Monero (XMR) is a privacy-focused peer-to-peer digital currency, designed to be untraceable and anonymous. A transaction on the Monero blockchain can’t be linked to a particular user or real-world identity as the cryptocurrency is fungible. This term describes a currency in which every unit is identical and mutually interchangeable with every other unit of that currency. So while a Bitcoin bought from the darknet could be distinguished from a Bitcoin bought on Coinbase through blockchain transaction analysis, two separate Monero coins appear exactly the same and can’t be told apart. This makes Monero a pretty unpopular currency with a lot of financial regulators as they can’t trace XMR payments or collect data on its users. Unlike Bitcoin, Monero wallet balances and payments remain concealed. This makes it easy for criminal activities such as money laundering to be perpetrated on the Monero platform.
Stealth addresses enable a sender to generate a one-time public address on behalf of the recipient for every single transaction. However, the recipient can still use a single public address for receiving all their payments, just like Bitcoin. Every Monero user will generate a private view key and a private spend key. The private view key will allow them to see all the transactions associated with their account, while the private spend key is similar to a Bitcoin private key – it’s used to authorize payments. In January 2017, Monero introduced Ring Confidential Transactions (RingCT) which also hide the value of transactions.
The Monero (XMR) wallet you choose will likely depend on what you want to use it for and how much you need to store. Hardware wallets or cold wallets provide the most secure cryptocurrency storage option with offline storage and backup. Ledger, Trezor and the Monero community-funded Kastelo offer XMR storage solutions. Software wallets provide another option and are free and easy to use. They are available to download as smartphone or desktop apps and can be custodial or non-custodial. Software wallets deemed safe by Monero include MyMonero, Edge and Cake Wallet. While convenient, they are seen as less secure than hardware wallets and may be better suited to smaller amounts of XMR or more novice users.
Monero also supplies a GUI (graphical user interface) wallet which can be downloaded to your desktop and is recommended for less technically savvy people who want to quickly send and receive XMR. It has a circulating supply of 17,959,803 and a total supply limit of 18.4 million XMR projected to be reached on May 31, 2022.
The increasing supply of XMR makes it less suitable as a hedge against inflation than other cryptocurrencies, and its main use case remains to be as a means of transacting anonymously. This could be useful in a variety of situations, including businesses wanting to keep their suppliers hidden, citizens trying to escape government oppression, and the average person who just wants to be free of any kind of scrutiny due to their personal purchases.