Wikipedia

Monero

This article is about the cryptocurrency. For other uses, seeMonero (disambiguation).

Monero(/məˈnɛroʊ/;Abbreviation:XMR) is acryptocurrencywhich uses ablockchainwithprivacy-enhancing technologiesto obfuscate transactions to achieve anonymity andfungibility.Observers cannot decipher addresses trading Monero, transaction amounts, address balances, or transaction histories.[2]

Monero
Denominations
Pluralmoneroj
CodeXMR
Precision10−12
Subunits
 1⁄1000millinero
Development
Original author(s)Nicolas van Saberhagen
White paper"CryptoNote v 2.0"
Initial release18 April 2014(10 years ago)(2014-04-18)
Latest release0.18.3.3 / 2 April 2024(3 months ago)(2024-04-02)
Code repositorygithub.com/monero-project/
Development statusActive
Project fork ofBytecoin [a]
Written inC++
Operating systemLinux,Windows,macOS,Android,FreeBSD
Source modelFOSS
LicenseMIT License
Ledger
Timestamping schemeProof-of-work
Hash functionRandomX
Block rewardXMR 0.6 ≥[1]
Block time2 minutes
Circulating supply>18,444,828 (2024-06-02)
Supply limitUnlimited
Website
Websitegetmonero.org
  1. ^Source code forkshouldn't be confused withhard forksorsoft forks.

The protocol isopen sourceand based onCryptoNotev2, a concept described in a 2013white paperauthored by Nicolas van Saberhagen. Developers used this concept to design Monero, and deployed its mainnet in 2014. The Monero protocol includes various methods to obfuscate transaction details, though users can optionally share view keys for third-party auditing.[3]Transactions are validated through aminernetwork running RandomX, aproof-of-workalgorithm. The algorithm issues new coins to miners and was designed to be resistant againstapplication-specific integrated circuit(ASIC) mining.

Monero's privacy features have attractedcypherpunksand users desiring privacy measures not provided in other cryptocurrencies. A Dutch-Italian study published in 2022 decisively concluded "For now, Monero is untraceable. However, it is probably only a matter of time and effort before it changes."[4]

Due to its perceived untraceablity Monero is gaining increased use in illicit activities such asmoney laundering,darknet markets,ransomware,cryptojacking,and otherorganized crime.The United StatesInternal Revenue Service(IRS) has posted bounties for contractors that can develop Monero-tracing technologies.[5]

Background

Monero's roots can be traced back toCryptoNotev2, acryptocurrencyprotocol first described in awhite paperpublished by Nicolas van Saberhagen (presumed pseudonymous) in October 2013.[6]The author described privacy and anonymity as "the most important aspects of electronic cash" and calledbitcoin's traceability a "critical flaw".[7]A Bitcointalk forum user "thankful_for_today"coded these ideas into a coin they dubbed BitMonero. Other forum users disagreed withthankful_for_today's direction for BitMonero, so forked it in 2014 to create Monero.[6]Monerotranslates tocoininEsperanto.[6]Both van Saberhagen andthankful_for_todayremain anonymous.[6]

Monero has the third-largest community of developers, behind bitcoin andEthereum.[7]The protocol's lead maintainer was previously South African developer Riccardo Spagni.[8]Much of the core development team chooses to remain anonymous.[9]

Improvements to Monero's protocol and features are, in part, the task of the Monero Research Lab (MRL), some of whom are anonymous.[citation needed]

Privacy

Ring signaturescreate ambiguity in blockchain analysis

Monero's key features are those around privacy and anonymity.[10][6][9]Even though it is a public and decentralized ledger, all transaction details are obfuscated.[11]This contrasts to bitcoin, where all transaction details, user addresses, and wallet balances are public and transparent.[6][9]These features have given Monero a loyal following amongcrypto anarchists,cypherpunks,and privacy advocates.[7]

The transaction outputs, or notes, of users sending Monero are obfuscated throughring signatures,which groups a sender's outputs with other decoy outputs.[citation needed]Encryption of transaction amounts began in 2017 with the implementation of ring confidential transactions (RingCTs).[6][12]Developers also implemented azero-knowledge proofmethod, "Bulletproofs", which guarantee a transaction occurred without revealing its value.[13]Monero recipients are protected through "stealth addresses", addresses generated by users to receive funds, but untraceable to an owner by a network observer.[6]These privacy features are enforced on the network by default.[6]

Monero uses Dandelion++, a protocol which obscures theIP addressof devices producing transactions. This is done through a method of transaction broadcast propagation; new transactions are initially passed to one node on Monero's peer-to-peer network, and a repeatedprobabilistic methodis used to determine when the transaction should be sent to just one node or broadcast to many nodes in a process called flooding.[14][15]

Efforts to trace transactions

In April 2017, researchers highlighted three major threats to Monero users' privacy. The first relies on leveraging the ring signature size of zero, and ability to see the output amounts. The second, "Leveraging Output Merging", involves tracking transactions where two outputs belong to the same user, such as when they send funds to themselves ( "churning" ). Finally, "Temporal Analysis", shows that predicting the right output in a ring signature could potentially be easier than previously thought.[16]In 2018, researchers presented possible vulnerabilities in a paper titled "An Empirical Analysis of Traceability in the Monero Blockchain".[17]

In September 2020, the United StatesInternal Revenue Service'scriminal investigation division(IRS-CI), posted a $625,000 bounty for contractors who could develop tools to help trace Monero, other privacy-enhanced cryptocurrencies, the BitcoinLightning Network,or other "layer 2" protocol.[5][7]The contract was awarded to blockchain analysis groupsChainalysisand Integra FEC.[7]

Mining

Monero GUI running on a remote node

Monero uses aproof-of-workalgorithm, RandomX, to validate transactions. The method was introduced in November 2019 to replace the former algorithm CryptoNightR.[citation needed]Both algorithms were designed to be resistant to ASIC mining, which is commonly used to mine other cryptocurrencies such asbitcoin.[18][19]Monero can be mined somewhat efficiently on consumer-grade hardware such asx86,x86-64,ARMandGPUs,a design decision which was based on Monero project's opposition to mining centralisation which ASIC mining creates,[20]but has also resulted in Monero's popularity amongmalware-based non-consensual miners.[21][22]

Illicit use

Monero's privacy features have made it popular for illicit purposes.[11][23][24]

Darknet markets

Monero is a common medium of exchange ondarknet markets.[6]In August 2016, dark marketAlphaBaypermitted its vendors to start accepting Monero as an alternative to bitcoin.[6]The site was taken offline by law enforcement in 2017,[25]but it was relaunched in 2021 with Monero as the sole permitted currency.[26]Reutersreported in 2019 that three of the five largest darknet markets accepted Monero, though bitcoin was still the most widely used form of payment in those markets.[11]

Mining malware

Hackers have embedded malware into websites and applications that hijack victim CPUs to mine Monero (sometimes calledcryptojacking).[8][27]In late 2017, malware and antivirus service providers blocked Coinhive, aJavaScriptimplementation of a Monero miner that was embedded in websites and apps, in some cases by hackers. Coinhive generated the script as an alternative to advertisements; a website or app could embed it, and use website visitor'sCPUto mine the cryptocurrency while the visitor is consuming the content of the webpage, with the site or app owner getting a percentage of the mined coins.[28]Some websites and apps did this without informing visitors, or in some cases using all possible system resources. As a result, the script was blocked by companies offeringad blockingsubscription lists, antivirus services, and antimalware services.[29][27]Coinhive had been previously found hidden inShowtime-owned streaming platforms[30]andStarbucksWi-Fi hotspots in Argentina.[8][31]Researchers in 2018 found similar malware that mined Monero and sent it toKim Il-sung UniversityinNorth Korea.[32]

Ransomware

Ransomware deployed in 2021 byREvil.The hackers are demanding payment in Monero.[33]

Monero is sometimes used byransomwaregroups. According toCNBC,in the first half of 2018, Monero was used in 44% of cryptocurrencyransomwareattacks.[34]

The perpetrators of the 2017WannaCry ransomware attack,which was attributed by the US government to North Korean threat actors,[35]attempted to exchange the ransom they collected in Bitcoin to Monero.Ars TechnicaandFast Companyreported that the exchange was successful,[36][8]butBBC Newsreported that the service the criminals attempted to use,ShapeShift,denied any such transfer.[37]The Shadow Brokers,who leaked the exploits which were subsequently used in WannaCry but are unlikely to have been involved in the attack, began accepting Monero as payment later in 2017.[36]

In 2021,CNBC,theFinancial Times,andNewsweekreported that demand for Monero was increasing following the recovery of a bitcoin ransom paid in theColonial Pipeline cyber attack.[9][7][38]The May 2021 hack forced the pipeline to pay a $4.4M ransom in bitcoin, though a large portion was recovered by the United States federal government the following month.[38]The group behind the attack,DarkSide,normally requests payment in either bitcoin or Monero, but charge a 10–20% premium for payments made in bitcoin due to its increased traceability risk.[7]Ransomware groupREvilremoved the option of paying ransom in bitcoin in 2021, demanding only Monero.[7]Ransomware negotiators, groups that help victims pay ransoms, have contacted Monero developers to understand the technology.[7]Despite this, CNBC reported that bitcoin was still the currency of choice demanded in most ransomware attacks, as insurers refuse to pay Monero ransom payments because of traceability concerns.[9]

Regulatory responses

The attribution of Monero to illicit markets has influenced some exchanges to forgo listing it. This has made it more difficult for users to exchange Monero for fiat currencies or other cryptocurrencies.[9]Exchanges in South Korea and Australia have delisted Monero and other privacy coins due to regulatory pressure.[39]

In 2018,Europoland its directorRob Wainwrightwrote that the year would see criminals shift from using bitcoin to using Monero, as well as Ethereum,Dash,andZcash.[40]BloombergandCNNreported that this demand for Monero was because authorities were becoming better at monitoring the Bitcoin blockchain.[41][40]

On 20 February 2024, the cryptocurrency exchangeBinancedelisted Monero, citing regulatory compliance.[42]

On 11 April 2024,Krakenannounced they would be delisting Monero for users located in Ireland and Belgium on June 10, 2024. As of the 10th of May 2024 Monero deposits and trades have been suspended.[43][non-primary source needed]

Publicity

  • After many online payment platforms shut down access forwhite nationalistsfollowing theUnite the Right rallyin 2017, some of them, includingChristopher CantwellandAndrew Auernheimer( "weev" ), started using and promoting Monero.[44][45]
  • In December 2017, the Monero team announced a partnership with 35 musicians for Monero to be used as a form of payment for their online stores.[8]
  • In November 2018, Bail Bloc released a mobile app that mines Monero to raise funds for low-income defendants who cannot otherwise cover their own bail.[46][47]
  • In April 2020, the Monero Film Workgroup releasedMonero Means Money: Cryptocurrency 101, Live from Leipzig,a documentary feature film that was the second highest grossing film in the United States for the weekend of April 10, 2020 according toThe Numbers(when theaters were shutdown due to the COVID-19 pandemic). Proceeds of the film went to independent theaters.[48][49]

See also

References

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