Hey, everyone! Welcome to my full guide on the cryptocurrency, Monero! Here, you will learn all about Monero, as well as where and how to buy Monero!
Monero is a cryptocurrency that is quite unique and different, especially when compared to Bitcoin. Because of its uniqueness, it has slowly but continuously gained popularity.
Launched in April 2014, Monero now has a market capitalization of about $1,6 billion. It is usually the 10th or 11th largest cryptocurrency, depending on the market cap of that particular day.
Monero offers more privacy than most cryptocurrencies, including Bitcoin or Litecoin. Have you heard about it too, but don’t know what it does?
Well, I am going to tell you exactly what it does and much more in this guide. I will also take you through a step-by-step process of where and how to buy Monero.
So, by the end of this guide, you will have a clear understanding of what is Monero, how it works and how to buy Monero.
Let’s start with Monero’s background and what makes it so different!
Table of Contents
- 1. Origins of Monero
- 2. How is Monero Different?
- 2.1. Privacy
- 2.2. Fungibility
- 2.3. Scalability
- 2.4. Mining
- 3. How do Monero Transactions work?
- 4. Potential of Monero
- 5. How to Buy Monero?
- 5.1. How to Buy Monero With Bitcoin or Ethereum
- 5.2. How to Buy Monero With USD or EUR
- 6. How to Store Monero?
- 7. Mining Monero
- 8. Conclusions
Origins of Monero
Did you know that the original project which led to the birth of Monero was called Bytecoin? In 2012, Bytecoin initially used the CryptoNote protocol on which Monero is built. More on CryptoNote later.
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Bytecoin started to gain popularity in 2014 but there was one problem — 80% of the Bytecoins had already been mined. Put simply, there were not enough coins left of Bytecoin to last in the long run.
That’s when some developers came together to create a new currency from Bytecoin and named it Monero. Monero means “coin” in Esperanto — a constructed international auxiliary language.
You can think of Monero as a child of Bytecoin as it kept most of Bytecoin’s features.
Today, Monero is led by a group of 7 developers, of which only two have come out to reveal their identity. 5 of them have chosen to remain anonymous.
So, this is where Monero comes from and it has gained a lot of popularity since then, as you can see in the graph above. It’s is currently priced at about $90.
Let’s move forward and learn about Monero’s features!
How is Monero Different?
Like Bitcoin, Monero is a digital currency that can be used to send or receive payments. Also, like Bitcoin, Monero is built on blockchain technology. But unlike Bitcoin, it uses the CryptoNote algorithm — this is what makes it so unique.
The following are the key features of Monero, which are quite different from Bitcoin and all other cryptocurrencies created from Bitcoin.
In a Monero transaction, the identities of the sender and receiver remain 100% private. Moreover, Monero transactions cannot be linked to each other and cannot be traced to their starting point.
For example, consider that you transfer 15 Monero (XMR) to Bob. Bob further transfers 12 XMR to Kate. Kate then transfers 10 XMR to Mike. There are two things to note here:
- Only you and Bob would know about the 15 XMR you exchanged, only Kate and Bob would know about the 12 XMR they exchanged and so on. No one else in the world can know unless people involved in the transaction decide to tell them.
- 10 XMR received by Mike cannot be linked to any of the previous transactions. So, these 10 XMR can never be traced back to you.
Now, if you did the above transactions using Bitcoin, the entire world would be able to see the following:
- The public address of each sender and receiver;
- The addresses of all senders and receivers of that Bitcoin since it was first created.
Since everyone can see what you are spending your money on, Bitcoin is not considered private. Even though it only reveals the public address, it is still possible to trace that public address to the person who is using it.
This is one of the key factors which makes Monero quite popular. No one wants the whole world to know about all their transactions, even if they are completely legal.
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This complex-sounding feature of Monero is a direct result of its privacy feature.
Simply put, any two units which can replace each other are fungible. For example, 1 oz. of gold of a particular grade is worth the same as another 1 oz. of gold of the same grade, and a $50 bill can be exchanged for any other $50 bill.
Just like gold and dollar bills, Monero is also fungible. One would think that all cryptocurrencies should be fungible, but that’s not the case. Bitcoin and all other cryptocurrencies which are built on Bitcoin are not fungible. Can you guess why?
It is because every Bitcoin transaction can be traced back to see where all it has been used. If someone finds out that it has been used in illegal trade, then he/she can refuse to accept it. So, the tainted Bitcoins are not exchangeable with the good ones.
However, tracing the history of a Monero coin is not possible. So, all Monero coins are equal — hence, fungible.
Bitcoin scalability is currently one of the most debated topics in the cryptocurrency universe, even among people who are trying to learn how to buy Monero. It basically refers to the problems related to the number of transactions that the Bitcoin network can process at once.
It takes about 10 minutes to process a block of Bitcoin transactions. This leads to a maximum of around 7 transactions processed per second. Do you know how many transactions can be processed by the credit card company Visa? It’s 24,000 transactions per second! That’s quite a difference!
Now you can see why we need cryptocurrencies to be scalable. Monero does a better job than Bitcoin at scalability. In Monero, a block of transactions is processed every 2 minutes. It isn’t perfect, but it’s better than 10 minutes!
They basically do what a bank or a credit card company does in the case of online transfers. In return for doing this job, miners get rewarded with the cryptocurrency they are mining.
The idea behind mining was to make the system decentralized. So, it was supposed to be an activity which could be performed on your regular computer, at home or work.
Over time, Bitcoin mining has become a job for professionals as it requires highly specialized and expensive hardware. Monero, however, can still be mined from home using your CPU or GPU. It is a very important factor that makes Monero truly decentralized and very popular among miners.
Monero and Bitcoin are like apples and oranges — while they are similar in some ways, they are also very different from each other in other ways.
Before getting into how to buy Monero, let’s break down exactly how Monero works.
How do Monero Transactions work?
Suppose, you want to send 6 XMR (Monero) to Bob to buy a computer from him. This transaction would include the following steps before you can happily own that computer.
- You would ask Bob for his public address and send 6 XMR to it. Think of a public address like your bank account number, which you can use to receive funds.
- Monero miners will include your transaction in a block which is a group of transactions happening in the same timeframe.
- These miners will verify your transaction to check whether you really own the 6 XMR you want to send to Bob. They also make sure that you don’t double-spend. Double-spending happens when you send the same Monero coins to two or more people.
- It usually takes 2 minutes for a miner to verify your transaction. Once that is done, the rest of the miners in the network will be informed about it. They will double-check the results achieved by this miner to make sure there is no mistake.
- With this, 6 XMR will be successfully received by Bob and he will be happy to give you your computer.
So, Is It Secure to Use Monero Then?
I would say so, yes!
You already saw that Monero solves the issue of double-spending. In addition to that, its blockchain technology ensures the data you input via sending transactions cannot be edited.
You must have heard of many incidents in which bank servers have been hacked, resulting in serious losses. Well, one of the reasons blockchain technology is becoming so popular is that it is super effective in avoiding such security breaches.
Now then, before knowing how to buy Monero, it would be a good idea to see what its future looks like and the things you should consider before making your purchase.
Potential of Monero
You have all the right to feel bad if you didn’t invest in Monero a couple of years ago. It grew from $10 in January 2017 to $494 in January 2018! If you had invested $500 in January 2017, it would have become $24,700 in just one year!
While you cannot change that, you can try to understand the future potential of Monero to make an informed investment.
There are a few things which are in favor of Monero and a few things which are not. Let’s see what they are:
Pros of Monero
- Privacy and anonymity, something which can be very desirable;
- The higher speed of processing transactions;
- Favorable for mining as it doesn’t involve huge initial investment like for Bitcoin or Ethereum.
Cons of Monero
- Privacy, which is the biggest strength of Monero, is also working against it. Monero has become one of the favorite cryptocurrencies for criminals who are using it to fund illegal trade and terrorism.
This has made Monero an obvious target for regulatory authorities. It could have a bad effect on the future of Monero if some unfavorable regulations are forced onto it.
- It does not have as big a community like Bitcoin, Ethereum, or Litecoin. So, technological development may be slower in the case of Monero. For example, there is still no hardware wallet available for Monero, something which is a necessity in the case of storing cryptocurrencies.
Looking at these pros and cons, I believe that Monero is here to stay. It might not become the #1 crypto, but I really believe it’ll remain part of the top 15 for a long time.
Now that you know what is Monero and how it works, it is time to answer other questions, like ‘how to buy Monero?’, ‘where to buy Monero?’, ‘how to store Monero?’ and so forth.
How to Buy Monero?
Buying Monero can be a little more complex than buying Bitcoin or Ethereum because of the lack of options. In this step-by-step process on how to buy Monero, I will take you through two ways to buy Monero:
- Using other cryptocurrencies (Bitcoin, Ethereum, Litecoin);
- Using fiat money (USD, EUR, GBP, JPY).
If you already own other cryptocurrencies and are looking to exchange them for Monero then the process is simple. Unfortunately, there are not many options if you are looking to buy Monero directly using fiat currency.
To buy Monero or any other cryptocurrency, the most important part is to find the most suitable exchange for your needs. Cryptocurrency exchanges are basically web platforms that let you buy and sell cryptocurrencies. Some platforms will allow you to trade XMR for other coins, while others will let you buy Monero with a credit or debit card, or a simple wire transfer.
Key things that you should keep in mind when selecting an exchange are:
- Do they accept fiat currency, or do they allow only exchanging cryptocurrency?
- How much of a transaction fee do they charge?
- How secure are they?
- Which cryptocurrencies do they support?
- Do they accept credit/debit card or do they accept just bank transfer?
Anyway, let’s first look at where to buy Monero using another cryptocurrency.
How to Buy Monero With Bitcoin or Ethereum
There are many exchanges that let you buy Monero using other major cryptocurrencies, like Bitcoin or Ether. The advantage of using this method is that the fees of such exchanges are generally lower than those which accept fiat currency.
If you do not own any cryptocurrency but still want to use this method then you should first go to an exchange like Coinbase, as shown in the snapshot below. Coinbase is the most user-friendly exchange for beginners to buy Bitcoin and Ether with fiat, so I recommend that you start there.
The Coinbase registration process is very simple and user-friendly. You can check out the fees charged by Coinbase for your country here.
Once you have received the Bitcoin in your account, you can start the process of buying Monero. To do that, you first need to transfer the Bitcoin to an exchange that supports Monero.
There are many exchanges that support Monero. Some of the most popular ones are:
Step 1: Create an account on Binance by going here and filling the information shown below.
Once you fill in this information, you will receive an email verification link. You should verify it and log in to proceed further.
Step 2: When you log in for the first time, you will be given an option to enable 2FA (2-Factor authentication) for your account. It is highly recommended that you do it to ensure the security of your funds.
You will also be asked to submit your identity verification documents, like a passport or driving license. When you submit these, your account will be activated anywhere within 12-24 hours.
Step 3: When you log in, go the tab labeled ‘Funds’ and then click the deposit. There will be a dropdown menu for selecting the cryptocurrency you need to deposit. On selecting Bitcoin, you will be shown a Bitcoin deposit address, which you should note down or copy (if you choose Ethereum, it will, of course, display an Ethereum address instead).
Step 4: You have to send your Bitcoin from Coinbase to this address. It will take about 10 to 20 minutes for Bitcoin to be deposited.
Step 5: You can now buy XMR by going to the ‘Exchange’ tab on the homepage and locating XMR/BTC pair, as shown in the image below.
After the purchase is completed, you will be able to see your XMR coins in the Binance account. Finding out where to store Monero safely is also something you need to take care of. Don’t worry, though — I will talk about it later in this guide.
Now, let’s find out how to buy Monero using your fiat currency, like USD or EUR!
How to Buy Monero With USD or EUR
One of the few reputed exchanges which offer Monero directly against a fiat currency is Kraken. So, Kraken is the best answer to the question ‘where to buy Monero using USD?’.
Kraken charges a transaction fee, but it’s usually lower than 0.36%! Not too bad, right?
Let me walk you through the steps.
Step 1: Go to the Kraken platform here and register yourself by filling in your information as shown in the snapshot below.
Step 2: After you sign up, the process is similar to that of Binance. When you log in, you will see the tabs called ‘Get Verified’ and ‘Security’, as shown in the snapshot below.
In Kraken, there are multiple tiers of verification, each with increasing amounts of deposit/withdrawal limits. It requires you to submit different types of proof of identity (i.e. passport, driving license, etc.) at each level, as shown below.
In the security tab, Kraken offers a variety of options for enabling 2FA — my personal favorite is Google Authenticator.
Step 3: Once your account has been activated, you can deposit funds into your Kraken account. Kraken accepts fiat deposits in USD, EUR, JPY, and CAD. They only accept funds through bank transfer and do not accept credit cards or PayPal.
To make a deposit, log in and go to Account > Funding > Deposit. Select the type of deposit you'd like to make and follow the given instructions.
Step 4: Once you have funds in your account, go to the "New Order" tab to place orders for buying Monero. When the order gets executed, you will get Monero in your account.
Now that you know how to buy Monero, you also need to know where to store them because storing them on an exchange is not the safest option. Kraken has never been hacked, but it is possible.
So, if you want to further ensure the safety of your Monero, you will need a wallet to store your XMR (Monero) coins.
How to Store Monero?
My first preference for storing any cryptocurrency is a hardware wallet, as they are the safest option available, but unfortunately, there isn’t a Monero hardware wallet available yet.
However, this is soon to change. Ledger, one of the leading hardware wallets, is currently working on integrating Monero. Hopefully, they don’t take too long to do it!
Until that happens, you could consider using one or two other options:
- MyMonero — It is a web wallet, so you can simply go to their website and create an account to start using.
- Monerujo — It is a mobile wallet available only for Android phones. If you have an Android phone, then you can download and start using it.
So, this is how you can buy and store Monero. Before ending this guide, I want to tell you that you can also own Monero without buying them. Confused?
What I am referring to is Monero mining.
By mining Monero, you don’t need to buy any XMR coins to obtain them, technically. However, you do need to spend money on electricity costs and a good graphics card and/or processor, of course.
Setting up Monero mining is not a very difficult task (far, far easier than Bitcoin mining).
The most important thing for you to do is to check whether mining Monero is a profitable activity for you or not. It all depends on electricity costs and location. You need to be sure of the numbers, otherwise, you could lose money.
So, you now know what Monero is and how it works. You also know about its key features like privacy and fungibility — the things that make it unique and popular.
With a good understanding of the security and future potential of Monero, you should also be able to decide whether you want to buy it or not. If you’re still not sure, don’t worry. Investing is not something that should be rushed. Be patient, do plenty of research, and always speak to a financial advisor before investing.
If you do choose to invest in Monero, you’re all set to go — you now know how to buy Monero, where to buy it, where you can save on fees and how you can do it with cash.
Not only that, but you also know that you can start mining Monero instead if you don’t wish to buy into it.
So, what’re your thoughts on Monero? Do you see it as a good investment opportunity? Is its privacy a good or a bad thing? Are you thinking of mining it? Let me know! I’d love to hear your opinions.