MONERO

DIGITAL ASSET REPORT:

XMR Update
Grade-B-minus

Crypto Briefing Research Department

December 20, 2019

Quick Facts

Current Price$47.00
Market Capitalization$816,100,001
Buy Up To Price$95.00
ICO DatesNo ICO
ICO PriceN/A
Public AllocationN/A
Private AllocationN/A
Circulating Supply17,362,485 XMR
Total SupplyUnlimited
Top 10 AddressesN/A
ATH Price$495.84 (Jan 07, 2018)
Sharpe Ratio-0.49
30-Day Average Price$52.56
24H Volume$104,642,281
30-Day Average Volume$132,256,986

Contents

Fundamental Factors

Market Opportunity 80;
Ecosystem Development 66;
Token Economics 80;
Token Performance 50;
Core Team 70;
Underlying Technology 70;
Roadmap Progress 70;

Combined Score: 7.0

Introduction

The privacy coin sector has seen mixed performance since Monero’s initiation report. Nevertheless, the coin was able to solidify its status as the number one coin in the segment.

Since privacy coins focus on particular use cases, it is likely that only a few ⁠— and maybe even just one ⁠— will be needed by the market down the road. As such, the coin that is able to satisfy the use case requirements and achieve a critical level of adoption will likely be the favorite.

Monero has showcased three key factors: sufficient privacy, decentralization, and promising adoption. As a

community coin project, it has been able to successfully continue to evolve its technology and maintain usage to support its privacy-by-default stance.

Competing projects have been less fortunate and are dealing with both financial and adoption-based difficulties. As Zcash faces potential restructuring, and the hype around MimbleWimble-based projects simmers down, Monero has become the lone representative of privacy among the altcoin majors.

Assuming that privacy coins continue to see demand, it is reasonable to expect Monero to expand its dominance over the sector.

Number One Privacy Coin

Over the past year, Monero has shown relative strength, compared to the market and the overall privacy sector. The project remains the number one privacy coin by market capitalization, with a market cap of around $816M, similar to what it was a year ago. By comparison, its closest competitor, Zcash, lost over 40% of its market cap since last year and is currently four times smaller than Monero with a market cap of around $232M.

Monero has kept its leading positions, not only in terms of market cap, but also in terms of the adoption of its protocol. As seen from the graph below, the project has twice as many private transactions as Zcash and Grin. In the case of Zcash, the number is even larger, given that just 2.5% of total Zcash transactions are fully shielded and can be considered private.

This shows that the protocol has been used by a significant number of users. In fact, Monero remains the second most popular coin (after Bitcoin on the Darknet) and is getting actual usage. The Darknet use case might not be ethical, but it drives adoption and reduces speculation for the coin. Something most of the competition and the rest of the market lack. 

In the same way the internet became popular (partially) due to the availability of pornography in the late 1990's, bitcoin (partially) gained its popularity due to its usefulness on the Darknet. Sometimes, there is no good without the bad.

However, as Bitcoin becomes more regulated and demand for BTC transaction tracing services grows, Monero may overtake Bitcoin as the coin of choice in the segment.

As the DEX infrastructure improves, liquidity for privacy coins should become less of an issue, and utilization within the broader DeFi ecosystem will become simpler.

Privacy coins require a large user base, as transaction anonymity depends on “getting lost in the crowd” and usefulness feeds off of liquidity and wide acceptance.

If the demand for anonymity grows, Monero will be in a position to benefit the most from the trend.

Constant Development as a Sign of Longevity

Over the past year, Monero has been improving its technology, solving the issues of scalability, and improving the privacy of its transactions. 

In the initiation report, one of the major concerns regarding Monero’s technology was the scalability problem. Monero transactions are around ten times larger than Bitcoin transactions. This could potentially bloat Monero’s blockchain size if we see an increase in the adoption of the protocol. 

However, at the beginning of the year, the project has come up with a solution. Monero has added pruning to its daemon software, which allows it to optionally "prune" about 2/3 of the blockchain data by creating “pruned nodes.” Although there is still a need for full nodes, pruned nodes have most of the important information and can support the network, which improves decentralization.

In November, Monero completed a scheduled network upgrade and added several important features to its protocol. To improve privacy, developers phased out inconvenient long payment IDs, added a requirement to have at least two outputs for every transaction, and enforced the 10 confirmation requirement for every transaction on the protocol itself. 

Additionally, Monero has introduced a new PoW algorithm, RandomX, to its network, which has been specifically optimized for CPUs and significantly penalizes ASICs or GPUs mining on the network. 

Monero’s hashrate has more than tripled since the introduction of RandomX, which likely means that more CPUs are connecting to the network. This helps further decentralize and increase mining power, and thus improves the security of the network. 

Monero Network Hashrate | Source:

https://2miners.com/xmr-network-hashrate

Monero is one of the few community-coins that has been able to successfully sustain itself. Over the past year, the project has raised over 2900 XMR ($133,000), which was spent on the continued research and development of Monero.

The ability to fund itself and continue to improve the protocol has given Monero an advantage. It has been able to defend its place as a top privacy coin in a challenging market, and should be well positioned for a market recovery.

The Media Might Not Always Be Right

The media coverage of Monero usually comes down to a few major topics. One of these topics deals with botnet miners, which hackers use to mine Monero on other people’s computers. However, this rogue behavior plays a minor role and has had almost no effect on protocol development.

Although Monero botnets are widely discussed and give the coin a negative PR image, their activity on the network is rather small in comparison to the total hashrate (no more than 5%, according to some reports).

The introduction of RandomX will make Monero mining more noticeable by network administrators due to its memory-hard approach. It will also require the installation of new software, which is a potentially troublesome task for botnets. These should further decrease botnet activity and attract more legitimate miners to the network.

The other topic that is very much talked about is the delisting of Monero and other privacy coins from cryptocurrency exchanges. Although this might be a long-term risk, presently, Monero is not at risk of delisting.

All the recent delistings were from small exchanges, like Bitbay. On the other hand, the coin was successfully listed on other small exchanges, like Atomars. The overall volume still remains significant. According to CoinMarketCap, Monero’s volume is currently around $100M per day, and is generally following the trend of the overall market.

This again proves that all the negative PR that Monero received during the year has hardly had an effect on the real usage and core community support. This puts the project far ahead of the competition.

Things to Think About

While Monero has shown itself to be a strong contender in the privacy coin sector, there are still factors that might negatively affect its progress.

The growing dominance of Bitcoin during the past year has had a severe effect on the altcoin market. Also, when only considering privacy coins, Bitcoin (with no in-house privacy features due to the use of different third-party coin mixing services) is effectively leading the space. It still remains the number one coin for payments on the Darknet. If its privacy features strengthen, this might put the privacy coin sector at risk.

Another relevant risk is the delistings from large crypto exchanges. Although this is not a concern right now, if we see Monero being delisted from Binance, for example, this would have a negative effect not only on the trading

volumes, but on the overall reputation of the project. Given that there is a trend towards more regulated and compliant markets, the risk is still there.

Also raising concerns is the fact that Monero’s lead maintainer Fluffypony stepped down. During recent years, Fluffypony was the main face behind Monero and his resignation might slow down the awareness efforts of the project.

As for many other projects, adoption still remains a concern, for Monero. Given current market conditions, it may not come in the near future. Significant time could pass before we see wide usage of the protocol, which increases the number of potential risks the project could face along the way.

Conclusion

Although the past year has not been the greatest for the crypto space, and the market has shown mixed performance, Monero has demonstrated resilience. The project continues to dominate the privacy coin sector, and there are no signs that this is going to change any time soon. 

As the crypto market works through this challenging period, the privacy segment looks to be consolidating around Monero. When the recovery takes place, the project and its underlying asset will be in the best position to benefit from it.

Due to these factors, the project receives an upgrade to B-. 

How to buy XMR

Step 0. Choose your preferred exchange.

XMR can be purchased from several cryptocurrency exchanges, the full list of available exchanges can be seen ​here​. 

Step 1. Head over to your preferred exchange.

If you want to purchase XMR, it is a good idea to use Kraken exchange. It has a good liquidity and is among the most reputable on the market.

Step 2. Create an account on the exchange of your choice if you don’t already have one.

Step 3. Top-up your exchange balance with some of your USD or BTC.

On Kraken, XMR can be purchased with USD or BTC, so make sure to first verify your ID and set up your debit card or bank account.

Step 4. Purchase XMR with a market or a limit order.

If you want to buy just a small amount instantly, it is easiest to use a Market Order.

Input the amount of XMR you want to purchase and press Buy.

Input the amount of XMR you would like to purchase, and the price at which the order should be filled at and press Buy. (It might take some time for the whole order to be filled if you are purchasing a large amount).

Step 5. Store your XMR on one of the supported wallets for increased security.

To store XMR, you can use Ledger or Trezor wallet for improved security.

If you need to purchase a large amount of XMR, it is best to use a Limit Order to get the best possible price.