Contributor, Benzinga
August 1, 2022

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Billed as the ultimate cryptocurrency for privacy, Monero has attracted both positive and negative attention from libertarians and governments everywhere. Is Monero, as controversial it is, safe and worth including in an investor’s portfolio?

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How is Monero Secured?

Monero (XMR) is a proof-of-work (PoW) blockchain forked from Bytecoin in 2012.

Monero (XMR) is a unique cryptocurrency that is designed to facilitate transactions as secretly as possible. The PoW network does not allow third parties outside of the two wallets involved to see information about their transaction. The protocol includes the wallets’ transaction amounts, transaction histories, wallet balances and addresses. Because an amount of XMR does not come attached to a public ledger the same way most cryptocurrencies do and therefore is completely untraceable, it is essentially more fungible than any prominent coin or token on the market, including Bitcoin and Ethereum.

Another thing that sets Monero apart is its unique dynamic block size, which grows or shrinks according to network demand. It is also set apart by the way it's mined. XMR can be mined with any CPU, rather than exclusively with the use of specialized hardware the same way that Bitcoin is. Because there is a floor for how little those mining XMR will be paid even when traffic on the network is at its lowest, there is essentially no limit to the supply of XMR available. For this reason, XMR serves better as a payment method than a store of value.

Risks of Investing in Monero

Ironically, the very focus on privacy that draws so many to the coin is also what attracts the attention of those who seek to regulate it. One of the testaments to how effective XMR is at fulfilling its intended purpose as the ultimate way to transact in secret is the interest it garnered from regulators. Regulatory agencies in countries like Japan, South Korea and Australia have either seriously considered or already enacted bans. 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.

Is Monero Safe?

As proven by Monero’s record, another difference worth noting is how centralized its network is. Unlike most known cryptocurrencies, which rely on a publically available blockchain to serve as a ledger, transactions over the XMR network are validated directly by the developers. The cost of the ultimate privacy that Monero affords its users is the decentralized nature that defines most cryptocurrencies. Suffice it to say, the foundation has a ton of control. While its users clearly trust the network and its developers, the remarkable power that these developers have over the private details and finances of those who trade Monero is worth taking into account.

Where to Invest in Monero

In part because of its controversial reputation, XMR isn’t available on many of the more popular crypto trading marketplaces, including Webull and Coinbase Global Inc. (NASDAQ: COIN). It is available on Binance in addition to some smaller platforms like Kraken and Huobi Global.

Monero Hacks

Monero has not had a serious breach or hack to its network and is trusted by its users. Its developers have tremendous amount of leverage on the network, and one of the primary reasons for this has to do with the centralized authority that the developers have over its network.

Best Hardware Wallet for Monero?

Fans of crypto care about their security, and this can be said doubly for those interested in XMR. Keeping your Monero, as well as all your other crypto, in a hardware wallet is a popular way to keep your coins as secure as possible.

Best Hardware Wallet: Ledger Nano X

Ledger wallets are the gold standard for hardware when it comes to crypto wallets and are the natural choice for anyone who cares enough about privacy to be interested in XMR. Benzinga recommends the Nano X.

Cryptocurrency Market Outlook

Like many altcoins, Monero’s value has taken a noticeable hit during crypto’s latest bear market. 

While most altcoins have yet to show signs of much recovery, Monero’s saving grace is its unique structure and network. For that reason, it hasn’t been hit nearly as badly as coins of comparable market price and is more likely than its competition to show staying power once the sector emerges from this bear market.

Is Monero a Safe Investment?

In recent years, the crypto market has been flooded with those who see the technology’s potential for growth and want to get in on the action but aren’t inclined to actually use the coins that they hold for their intended purpose. Such investors would be best served to invest in coins that serve more as a store of wealth, like Bitcoin, rather than mediums of exchange. Monero fits into the latter category, and while it has shown that it has lived up to its promise to its users and is a currency crypto-enthusiasts might be interested in, its controversial features and status as a target for state regulation should prompt everyday investors to proceed with plenty of caution. 

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About Jack Fineman

Jack Fineman is an undergraduate student studying economics at UCSB, President of the Blockchain at UCSB club and starting player for UCSB in the Collegiate Chess League. Jack primarily works on project creation and managerial work for his club and produces Web3 content for Benzinga. Jack is highly passionate about DeFi and blockchain technology, one of his favorite projects is The Helium Network.