What is Monero? Can You Trade Monero CFDs?

Brandie E Blackler
11 Min read

A new cryptocurrency is created every day, or at least that's how it seems at this point.

However, not all non-Bitcoin cryptocurrencies have their origins in 2017 and beyond. Take Monero (XMR), for instance, a cryptocurrency that started back in 2014, and has provided key advantages in the field of privacy.

This article will define what is Monero, it will explain how Monero differs from Bitcoin, how Monero defends its privacy, the pros and cons of privacy, how new Monero coins are created, and how to trade CFDs on Monero.

What is Monero?

Monero is a cryptocurrency which launched in 2014. It is privacy-oriented and operates as open-source on the blockchain concept.

Open-source means that the technology and software is built, tested, and improved through user collaboration. According to Monero itself, over 240 developers have contributed to the project, with 30 of them marked as the 'core' group.

Blockchain has the same technology logic used for most digital currencies: it is the underlying logic behind cryptocurrencies and provides a public ledger for all the transactions in the network.

Last but not least, Monero is known for its privacy, as it was built with a lack of transparency on purpose. It was configured to hide the identity of the senders and recipients, as well as the amount of every transaction.

How is Monero Different from Bitcoin?

Bitcoin is known for its anonymity, but there are limits to the privacy that it offers.

Bitcoin records both Bitcoin addresses and transactions on the blockchain, which opens the data to the public.

The key point is that the addresses are not fully private, even though Bitcoin uses fake names and addresses.

Why? Simply because Bitcoin addresses and transactions are recorded in the blockchain, which makes them publicly available and traceable.

Basically, this means that there is a chance that transactions may potentially be linked to a real person's identity.

Monero offers more privacy than Bitcoin, as its transactions are hidden behind cryptography, which protects addresses and transferred amounts. Basically, all Monero transactions are obscured, which enhances the privacy of all of its users.

How Does Monero Defend its Privacy?

Monero is based on the so-called ring signatures and stealth addresses, which helps to conceal the sender's and recipient's identities.

Ring signatures make a mixture of the user's account key with public keys from the Monero blockchain.

Third parties are not able to identify which key is from the public, and which one is from the user, which removes the possibility of linking a user and a signature together.

Monero mixes all of its coins with every transaction, which is something that other privacy cryptocurrencies (e.g.Dash (DSH) and Zcash (ZEC) ) do not have.

However, Dash does combine transactions to reduce the chance that any one user's identity will be identified. Zcash also offers users a choice to withhold their identities, and does not mention the transaction value.

The main difference is that Zcash's privacy settings are optional, whereas Monero is private by default.

Other cryptocurrencies do not mix by default, which creates suspicion when coins are mixed, due to the perception that something is hidden. Monero removes the suspicion, as all coins are mixed and the information is concealed automatically. Users aiming to remain anonymous appear to be better off with Monero.

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What Are the Pros and Cons of Privacy?

High levels of privacy offer multiple benefits.

Each Monero coin or unit is interchangeable, like the currency used at your local store.

You simply do not care if you receive coin X or coin Y, they are the same. You might be wondering: is this not valid for all cryptocurrencies?

You might be surprised to find out that the answer is no.

Bitcoin is recorded on a blockchain which displays the transaction history. This means that coins can be associated with certain events, as well as negative ones, such as theft. In these instances, these coins could become less desirable.

This is where Monero makes a key difference due to its emphasis on privacy. This means that two XMR coins cannot be distinguished from each other based on their transaction history.

That is at the same time also a challenge for Monero as its strength in the field of privacy has made it a popular coin for questionable marketplaces potentially connected to drugs and gambling.

How Are New Monero Coins Created?

The creation of new Monero coins is completed via the "mining" process, which is a usual way for cryptocurrencies to reward participants in recording blockchain transactions.

The time needed for Monero to mine (complete) one block is approximately two minutes. Monero offers the opportunity to mine coins as well, but with a few key differences.

Monero mining does not require specific hardware and can be applied on all leading platforms including Windows, Android, Linux, and MacOS.3

It uses a proof-of-work (PoW) algorithm that was designed to make sure that it was accessible to a wider range of processors.

This means that mining is open to different parties, not only large mining pools that solely focus on mining coins. This is one of the main advantages of mining

When compared to other altcoins: the process can be completed on a standard computer, rather than on one that requires dazzling speeds.

You might be wondering what the reward for mining is. Miners are offered a 'permanent block reward', which means that there will always be a minimum reward of 0.3 XMR.

The main advantage of mining new coins is simple: it offers miners an incentive which ensures that enough participants are participating in the blockchain process.

Relatively speaking, 0.3 XMR will constitute a smaller part of the total XMR in circulation, which means that it is a disinflationary cryptocurrency. By 2022, the inflation will be approximately 1%, and it will likely keep decreasing from then onwards.

Is it Possible to Trade Monero?

Yes, absolutely, on both Buy and Sell directions.

It's not just about long-term investing in cryptocurrencies. You can also trade cryptocurrency CFDs – short-term.

Admirals offers the ability to trade CFDs in Monero, where you can trade the derivative of this highly popular cryptocurrency on the world's leading trading platform – MetaTrader 5. You can also trade direct in your web browser – with no downloads necessary – via MetaTrader WebTrader.

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What is Monero's Price Movement Like?

The price movement in the Monero (XMR) cryptocurrency has been hugely volatile, especially in recent years. In early 2017, Monero traded around the $12 price level. By August 2017, the cryptocurrency was traded at a high of $160. It then spent the rest of the year surging higher to an all-time high of $469.

Unfortunately, the cryptocurrency unravelled in 2018, as did many other cryptocurrencies. Monero (XMR) spent the year trending lower closing the year out at just $49.71, only a few dollars above $37.06 - Monero's low of 2018.

Now, in the year 2022, Monero's price hovers around $180 - a sizeable difference from the lows of 2018.

The volatile price swings are evident in the price chart of Monero (XMR), as shown below:

Source: Admirals Trade.MT5 WebTrader, XMRUSD, Daily with Average Directional Movement Index indicator - Data range: from September 29, 2021, to February 4, 2022, accessed on February 7, 2022, at 13:00h CET. - Please note: Past performance is not a reliable indicator of future results.

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INFORMATION ABOUT ANALYTICAL MATERIALS:
The given data provides additional information regarding all analysis, estimates, prognosis, forecasts, market reviews, weekly outlooks or other similar assessments or information (hereinafter “Analysis”) published on the websites of Admiral Markets investment firms operating under the Admiral Markets and Admirals trademarks (hereinafter “Admirals”). Before making any investment decisions please pay close attention to the following:
1. This is a marketing communication. The content is published for informative purposes only and is in no way to be construed as investment advice or recommendation. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and that it is not subject to any prohibition on dealing ahead of the dissemination of investment research.
2. Any investment decision is made by each client alone whereas Admirals shall not be responsible for any loss or damage arising from any such decision, whether or not based on the content.
3. With view to protecting the interests of our clients and the objectivity of the Analysis, Admirals has established relevant internal procedures for prevention and management of conflicts of interest.
4. The Analysis is prepared by an independent analyst (hereinafter “Author”) based on the Brandie E Blackler, Financial Analyst, personal estimations.
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