Coin Showdown is a series that pits competing cryptocurrencies against each other, helping you remain well informed in this fast-paced ecosystem. Today we see how the privacy coin Monero fares against the big daddy of crypto.
Both coins were created to provide an alternative form of currency, aiming to challenge the traditional finance and banking world. Since they share similar advantages/disadvantages when compared with the fiat currencies they compete with, we’ll focus on what separates the two as cryptocurrencies.
Privacy | Mining | Scalability
“Monero is what I thought bitcoin was when I first heard about it.”
When you first heard about bitcoin, you probably thought it was this super-secret, anonymous currency used in black markets to mask illegal activities. You’re not entirely wrong, but there is one key distinction. Bitcoin is not anonymous. It’s pseudo-anonymous at best. Every single bitcoin transaction is completely public. Every single address and all its associated activities, are completely public.
On the other hand, Monero was built from the ground up with privacy in mind. It utilises stealth addresses and Ring CT to ensure complete privacy and anonymity. No one will be able to view what you do with Monero. There are multiple reasons this is desirable, and no - not because you are a criminal.
Bitcoin can only be mined by specialised hardware called ASICs. These are expensive and are unable to do anything except mine bitcoin. Monero uses another algorithm, which makes CPU and GPU mining feasible. This opens up the possibility for anyone to mine using an ordinary computer.
ASICs do add to the security of the network, but increase the centralisation on the network.
3. Transaction & Scalability
At first glance, Monero wins this round. The median bitcoin transaction fee is currently sitting at $31, compared to Monero’s $5. However, this is not a fair comparison since bitcoin is processing many more transaction than Monero. A Monero transaction is much larger than a bitcoin one, this is the tradeoff it makes for privacy.
Bitcoin operates a 1mb blocksize limit, while Monero has an adjustable blocksize. This makes bitcoin more prone to congestion, but keeps the blockchain small. Monero may be able to deal with a surge in volume better, but at the cost of rapidly increasing blockchain.
Monero is aiming to implement Bulletproofs, which will reduce transaction sizes and fees by 80%. Bitcoin recently implemented SegWit, but it has not yet been completely adopted.
Off chain scaling methods are being developed for bitcoin and Monero, theoretically creating free and instant transactions.
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"Mysterious and known only by a few people."
"One of the UK's two financial districts, Canary Wharf hosts the world headquarters of numerous major banks, professional services firms, and media organisations."
This is not investment advice.