be submitting homework task for @levycore on topic privacy coins.
**[Made at snappa](https://snappa.com/)**
https://cdn.steemitimages.com/DQmbmxuhqF6FMs56Bk82F8QtLtd77RrQxvbcoLi3NfpkNDW/Red%20Line.png
**Privacy coin**
As the name suggests, it is a coin or cryptocurrency that provides privacy to its user by making user anonymous in a particular transaction.
As we all know in the world of cryptocurrency, the cryptocurrency which is more decentralised is said to be the most suitable one because of its transparency throughout the blockchain.
But some hackers or people took advantage of it by tracing the address of the holder of cryptocurrency and then blackmailed him or her . So to tackle this situation Privacy coin comes into play.
Now moving on to the questions .
https://cdn.steemitimages.com/DQmbmxuhqF6FMs56Bk82F8QtLtd77RrQxvbcoLi3NfpkNDW/Red%20Line.png
<center>**Privacy coin I choose : Monero(XMR)**</center>
The privacy coin that I am choosing is Monero(XMR).
**What is Monero(XMR)?**
Monero is an open source cryptocurrency mainly focused on privacy of the users of Monero.
It is a decentralised peer to peer currency( No mediators involved in transaction) like any other cryptocurrencies(BTC, ETH etc.) but the main function of Monero is different from any other cryptocurrencies which is privacy, Monero provides the privacy to its user on a decentralised blockchain, I know that it sounds like oxymoron, but it is true.
**Origin or development of Monero(XMR)**
Monero(XMR) was developed to overcome the limitations or to make a better version of its parent cryptocurrency Bytecoin.
Monero(XMR) was created without the pre mine and VC funding in 2014.
**How it works**
It disguises the address of the sender and receiver of XMR and hide amount transacted, that leads to the restriction of watching transaction details of a particular person in blockchain, and that is how Monero(XMR) provides privacy to its users.
https://cdn.steemitimages.com/DQmbmxuhqF6FMs56Bk82F8QtLtd77RrQxvbcoLi3NfpkNDW/Red%20Line.png
<center>**Fundamental analysis of Monero(XMR)**</center>
https://cdn.steemitimages.com/DQmbmxuhqF6FMs56Bk82F8QtLtd77RrQxvbcoLi3NfpkNDW/Red%20Line.png
Fundamental analysis is the analysis by which you can get to know about the cryptocurrency by looking at its market value, projects, whitepaper and roadmap.
First I will be talking about positives of Monero(XMR).
https://cdn.steemitimages.com/DQmbmxuhqF6FMs56Bk82F8QtLtd77RrQxvbcoLi3NfpkNDW/Red%20Line.png
<center>**Positives**</center>
https://cdn.steemitimages.com/DQmbmxuhqF6FMs56Bk82F8QtLtd77RrQxvbcoLi3NfpkNDW/Red%20Line.png
**(1) Privacy** : Privacy is the foremost thing that should be taken care of by Monero(XMR).
It disguises address of sender while making a transaction so that no one can keep track of the address of the users making a transaction.
There are many concepts or way by which Monero(XMR), some of the concepts are :
**(a) Stealth addresses** : Many random addresses are generated along with the real address of the receiver, so that leads to the hiding or mixing of real address with the random addresses and by this process the receiver remain unknown in a transaction with user's address concealed too.
**(b) Ring signature** : In this method the account keys of the sender are mixed with the other account keys on the blockchain, that leads to a secure transaction for sender as his or her account keys is well mixed or hidden with the other account keys and it is very difficult to know about the key which generated the signature.
**(c) Ring confidential transaction(Ring CT)** : this process is used to hide the amount of asset sender sending or receiver receiving .
**[Privacy or untraceable transaction](https://localmonero.co/blocks)**
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**(2) Security to its user** : By using the Ring signature, Stealth addresses and Ring CT, the address of receiver, the account keys of sender and the amount that gets transacted is hidden, so a hacker or other persons can't use these information as leverage upon the user of Monero(XMR) .
And if the address or keys are unknown to anyone on blockchain , one can't use these information against you or blackmail you.
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**(3) Scaling and Scalability in Monero( XMR)** : Greater the scalability, greater the number of transactions.
So to achieve scalability, Monero( XMR) used a proof standard called **bulletproof** .
Bulletproof, now how does it how to improve scalability of Monero(XMR), so by using bulletproof standard transaction size in a block can be reduced .
Without bulletproof :
1 output = 7 kb
2 outputs = 13 kb
With bullet proof
1 output = 2 kb
2 outputs = 2.5 kb
So you can see that just by using bulletproof standard , the transaction size in a block is reduced by 70%-80%.
Now the transaction size in a block is reduced that means now it can handle more user than its previous capacity without any delay or crash in Monero(XMR) blockchain.
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**(4) Mining process** : In mining process, Monero gives reward to the miners for joining mining pool and an individual can mine too as per his wish.
**Consensus algorithm**
Monero(XMR) uses Egalitarian Proof-of - work for mining process , in Proof-of- work consensus algorithm, miners must be highly knowledgeable and must have equipments like CPU, GPU and ASICS miners , with the help of these equipments miner must solve a puzzle which can only be solved with the equipments like ASICS miners and then claim a block. This algorithm works in Bitcoin.
So Monero(XMR)'s motive was to finfish the monopoly of the ASICS miners or the miners who have equipments that others don't have or very costly. So Monero opt for egalitarian proof of work consensus algorithm.
So in order to stop monopoly of certain miners, Monero(XMR) restricted the mining with the help of ASICS miners and that step leads to giving an equal chance to all the miners.
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**(5) White paper and roadmap of Monero(XMR)** :
Before investing in any of the cryptocurrency, the first thing that investors look for is the whitepaper of that cryptocurrency.
**[Whitepaper](https://www.getmonero.org/resources/research-lab/)**
This whitepaper completely focused upon :
- Bitcoin feedbacks and possible solutions.
- Proof of work function.
- Irregular emission.
- Untraceable transactions.
- Egalitarian proof of work .
- Advantages of Monero.
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Roadmap helps investors to see if cryptocurrency is fulfilling their commitments or not, and their upcoming future projects .
**[Roadmap](https://www.getmonero.org/resources/roadmap/)**
In the roadmap of Monero(XMR) , you can see that they have completed all of their commitments they made for each year and their recent change was just 50 days ago, you can also see the future changes they want in Monero.
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**(6) Market details of Monero(XMR)**
**(a) Price of Monero(XMR)** :
Price of Monero(XMR) at the time of screenshot taken is $265.35 , it is that high just because of its feature( security, privacy and Scalability).
**(b) Market capitalization of Monero(XMR)** :
Market capitalization of Monero(XMR) is $4.77 B, and fully diluted Market capitalization is $4.75 B.
**(c) Rank on the basis of Market capitalization** :
Monero(XMR) has been ranked 27 on the basis of market capitalization, this is the one thing that investors look into before investing , as the cryptocurrency which are in the top are reliable ones and safe to invest in.
**(d) Volume(24 hr)** :
Volume of Monero(XMR) for 24 hour is $283 Million.
**(e) Circulating supply** :
Circulating supply of Monero(XMR) is 17.9 Million XMR , it shows the demand of XMR in the market.
**[Market details](
https://coinmarketcap.com/currencies/monero/)**
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**(7) Community of Monero**
Monero has a very diverse community on twitter, telegram, facebook and Reddit etc.
You can make contact with them their or can ask for updates on mail by subscribing Mailing list.
Monero has 421k followers on twitter and 7546 members on telegram which shows the liking of users toward Monero.
**[Hangouts or communities](https://www.getmonero.org/community/hangouts/)**
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**These two screenshots have been taken from my telegram and twitter account**
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https://cdn.steemitimages.com/DQmbmxuhqF6FMs56Bk82F8QtLtd77RrQxvbcoLi3NfpkNDW/Red%20Line.png
<center>**Negatives**</center>
https://cdn.steemitimages.com/DQmbmxuhqF6FMs56Bk82F8QtLtd77RrQxvbcoLi3NfpkNDW/Red%20Line.png
**(1) Liquidity** : It refers to the ease of converting asset into another currency without a reduce in the price of asset.
So liquidity is the problem with Monero(XMR) as it has listed in very few exchanges , I checked and got to know that it is listed on 55 exchanges which is very less than Bitcoin that is listed in more than 400 exchanges.
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**[Exchanges](https://coinranking.com/coin/3mVx2FX_iJFp5+monero-xmr/exchanges)**
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**(2) Regulations implemented by Government** : As we all know that the transactions are untraceable and the sender and receiver is unknown, so Monero(XMR) has been frequently used for illegal activities .
So to control that Govt of different countries can implement some regulations that can affect the privacy nature of Monero(XMR).
**(3) Good competition from other privacy coins** : Monero(XMR) is getting good competition from other privacy coins ( Dash, Zcash etc), so there is a chance that the features of other privacy coins can gain the attention of investor.
- Dash is a fork of bitcoin and gains attention of investors.
- Zcash is not set default to anonymous transactions , it has an option for ordinary transaction, which might gain the attention of users who are looking for both features in one cryptocurrency.
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So I have done all the fundamental analysis on Monero in which I told about its positives or strengths and its negatives or weakness by giving proof like whitepaper, roadmap, list of exchanges and market details.
https://cdn.steemitimages.com/DQmbmxuhqF6FMs56Bk82F8QtLtd77RrQxvbcoLi3NfpkNDW/Red%20Line.png
<center>**Steps to make a Monero wallet**</center>
https://cdn.steemitimages.com/DQmbmxuhqF6FMs56Bk82F8QtLtd77RrQxvbcoLi3NfpkNDW/Red%20Line.png
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**(1) I opened the official website of [Monero](https://www.getmonero.org/), where I can get any information regarding Monero as I have to download or create a wallet , I chose download option.**
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**(2) I opted for GUI wallet(Graphical user interface wallet).**
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**(3) Then I went to download section to download wallet as i was using device with Window OS, I stated downloading first option.**
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**(4) Then I chose a drive to save Wallet after downloading and pressed the save button.**
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**(5) Then I waited for the download to be complete.**
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**(6) After the download got completed a pop up appears asking for exit setup of wallet by clicking on finish , I clicked on finish button.**
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**(7) Then I agreed to their terms and pressed next to access wallet.**
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**(8) Then I opened Wallet and chose english language and pressed continue option.**
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**(9) I opt for simple mode as I wanted easier access to transactions.**
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**(10) Then I agreed to the terms of privacy implications for using a 3rd party app.**
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**(11) As I was new to the Monero I opted to create a new wallet.**
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**(12) My mnemonic seed and wallet restore height had been provided to me to restore my wallet in future so I saved them and I also filled the wallet name that I wanted.**
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**(13)Then I chose my password for the wallet.**
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**(14) Then a confirmation page appears asking for create wallet and I filled on create wallet option.**
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**(15)Then it asked for my password to keep logged in I entered the password .**
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**(16) Here you can see that I was managed to make a new wallet with my name on it.**
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So I have shown all the steps required to make a wallet in Monero.
https://cdn.steemitimages.com/DQmbmxuhqF6FMs56Bk82F8QtLtd77RrQxvbcoLi3NfpkNDW/Red%20Line.png
<center>**My reasons for choosing Monero(XMR) and its advantages**</center>
https://cdn.steemitimages.com/DQmbmxuhqF6FMs56Bk82F8QtLtd77RrQxvbcoLi3NfpkNDW/Red%20Line.png
The reasons for which I choose Monero(XMR) are the features and the advantages Monero(XMR) provides.
- Privacy : If I were to choose a privacy coin, I would always opt for Monero(XMR) , as it is the most popular Privacy coin among all the coins and provide you the privacy that you can lack in other privacy coins.
- Security : Monero is very secure in comparison to other privacy coin because of their technology(Ring signature, Ring CT and Stealth addresses) and untraceable address.
- Scalability : This feature is the most fascinating one and this feature must include in popular cryptocurrency not just privacy coins, more the scalability,.more the transaction simultaneously happen and less the the delay and rush.
- Equal opportunity to mine : Monero gives equal opportunity to everyone who doesn't have ASICs miners and then I think everyone has a fair chance of claiming a block.
- Committed team for improvements of Monero
- Features or technologies( Bulletproof, Block reward penalty system and fungibility) : These two features are the most fascinating ones and I want to see these technology work in other cryptocurrencies as well.
And I personally believe that the creator and developers of Monero have the potential to overcome all the limitations that are being faced by Monero nowadays.
So, now I will be talking about the advantages and in depth about my reasons for choosing Monero(XMR).
**(1) Privacy** : In the world of cryptocurrency, where all the transactions are transparent, Monero has done something that no one had thought of, providing privacy in decentralised blockchain .
Privacy is necessary sometimes as it helps the user of the platform transact without any risk of getting traced and being blackmailed by someone.
**(2) Untraceable transactions** : I have told or mentioned about the techniques or processes used by Monero(XMR) that makes the transactions impossible to be traced and the identity of a user remains anonymous.
Techniques or processes are :
- Ring signature(to conceal address of sender).
- Stealth addresses(to conceal or hide the receiver's address).
- Ring confidential transaction(Ring CT)( used to conceal or hide the amount which gets transacted)
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**[Privacy or untraceable transaction](https://localmonero.co/blocks)**
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**(3) Selective transparency** : Well Monero(XMR) has an excellent feature known as selective transparency, by this feature you can get to decide whether you want your transactions to be transparent or not.
It must come in handy when someone is forced by govt or some authority to show the transaction history of a particular transaction, that is when you can use selective transparency.
**(4) Dynamic Scalability** : Well if I were to choose a cryptocurrency, I would look for one who has a good Scalability, so that my transactions fee remains low or same despite a lot of rush or traffic on platform.
As I have mentioned above Monero(XMR) has been using Bulletproof to increase scalability .
Bulletproof helps in storing transaction in less space or the block size can be adjusted according to the transaction so it mitigates the problem of big transaction in Monero.
**(5) Equality in mining process** : As there won't be anyone using ASICS miners to mine as ASICS miners are restricted to mine in mining process of Monero(XMR).
So the miners who don't have ASICS miners can have a equal chance to get a block while mining .
**(6) Commitment of developers towards Monero(XMR)** : Monero(XMR) has a very good team which is dedicated to make Monero(XMR) a cryptocurrency with no flaws.
We can see that by the roadmap and new technologies they made, they have completed their all the projects on time.
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**[Roadmap and accomplished work](https://www.getmonero.org/resources/roadmap/)**
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**(7) Block reward penalty system** : This system was made to counter the limitation of Bitcoin in which block reward gets reduced if the new block that are being generates by the miners exceeds or crosses the median of previous 100 blocks.
So to tackle that problem and to make profit to the miners block reward in Monero(XMR) has been set to 0.3XMR per minute and that is the reason that makes Monero(XMR) cryptocurrency a disinflation currency.
Well nothing is perfect inflation might exceeds to some level but the block reward will remain same.
https://cdn.steemitimages.com/DQmbmxuhqF6FMs56Bk82F8QtLtd77RrQxvbcoLi3NfpkNDW/Red%20Line.png
<center>Disadvantages</center>
https://cdn.steemitimages.com/DQmbmxuhqF6FMs56Bk82F8QtLtd77RrQxvbcoLi3NfpkNDW/Red%20Line.png
**(1) Not listed on many Exchanges** : As I have talked about it earlier that due to that much of privacy, many exchanges have not included Monero(XMR) on their list yet.
That disturbs the liquidity of Monero(XMR), as it will be difficult to find an exchange and then get a fair value of XMR.
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**[Listed on only 55 exchanges](https://coinranking.com/coin/3mVx2FX_iJFp5+monero-xmr/exchanges)**
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**(2) Used for illegal works** : Monero(XMR) has made first choice of the people that are involved in illegal works.
No one would be able to know about the sender or receiver of a particular transaction that was involved in illegal works, that why it is frequently used for illegal works.
**(3) Monopoly of mining of Monero(XMR)** : Despite the restriction of using ASICS miners to mine, monopoly of some of the mining pools can be seen because they are able to control approx 40% of the total has rate.
**(4) Not a Bitcoin based coin** : Being not a Bitcoin based coin has its own demerits as it is difficult to make applications compatible with the Monero(XMR) blockchain.
The developers will be making the application to be suited for the currency coin that are based on bitcoin, so developers will have hard time while making application compatible to Monero(XMR) platform.
**(5) Interference on Governments** : Due to its privacy nature many illegal works like drugs and weapons selling can be easily made without being seen by anyone, so to counter that Government from some of the countries can issue regulations regarding privacy policies of Monero(XMR) and that will lead to the extinction of control and privacy of Monero(XMR) over transactions.
https://cdn.steemitimages.com/DQmbmxuhqF6FMs56Bk82F8QtLtd77RrQxvbcoLi3NfpkNDW/Red%20Line.png
<center>**Conclusion**</center>
https://cdn.steemitimages.com/DQmbmxuhqF6FMs56Bk82F8QtLtd77RrQxvbcoLi3NfpkNDW/Red%20Line.png
I personally think that some of the features of Monero(XMR) are really very good and must be adopted by other cryptocurrencies, like bulletproof and block reward penalty system.
But due to its privacy, most of the investors hesitate to invest in it as it is not certain when government of a nation will start keeping tracks of the users of Monero(XMR).
Cryptocurrency are known for their transparency over the network and the introduction of privacy coins like Monero(XMR) are mitigating the essence of a decentralized system or blockchain by hiding or concealing the transactions and that also leads to the entry of some illegal working persons and that forces government of certain nation to take some serious action against cryptocurrencies by banning or regulating all the other Cryptocurrencies.
If I were to talk about solution, I would say that Monero(XMR) should keep all the records of users by any of the methods required and keep tracks of the transactions made by the person on the blockchain, if found involved in illegal works then there would be some serious action against the user.
Well privacy is necessary but to an extent or limit and that limit must be set by the cryptocurrency itself, cryptocurrencies are made and known for their transparency and that provides an environment of trust over the platform and the losing sense of trust and illegal works are frequently taking places while using privacy coins or Monero(XMR).
And at last I think that Monero(XMR) has the potential that can make it a cryptocurrency which can compete with bitcoin, all because of the technologies and developers in Monero(XMR).
Developers are committed for a cause and will achieve it and I think if needed some regulations regarding privacy , Monero(XMR) would be able to tackle it by thinking of an efficient way of providing privacy to user and prohibiting illegal activities on their network or blockchain network.
https://cdn.steemitimages.com/DQmbmxuhqF6FMs56Bk82F8QtLtd77RrQxvbcoLi3NfpkNDW/Red%20Line.png
So that was all from my side.
Thank you.
For the attention of @levycore.
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