Monero is a cryptocurrency like Bitcoin, but where Bitcoin zigs, Monero zags.
Initially released in 2014, Monero (also known as XMR) is a type of cryptocurrency often referred as a "privacy coin"; it has been built first and foremost with privacy in mind. Compared to something more public and traceable like Bitcoin, Monero (currently valued at approximately $137 USD per coin) uses a technology suite to obscure transactions and is generally considered far more "anonymous" than its more well-known counterpart. It also has a substantial development community and maintains a strong base of privacy advocates and cypherpunks.
And yet, what Monero might be best known for in the general public is its now-common usage in illicit transactions. The currency is accepted on many large darknet markets alongside Bitcoin, and one of the largest dark web drug markets, the now-defunct White House Market, exclusively facilitated XMR transactions starting in late 2020.
Perhaps because of this, some major cryptocurrency exchanges like Coinbase do not offer Monero transactions. Meanwhile, U.S. regulators have taken notice of difficult-to-track cryptocurrency like Monero, putting the privacy coin in a precarious position.
A privacy coin
In more technical circles, privacy coins like Monero are referred to as anonymity-enhanced cryptocurrencies (AECs). Monero is the most popular and valuable AEC, but other top coins include ZCash (ZEC), Oasis Network (ROSE), Secret (SCR) and Decred (DCR).
Monero's official website explains that the coin is built with three core values: security, privacy and decentralization. The reason for being so privacy-focused is explained as follows:
"Monero takes privacy seriously. Monero needs to be able to protect users in a court of law and, in extreme cases, from the death penalty," the site reads. "This level of privacy must be completely accessible to all users, whether they are technologically competent or have no idea how Monero works. A user needs to confidently trust Monero in a way that this person does not feel pressured into changing their spending habits for risk of others finding out."
Justin Ehrenhofer, who organizes the Monero Space workgroup, said Monero's privacy technology gives the coin a level of fungibility (meaning all transactions are treated equally, like cash) lacked by less private currencies.
"By just providing a very basic level of privacy protection to everyone, it means that you can, in practice, treat Monero as fungible, which helps with commerce," he said. "So when you see people actually accepting cryptocurrency payments, Monero is really high up there."
The Monero site lists two directories which in total contain over 1,000 vendors where XMR is accepted. Some of the primary vendor types include those offering VPNs, cloud storage and web hosting, but other vendor types include gambling and cryptocurrency-themed merchandise.
While other privacy coins like ZCash have found some popularity, Monero has become the most popular among them.
David Décary-Hétu, an associate professor at the University of Montreal who researches illicit markets, believes XMR's technology offers a key role.
There are other coins that can provide some level of privacy, but for some reason, [Monero is] the one that probably has the best crypto and the best means of hiding transactions.
"It has been tested. There are other coins that can provide some level of privacy, but for some reason, [Monero is] the one that probably has the best crypto and the best means of hiding transactions," he said. "It just works."
Monero's technology suite includes RingCT (a means of hiding transaction amounts), Dandelion++ (used to anonymize peer-to-peer connections) and automatic stealth addresses for each transaction (to ensure only the transaction sender and receiver know a payment's destination).
A factor in Monero's technological competence is almost certainly its development community, which is one of the largest in cryptocurrency.
Monero's development community
The development community that supports Monero is broken into various workgroups with roles that include infrastructure, community, development, regulatory compliance and more. Ehrenhofer's Monero Space workgroup, for example, provides a number of services to the coin's community.
Ehrenhofer, who joined the community in 2016, explained that the closest thing to leadership within Monero is the Core Team, which comprises seven members who ultimately decide what code is and isn't merged. They maintain the coin's infrastructure and repositories, as there are some limits to how decentralized something like a cryptocurrency can be.
However, the Core Team are often not the advocates for any technical changes, Ehrenhofer said, and the process for making changes is distributed across various workgroups and ecosystems.
"Normally, [a protocol change] starts in the Monero Research Lab, and you'll have a bunch of discussions there. People pitch ideas, talk about that for a while, and then it'll get moved to a development workgroup, where we'll talk about the actual implementation and all sorts of things like that. If there needs to be external work, where money needs to be raised for an audit or something, they'll talk to a different workgroup," Ehrenhofer said. "It's very, very distributed."
Despite its comprehensive development structure (which, again, includes a workgroup dedicated to compliance) and a seemingly noble quest to create a private, fungible coin for those who advocate for or need that privacy, one of the most well-known uses for Monero is in illicit transactions.
Cryptocurrency on the dark web
Due to its privacy-focused technology and popularity, Monero has become a cryptocurrency of choice for darknet markets in recent years. For example, two of the most active markets, The Versus Project and ASAP, accept Monero. Both offer an array of illicit goods, including hard drugs, malware, stolen accounts and more.
Bitcoin is still on top, however. Décary-Hétu said that even though Monero is rapidly gaining market share, it will likely lack the market power of Bitcoin "for a very long time." Even though it's not difficult to exchange Bitcoin and Monero, he said, it adds another step and more fees.
"If I'm selling a piece of ransomware or cocaine on the dark web, I want to get $100 in my pockets at the end of the day. But how do you get that when the price of Bitcoin just crashed? It goes up, it goes down, and you have all these commissions, all these fees, and it becomes very difficult to predict how much money you're going to have," he said. "It's yet another barrier for entry and barrier for purchase, which means that the sales are going to decrease because of that."
In addition to the darknet markets, XMR has also become a rising star in ransomware. Experts say ransomware actors are increasingly demanding ransom payments in Monero, and some even charge less if a victim pays in the coin.
The main consequence of these emerging illicit use cases has been clear: more attention from regulators.
Consequences for exchanges
Several countries, including Japan, Australia and South Korea, have put severe regulatory pressure in recent years against cryptocurrency exchanges offering privacy coins, resulting in many delisting the coins in such territories. While the U.S. has not put as much pressure on exchanges, a number of major exchanges like Coinbase do not facilitate Monero exchanges.
Coinbase did not respond to SearchSecurity's request for comment.
Binance, the largest cryptocurrency exchange in the world, does allow Monero transactions. [Editor's note: An earlier version of this story said Binance supports Monero transactions in the U.S., but Binance.us, the exchange's U.S.-based partner, does not offer Monero support.] Binance provided a statement when asked about its support for the privacy coin.
"Binance strives to be the best crypto exchange and provide our users with choice," the spokesperson said. "When deciding which coins to list, the listings team considers many aspects including: the number of users, a coin's trading volume, token economics and so on."
Asked about the exchange's thoughts on regulatory pressure, the spokesperson said the following:
"Binance believes regulators are right to pay attention to the potential risks of privacy coins; more regulatory clarity on how privacy coins are treated would be a welcome development for the whole crypto industry. Binance focuses on keeping users safe with measures such as mandatory KYC [know your customer] and has strict AML [anti-money laundering] protections in place. Our security team closely cooperates with law enforcement agencies around the world to support their investigations, which has previously included identifying relevant Monero transactions."
The U.S. Treasury's Financial Crimes Enforcement Network (FinCEN) regularly mentions AECs like Monero in its advisories and documentation, and in 2020, the IRS awarded Chainalysis and Integra $500,000 contracts to develop Monero tracing tools, with $125,000 available if either company succeeded.
The current status of Monero tracing remains in question. Cryptocurrency analytics firm CipherTrace filed two patents in 2020 for Monero tracing technology and released "tracing virtualization" tools last summer for qualified government agencies and financial institutions.
Chainalysis, meanwhile, did not share the results of the work resulting from the IRS contract because, as Chainalysis global public sector CTO Gurvais Grigg told SearchSecurity, "as a policy we do not discuss details of any Monero tracing capabilities we may have."
In a separate series of questions in November, SearchSecurity asked Grigg about the overall traceability of Monero. He said privacy coins lie between cash -- the most difficult to trace -- and Bitcoin.
"It's very hard to develop total privacy. It's not necessarily the case that privacy coins are completely anonymous. It's also worth noting that privacy coins -- like other cryptocurrencies -- operate on an immutable ledger," Grigg said. "This means evidence of criminal transactions will exist forever. Should someone find a way to view privacy coin transactions, any criminality found can be retroactively investigated and potentially prosecuted. We've seen that with cases involving Bitcoin from many years ago, including activity connected to the Silk Road."
A familiar story
Monero represents just one example of technology being inadvertently used for ignoble purposes.
Contraband, for example, has been sold on the internet for decades by this point. Tor, the main open source software used to access the dark web, was created by the U.S. Naval Research Laboratory to protect U.S. intelligence. And the first widespread use of Bitcoin -- originally created as a proof-of-concept for a peer-to-peer currency system -- was on black markets like the Silk Road.
Guillermo Christensen
Guillermo Christensen, a partner with law firm Ice Miller who specializes in cybersecurity incidents including ransomware, said while he doesn't advocate for or against increased cryptocurrency regulation, he doesn't support a ban simply due to its use in criminal operations.
"I would not favor banning cryptocurrency over things like ransomware because we still don't really understand how [cryptocurrency] can be a force for good. I think there are a lot of strong arguments that it can be, especially in places that have very poor banking systems," he said. "My default position is to let innovation work its way out. And then assess it. Don't go and kill something off just because you don't understand it."
However, Sophos senior security advisor John Shier argued some additional regulation may be needed.
"I don't know that I have an immediate aversion to privacy coins. I do, however, feel like there needs to be some regulation around it," he said. "I think that there needs to be some guardrails put up. Ransomware is really thriving because of the global lack of regulation around Bitcoin, specifically in some crypto coins. It's just too easy. Russian ransomware criminals don't have Coinbase accounts. They have accounts on exchanges that don't have KYC and AML. And they don't really care about where the money goes to and from."
Décary-Hétu called privacy coins "essential," and said they represent a new reality for law enforcement to adapt to.
"I think they're essential. I think they're great. I think we should embrace them. There's no reason why we should leak information about who we send money to. These are very interesting, and law enforcement will always complain that these new technologies are going to prevent them from doing investigations," he said. "Is law enforcement going to need to adapt to these new reality? Probably yes. If you have these privacy coins, you're going to have to work a little bit harder, and you're going to have to develop new methods to investigate people. But I don't think they really change the balance of powers between the offenders and law enforcement. There's nothing to be afraid of."
Alexander Culafi is a writer, journalist and podcaster based in Boston.
Being the best privacy coin, Monero doesn't just keep receivers private. It also offers Ring Confidential Transactions (RingCT) to hide the wallet address of senders. This privacy measure even hides transaction amounts.
Ring signatures work by having a group of users sign each transaction, making it impossible to determine which user actually signed the transaction. This makes Monero transactions more private than Bitcoin transactions, which are only pseudonymous.
Can HMRC track crypto transactions? HMRC may investigate your tax affairs if you have invested in crypto assets, cryptocurrency, and virtual currencies such as Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC), Monero (XMR), Zcash (ZEC), and Ripple (XRP).
This serves to protect the privacy of the transaction by preventing traceability to a specific individual or wallet. Due to its emphasis on anonymity, Monero has been associated with illegal activities. This perception has had negative implications for the cryptocurrency's reputation and acceptance.
The tokens that will be delisted on Sept 19 include Zcash, Monero, Dash, Decred, Firo, and Verge. Unlike Bitcoin or Ether, privacy tokens such as Monero are designed to avoid tracking.
When you buy a cryptocurrency for fiat currency (such as USD or GBP) as mentioned above, the government can see this and even if they didn't there is always a chance they will. Until your funds are on Monero the transactions can and will be traced back to you.
Monero's prevalence in the cybercrime world mostly comes down to one key component of its design: anonymity. Of course, the vast majority of cybercriminals want to remain anonymous at all times to evade the authorities, so it's expected for these malicious individuals to do what they can to conceal their identity.
Although some use Monero for ransomware and other illegal activities, other users just don't want a public record of their cryptocurrency transactions. Monero does have its potential issues. Countries have banned it and exchanges have delisted it.
Is Monero Illegal? Monero is not an illegal cryptocurrency. Unlike others, it is a privacy-oriented cryptocurrency that provides users with anonymity. This means it is not traceable.
Based the mining hardware inputs provided, 0.00792373 Monero can be mined per day with a Monero mining hashrate of 42,000.00 H/s, a block reward of 0.65 XMR, and a Monero difficulty of 297,678,090,296.00.
Blockchain transactions are recorded on a public, distributed ledger. This makes all transactions open to the public - and any interested government agency. Centralised crypto exchanges share customer data - including wallet addresses and personal data - with the IRS and other agencies.
If you're holding crypto, there's no immediate gain or loss, so the crypto is not taxed. Tax is only incurred when you sell the asset, and you subsequently receive either cash or units of another cryptocurrency: At this point, you have “realized” the gains, and you have a taxable event.
This is in contrast to Bitcoin, in which a wallet address can be used to identify users. However, even so-called privacy coins like Monero can be traced by law enforcement.
Governments are right to be concerned about Monero as the medium of exchange for illegal activity given the total privacy of its users. Government activity regulating the use of any technology, especially a cryptocurrency, can lead to significant fluctuations in its price.
In the case of Monero, hackers had compromised the official website and download servers and replaced the file with their own version, laced with malware used to transfer funds from people”s wallets.
Having analyzed Monero prices, cryptocurrency experts expect that the XMR rate might reach a maximum of $231.67 in July 2023. It might, however, drop to $196.26. For July 2023, the forecasted average of Monero is nearly $204.58.
According to the Monero price forecast for 2027, the average price of Monero (XMR) might reach $661 by the end of the year. XMR is expected to trade around a maximum value of $690 with a minimum value of $626.
Monero achieves that by having higher transaction speeds and lower costs than Bitcoin. Most importantly, it is known for its privacy credentials, which make it impossible for people to track transactions. Monero achieves this by using a private and a public ledger and then marrying the two with in-depth encryption.
It is increasingly used in illicit activities such as money laundering, darknet markets, ransomware, and cryptojacking. The United States Internal Revenue Service (IRS) has posted bounties for contractors that can develop monero-tracing technologies.
Monero transactions are confidential and untraceable.
The sender, receiver, and amount of every single transaction are hidden through the use of three important technologies: Stealth Addresses, Ring Signatures, and RingCT. Because every transaction is private, Monero cannot be traced.
To start with, some crypto exchanges send Form 1099 to IRS, alerting the agency that a taxpayer has been trading cryptocurrency. Thus, the taxpayer is likely to be expected to report crypto on their tax returns. Meanwhile, the IRS first added a question about virtual currencies in Form 1040 in 2019.
Though not fundamentally illicit, and not illegal in most countries, it's an ideal way to send and receive money for goods and services you'd rather keep hidden from law enforcement. Monero, like bitcoin, uses a public ledger.
Monero transactions are private: people watching the blockchain will not know important details of your transaction, like sender address, amount and recipient address.
Coinbase CEO explained on a podcast why the exchange hasn't listed Monero. CEO Brian Armstrong said regulators have expressed discomfort with privacy coins. He said they have a more conservative approach to listing than Binance or Kraken.
If you would prefer to buy Monero directly there is a cryptocurrency exchange which offers a direct USD/XMR trading pair. That exchange is Kraken, a San Francisco based outfit. Available to everyone in the USA, save for those living in New York, Kraken is a reliable exchange with a long history of reliability.
As of January 2021, miners receive 1.26 XMR for every block they add to the blockchain and a new block is mined every 2 minutes. Depending on your CPU/GPU, this can amount to around $0.45 to $1 in profitability, per day per mining system. Usually, coins have a circulation hard cap.
If the number of miners increases, the network hashrate goes up.The effective block find time becomes lower than the preset value. As a result, the network gradually increases its difficulty, that is, the difficulty of a problem that miners are solving.
Almost any CPU can be used for mining Monero. However, if you wish to purchase a new CPU, select either the Intel Xeon or AMD Opteron CPUs. The Xeon L5640 has a hash rate of 130 H/s, while AMD Opteron has a hash rate of 415 H/s. Always remember that mining Monero using your CPU isn't the most profitable of processes.
Yes, the IRS can track crypto as the agency has ordered crypto exchanges and trading platforms to report tax forms such as 1099-B and 1099-K to them. Also, in recent years, several exchanges have received several subpoenas directing them to reveal some of the user accounts.
If you don't report transactions that have been reported to the IRS via Form 1099, you may automatically be sent a warning letter about your unpaid tax liability. In the future, the IRS will have even more information about cryptocurrency investors at its disposal.
First, many cryptocurrency exchanges report transactions that are made on their platforms directly to the IRS. If you use an exchange that provides you with a form 1099-K or form 1099-B, there is no doubt that the IRS knows that you have reportable cryptocurrency transactions.
How much crypto do I need to report to the IRS? You owe taxes on any amount of crypto profit or income you generate, regardless of whether or not you receive tax documents. Bear in mind that crypto exchanges send Forms 1099-MISC to traders who earned more than $600 through crypto rewards/staking and to the IRS.
The IRS requires that you report all sales of crypto, as it considers cryptocurrencies property. You can use crypto losses to offset capital gains (including future capital gains if there is applicable carryover) and/or to deduct up to $3,000 from your income.
Can You Cash Out Bitcoins Tax-free in the U.S.? Some people can cash out Bitcoins tax-free in the U.S. Investors who do not exceed a $78,570 income can cash out at a 0% capital gains tax rate. You can also avoid taxes by investing Bitcoin in strategic investment accounts or modifying your citizenship.
Best for beginner miners since it can be mined with CPUs. Monero is one of the best privacy-minded coins and blockchains and enhances the non-traceability of transactions. Unlike Bitcoin where transaction details such as the amount sent, sending, and receiving addresses are visible; these are not visible on Monero.
Monero is absolutely private. Both the transaction and the wallet addresses are obscured on the blockchain. In fact, there is a bounty from the US government for cracking the cryptography of the network which has yet to be fulfilled.
The largest and most well-known privacy coin is Monero (CRYPTO:XMR). The fundamental blockchain technology behind Monero is a heavily edited version of Bitcoin by way of the almost-defunct Bytecoin (CRYPTO:BCN).
FightOut - A new move-to-earn app rewarding users for exercising. Dash 2 Trade - A crypto signals dashboard and market intelligence platform. C+Charge - A project that seeks to revolutionise the EV charging industry. RobotEra - A Sandbox-like planet-rebuilding game.
And none is more established than Bitcoin – the first cryptocurrency and largest by market cap, with a valuation of about $323 billion, or roughly 40% of the overall market.
Bitcoin – Most profitable cryptocurrency to mine. Ethereum – Best for smart contracts and corporate miners. Monero – Best for beginner miners. Ravencoin – Best for low investment mining.
If the bitcoin wallet is not encrypted, law enforcement has complete access (provided proper warrants have been obtained for the seizure of the device). If the bitcoin wallet is encrypted, getting the suspect to volunteer the encryption code is the easiest method of access.
What is the best crypto to buy to get rich? Based on our market research, some of the best cryptos include Meta Masters Guild, Fight Out, C+Charge, RobotEra,Dash 2 Trade, IMPT, Ethereum, and Polygon. Dash 2 Trade and IMPT, in particular, are brand-new projects that are currently engaged in a presale launch.
Bitcoin (BTC) Bitcoin has been around for the longest of any cryptocurrency. It's easy to see why it's the leader, with a price and market cap that are much higher than any other crypto investment options. Many businesses already accept bitcoin as payment, which makes this cryptocurrency a smart investment.
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