When a person says the word "Bitcoin," what do you think about? For many, it’s privacy, anonymity, the ability to complete a transaction without a footprint. Bitcoin was the first to market, holds the highest coin value and retains the position as market leader. But it’s not without competitors, and one such competitor is Monero.
Cryptocurrencies are widely known for providing a higher level of privacy for transactions, but the developers of Monero found that privacy wasn’t as robust as most expected. Seeing this drawback, they created a new cryptocurrency, one that was designed to truly protect privacy. Here is a quick guide highlighting a few of the major differences between Bitcoin and Monero.
Bitcoin transactions aren’t linked to personal information, but they are linked to your wallet. With a little analysis, it’s entirely possible to uncover a person’s identity by observing patterns, time zones and other key pieces of data. This could be problematic in a variety of situations.
For example, let’s say that you’re visiting an area with a high crime rate and decide to make a payment with Bitcoin. Although the recipient of the payment can’t see your personal identity, they can see how much money you hold in your bitcoin wallet. If that balance is high, this transparency could pose a security risk.
Another example is a business that pays suppliers with Bitcoin. The suppliers can view how much currency that business has and guess whether they’re price-sensitive, which could adversely affect negotiations. The supplier could also uncover other types of sensitive details, such as what other suppliers the company does business with.
Bitcoin and Monero use different mining algorithms, with Bitcoin using the SHA-256 algorithm and Monero using Cryptonight (GPU mining). This creates a few differences between the two; for example, the bitcoin algorithm runs on much faster custom mining chips known as ASICs, application-specific integrated circuits. At first glance, this may seem like a benefit - especially if you can afford to invest in an ASIC computer for mining - but it does pose some problems.
ASIC computers have a great advantage over CPU and GPU equipment because of more computing power. This makes it pointless for miners to attempt to use any other type of computer when ASICs are in use. Having a large number of ASICs operating also creates a concentration of miners in various parts of the world that have low energy costs, since these units consume large quantities of power.
Monero mining is designed in such a way that ASIC computers do not have much of an advantage over ordinary computers. As a result, ordinary people can use a simple CPU and start mining right away on their computer, which makes the process more user-friendly.
The bitcoin network can get busy, and bitcoin has a maximum block size, which can slow down transactions during peak times. Paying higher transaction fees can increase speed, but this can get expensive.
Monero has an adaptive block size limit, so if transaction volumes get high, the size of the blocks can automatically expand. This is a critical advantage for cryptocurrency users, because with some recipients requiring double verification, transaction times can be significantly delayed.
One of the major advantages that has led to Monero mining is that it provides greater security and privacy than other coins. This benefit may get even stronger in the future with the development of passive network monitoring. Developers are currently working on an "invisible internet project."
The project would protect users from passive network monitoring. For example, people wouldn’t be able to snoop in the system and attempt to learn more about transactions and the identities of individuals. The existing system is very private, but this additional safeguard would provide additional protection.
Bitcoin was the first to market and the cryptocurrency that most people think about when deciding to give digital currency a try. But it’s not the only option available. Cryptocurrencies such as Monero are giving users with specific needs - such as privacy - additional options for participating in the digital currency space.
Monero is a privacy-centric altcoin that addresses privacy concerns about bitcoin and allows users to transact with greater security and mine without the expense of ASIC equipment.
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