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Bitcoin and Monero are two coins in the cryptocurrency revolution. Cryptocurrency is a medium of exchange backed by cryptography. There have been numerous attempts at creating a digital money in the internet age, but Bitcoin is the first fully decentralized peer-to-peer currency. What sets cryptocurrency apart from other forms of digital money is the decentralized peer-to-peer aspect, which makes it almost impossible to shut down. While nearly all cryptocurrencies share similar basic ideas such as addresses, wallets, and a proof mechanism, there are differences in implementation and details. bitni.com has developed a 20 point comparison of cryptocurrencies in every last detail.
Bitcoin is the first successful attempt at creating a fully decentralized peer-to-peer cryptocurrency. It brought together existing concepts like addresses (public keys), proof-of-work, and peer-to-peer file sharing, and put them together into a new invention. While it's ideas were ingenious compared to every other digital money before it, there was plenty of room for improvement.
Monero takes ideas from Bitcoin to the next level. Monero is not just a cryptocurrency, it's a privacycoin. The main focus of a privacycoin is to create a form of money that maximizes financial privacy of the user. These advanced technical features add economic value to the coin itself. Monero replaced Bitcoin as the money of choice in online underground markets.
Compared to other forms of digital money, Bitcoin and Monero are more similar on the surface than they are different. Both have coins, addresses, wallets, nodes, mining, etc. Both are fully decentralized and peer-to-peer, vastly unlike traditional fiat payment transfers. However, Monero offers incredible improvement to some of Bitcoin's ideas.
Monero's design is inspired by Bitcoin's, building on the peer-to-peer model of cryptographically enforced record keeping. Bitcoin introduced addresses as public-private key pairs, which Monero also has, but with technical improvements. Bitcoin also introduced processing transactions by grouping them into blocks, then linking each latest block to the previous with a cryptographic hash, and Monero also builds on this basic idea. Like Bitcoin, the creation of new Monero goes to anyone processing blocks, known as mining.
Bitcoin and Monero are not only different at a technical level, but also a philosophical one. The designer(s) of Bitcoin were obsessed with decentralization, but privacy was an afterthought. [Monero privacy, stealth addresses, Monero pruning] Monero's designers are obsessed with financial privacy. Bitcoin mining rewards are cut in half every quadrennium until they are zero, at which point transaction processors will have to make all their money charging for transactions. Monero corrects this problem by allowing a small amount of coins to be mined for eternity, to fund the processing of transactions.
Compared to other forms of digital money, Bitcoin and Monero have far more Strengths/Pros than Weaknesses/Cons. Both eliminate the central authority of other systems of money, relying on computer code as immutable mathematical law, recognizing that money is too important to be controlled by a single entity. This is a huge Strength/Pro compared to everything before it. Compared to each other, Monero has some compelling Strengths/Pros over Bitcoin.
Compared to the digital currencies that proceeded it, Bitcoin was the first to achieve a complete level of decentralization. Previous attempts at digital money always had a weak point in centralization which caused them all to be shut down. Bitcoin still stands after over a decade, because it is fully peer-to-peer. If it could be shut down, it would have been the moment politicians learned about it. Compared everything before it, almost all of Bitcoin's aspects are strengths. However, many technically superior cryptocurrencies have appeared in the time since. Bitcoin's only remaining strength against more technically advanced cryptos is popularity. Bitcoin is hyped by the media, wheras other technically superior coins are ignored.
While Bitcoin was the most advanced digital currency when it was released, powerful advancements to cryptocurrencies have been made in the decade since. Most of these improvements have not been adopted by the Bitcoin developers, thus it is falling behind more sophisticated coins with superior features under constant improvement. Bitcoin is anonymous only if an address is never linked to a physical identity. However, it is becoming easier to tie Bitcoin ownership with real persons. Bitcoin has no built-in anonymization feature. This is a huge weakness, and a downside for anyone wishing to preserve their privacy. Another weakness: There is no perpetual gradual creation of new coins to replace permanently lost ones.
Monero has true anonymity, or close to it. Earlier cryptocurrencies had no anonymization technologies, and relied on 3rd party tumblers to mix up transactions. This was a crude, makeshift solution at best. Monero introduced built-in, inherent anonymization with stealth addresses. Privacy is Monero's greatest strength, and it is one of the most, if not the most, private cryptocurrency ever created and put to everyday use. Monero dominates the transactions of underground markets, arguably another of it's strengths - ubiquity in certain types of online economic activity.
Monero is hated by the establishment, because it is a far greater threat to the financial world order than Bitcoin. A few exchanges have gone so far as banning it even though it is not officially prohibited. The mainstream popularity of Monero is less than Bitcoin, and this could be seen as a weakness in comparison to the latter. Monero also get's less press coverage than Bitcoin, even less press than the latter did at the equivalent valuation. The press tends to ignore almost every other cryptocurrency other than Bitcoin, especially ones which are far more technically advanced and anonymous.
The identity of Bitcoin's true inventor has never been revealed. His disappearance has elevated him to a kind of myth, and allowed pretenders/impersonators to fill the void. The 'Satoshi Nakamoto' alias serves as a kind of mascot.
No single person invented Monero, it was an evolution from multiple contributors at different times. The original version was not as sophisticated compared to subsequent iterations, thus the very first developers who moved on should not be given too much credit. Many of Monero's developers are anonymous or use pseudonyms. There is not necessarily a "Face of Monero" the way other coins have been heavily associated with one public persona. Some of the core developers frown on the idea of making celebrities with disproportionate influence.
The code of Bitcoin is developed and debugged on a github repository, with discussion taking place on the mailing list bitcoin-dev. Bitcoin developers are fairly technologically conservative and don't usually incorporate the features of more advanced cryptos, possibly due to the influence of those who want it to be strictly an investment instrument and not a tool of revolution. Because of this, Bitcoin development is slightly stagnant compared to some other coins, although there has been gradual improvement over time.
Much of the development and debugging of Monero takes place on a github repository, divided into various subgroups such as a Research Lab working on inventing new cryptocurrency technologies. Discussion about development occurs accross several chat servers, such as #monero-dev and #monero-research-lab. Monero developers take security/privacy critiques seriously and are quick to implement improvements. The core team does not accept outside funds, to eliminate conflicts of interest. Paid developers are grassroots crowdfunded, although significant development is volunteer.
The ultimate governance in Bitcoin and Monero is not humans, but the immutable Laws of Mathematics embodied by computer code. No entity has a right to alter the blockchain or move value from an address without the owner's explicit cryptographic permission, and this is enforced with brute force by the one of the largest and most powerful collective supercomputer clusters in the world.
There still is a human side of decentralized direction in the organizations behind both these coins. Even without a single central authority, natural checks and balances emerge between developers, miners, and users. Those who develop the software can threaten to fork a new blockchain, which is kept in check by mutual loss of value in fragmentation. Those who run the mining nodes can threaten to mine a different cryptocurrency, which is kept in check by transaction fees of users. Those who use the cryptocurrency in real-world transactions can threaten to cash out, which is kept in check by increasing purchasing power of the coin.
Bitcoin development moves forward through Bitcoin Improvement Proposals (BIPs), a decentralized consensus process of deciding direction for the miners, developers, and users.
Monero is organized spontaneously by bottom-up emergent behavior. Seven stewards known as The Monero Core Team handle situations where a single point of control would be desirable, such as administering the official website or github account. However, ultimate control is in a trinity of checks and balances between the developers, miners, and users. New projects and goals are advanced through the Forum Funding System (FFS), a community discussion and crowdfunding process.
Technology adoption occurrs on a bell curve, starting with the developers and visionaries themselves, then a small group of early adopters and techies, then hopefully growing into the mainstream of ordinary people. Community is how any technology grows beyond nerds and techies and into the mainstream. In any grassroots leaderless movement, community alone outreaches and onboards new initiates. A helpful community is critical to reach mainstream adoption of anything that is not backed by a top-down entity with a huge starting budget, advertising, and support team.
The oldest and biggest forum for Bitcoin is bitcointalk.org, established by the original Satoshi himself. Answers to most beginner questions can be found here. Various other Bitcoin communities are listed by bitcoin.org. The r/Bitcoin subreddit has 2 million users as of 2021.
Early Monero discussions took place on the bitcointalk forum, but soon migrated to it's own forum on the official Monero site as the community around the coin grew rapidly. A stackexchange also exists to answer questions from beginner to advanced. Groups where members work together to achieve a goal are called Monero Workgroups, with some dedicated to community outreach and meetings. The r/Monero subreddit has about 200k members as of 2021.
Both Bitcoin and Monero are technically considered 1st generation cryptocurrencies, because they both use proof-of-work, blockchains, public/private key addresses, etc. However, this categorization is a technicality that does not take into account the level of privacy/anonymity, which Monero is one of the most, if not the most, advanced cryptocurrencies in the world in this regard.
The granddaddy of cryptocurrency research whitepapers was released on October 31, 2008 to The Cryptography Mailing List. It was one of the most revolutionary moments in both the history of money and technology. It described a completely new invention assembled from proven concepts, solving problems that had stumped experts for decades. In the time since, not much has changed with the original Bitcoin compared to how much change it originally brought, while other coins have built on it's ideas.
In contrast to Bitcoin, Monero is in a constant state of innovation, modernization, and upgrades. It begain with the CryptoNote Whitepaper, released almost exactly 5 years after the Bitcoin paper, which described improvements to the original protocol, such as self-adjusting variables and dynamic block sizes, continuous coin emission, and unlinkable transactions. From there, various other developers have contributed along the way. Ring Signatures were introduced in early 2017 to obfuscate the sender, and Confidential Transactions to hide the amount using a technique called Pedersen Commitment, then about a year and a half later RingCT was upgraded to Bulletproofs, which not only increased anonymity, but decreased the disk space of a transaction. Unlike some schools of thought influencing Bitcoin, which see the original codebase as almost sacred and impossible of needing further improvements, Monero is continually progressing and advancing.
When Bitcoin was released it was the most advanced digital money system ever created, by light years. No other attempt prior in history managed to fully decentralize money in a peer-to-peer fashion. Since then, much technical progress has been made, much of which has not been incorporated back into the original Bitcoin. Other coins are now more technically advanced.
Monero is arguably the state-of-the-art in cryptocurrency privacy, innovating new technologies in obfuscation and anonymization. With near perfect cloaking of IPs, sending and receiving addresses, and even the amount sent, Monero offers almost unmatched continual technical advancement in terms of privacy - the unmarked cash in a paper bag equivalent of online payments.
The original Bitcoin that went online on January 3, 2009 had 31,000 lines of C++ code. Over the years, this ballooned to hundreds of thousands of lines. About the size of a small operating system (the Linux 1.0 kernel was ~140K lines of code), such a large codebase requires significant manpower to maintain and especially debug. The Bitcoin project has about ~4000 commits and ~160 contributors, a relatively lean crew in proportion to it's massive global popularity. Since it's earliest release, there have not been any known bugs in the code that would compromise the coins or addresses.
The Monero codebase is also of a comparable size at several hundred thousand lines of C++, however it is doing more complex things, so it's size is more justifiable. In 2020, the Monero project had ~3000 commits and ~100 developers. Monero not only has some of the top talant in crypto, there are nearly as many developers as Bitcoin which has an order of magnitude larger community. So far, no bug has been discovered that would damage the financial integrity of the network, or it's anonymity.
A coin in Bitcoin and Monero is the numeric balance at an address. Coins do not exist as independent entities, they are purely digits associated with an address. The only hardcoded unit in Bitcoin is the Satoshi, there are no "whole" coins, thus "1 BTC" is displayed on a user interface as merely a unit of convenience, but everything in software is denominated in Satoshis. Coins in Bitcoin are all traceable down through every transaction from their creation.
Monero improves on the idea of Bitcoin by making it's coins fungible - each coin is identical and perfectly interchangeable with another, by overwriting the unique histories that would otherwise be behind every coin. Monero achieves this by obfuscating sending addresses during a transaction, so that it is not obvious where the funds are coming from. Any coin could have come from anywhere, just like physical cash.
The maximum supply of Bitcoin is limited to 21 million, although this will not be reached until the year 2140. The initial mining block reward of 100 coins, established in 2009, reduces by half every quadrennium. 85% of coins are created in the first decade, with almost 60% in the first 4 years and almost 15% in the first year. 1 Bitcoin is a human abstraction for 100 million Satoshis, the real unit in the software. Thus the total number of Satoshis is 2,100,000,000,000,000 trade units. For 10 billion people, this works out to an average of 210000 Satoshi per person. The 18 millionth Bitcoin was mined around October 19, 2019. In the first 10 years, over 85% of all Bitcoin was mined, with the remaining requiring 120 years to complete. Perhaps a disproportionate reward to early adopters, but it allows the early hacker culture of Bitcoin to maintain influence.
Monero does not have a fixed maximum supply, although the mining reward smoothly decreases by about 40% every year, starting from ~35 coins per block, but stops decreasing at 0.6 coins per block and continues on forever, about 8 years after going online. Roughly 90% of the 18.4 million coins generated in the first decade of Monero are created in the first 4 years, about 40% in the first year, and over 22% in the first 6 months. This heavily favors the early adopters even more than Bitcoin. After the year 2040, there will be more Monero than Bitcoin, both at a little under 21 million. The smallest unit of Monero is the Piconero, 0.000000000001 XMR, thus in the first decade there will be 1.84e+19 Piconero. Enough for 10 billion people to have 1.84 billion Piconero each.
Addresses in Bitcoin are based on cryptographic public-private key pairs, a system invented in the 1970s, which has three components: Public Key Generation, Private Key Signing, Public Key Signature Verification. A cryptographic key is an alphanumeric sequence of fixed length. The Private Key is used to generate corresponding Public Keys, and also to generate a unique cryptographic signature of data - to "sign" it. The signature can be verified by anyone by using a corresponding Public Key. Bitcoin merely takes this proven technology and makes transfers of value the signed data. The Public Key is the address shared with others, the Private Key is the secret used to authorize a transfer of value from an address, by signing the transaction data. Private keys in Bitcoin and Monero can be an easily memorized mnemonic phrase.
Early public keys (addresses) in Bitcoin started with a 1, for Pay-to-Pubkey Hash (P2PKH), or a 3, for Pay-to-Script Hash (P2SH) used in more complex multisignature transactions. Both are usually 34 characters long. Newer addresses compatible with the SegWit protocol start with 'bc1', which stands for Bech32. Since the beginning, the capital letter O and I are not used in addresses because they are visually similar to 0 and 1.
Monero addresses are similar to Bitcoin, but add an additional layer of privacy called Stealth Addresses, which hide the sender from the receiver by creating intermediary temporary addresses. The monetary value contained at an address is also kept private and requires a key to access. There are four types of keys: Public View Key (to view stealth addresses), Public Spend Key (to generate steal addresses), Private View Key (to view history of incoming transactions), Private Spend Key (to spend the coins). Each standard address is 95 alphanumeric characters and starts with a 4. In addition there are also subaddresses (also 95 chars) derived from the standard address, and integrated addresses (106 chars) which store a unique ID.
Wallets are applications which manage all of a user's addresses and private keys, total the values into a single balance, and do the underlying work of creating a new transaction via a user interface. In order to reach mass adoption, the wallet software of any cryptocurrency needs to be as easy to use as possible. Bitcoin has had a GUI based wallet since day one, which was likely helpful to mass adoption over something with a command line interface. Bitcoin was getting started around the time the appstore was starting to boom, and thus wallet apps rode the wave of popularity.
5 years after Bitcoin was released, the first hardware wallets entered the scene. A hardware wallet contains all keys to a specialized physical device about the size of a thumbdrive, which leaves no trace on a computer when unplugged, and can easily be stored in a safe, secure location. A paper wallet is the private key / mnemonic seed written down on a piece of paper. Web wallets are private keys hosted on a 3rd party site, completely the opposite of the original ideals of cryptocurrency, everyone their own bank. Any wallet should be Free and Open Source Software (FOSS) - there is no other way to publicly prove the program is safe and secure.
Monero wallets work on the same basic principle as Bitcoin, although they handle the additional complexity of privacy features. Monero wallets scan the blockchain for stealth addresses that are only visible to the corresponding Public View Key.
The first Bitcoin wallet, the first cryptocurrency wallet of any kind, Bitcoin-Qt, was part of the original release of the coin and is still used and maintained today as Bitcoin Core. It runs a full node which helps secure the network, but requires downloading the entire blockchain, which wasn't an issue in the early days but is now kind of a deal-breaker at hundreds of gigabytes.
Electrum is a simple and easy to use wallet primarily for desktops of every OS, although it has been adapted for mobile. This was one of the first lightweight wallets that did not require downloading the full blockchain. Possibly the best desktop wallet for general use, versions for Dash and Litecoin are also available.
The first hardware wallet is the Trezor One, started in 2011 and released in 2014, it set the benchmark for the industry. Completely open source, as should be demanded of any security product, it's software is the standard used by other brands.
The original wallets from the Monero developers are: GUI Wallet, which allows running a node, and downloading a pruned version of the blockchain one third of the full size. And CLI Wallet, a much more advanced command line tool for power users, with analysis features, and the ability to send transactions over Tor for additional privacy.
MyMonero is a wallet for every platform - desktop, phones, even web browsers. This has the benefit of consistency and familiarity with the same program on every device. Downloading the entire blockchain is not necessary.
Cake Wallet is for mobile and supports both Monero and Bitcoin, simplifying things with a single app for two cryptocurrencies.
Top hardware wallet choices for Monero include Trezor Model T, and the Ledger Nano S or Nano X series, both of which can synchronize with Monero GUI or CLI.
A transaction is a transfer of value from one address to another. Bitcoin popularized the concept of a new transaction spending the outputs of previous transactions as it's input. A transaction output is either fully spent, if it has been used as the input of another transaction, or unspent if it has not. The entire value of an output is spent regardless of the amount sent to an address, so any remainder must be sent back to the senders address - known as the "change". When transferring coins to a new address, a sender's wallet or client software creates the appropriate transaction data and signs it with their private key. This data is broadcast to miners who include it into blocks for a fee, which are cryptographically linked to the other blocks in the blockchain. A multi-signature transaction transfers value with 2 out of 3 signatures, an incredibly useful feature allowing a trusted third-party to resolve disputes without a central authority.
Monero is inspired by Bitcoin's concepts of transactions, but obviously attempts to close any holes that would allow the identification of the transacting parties. A transaction in Monero consists of several other unrelated sending addresses mixed in, so that it is not obvious where the payment is coming from. Once completed, the receiving address will likewise become mixed with other sending transactions in the future. To an observer, a small number of real transactions look like practically everyone on the network is transacting with everyone else at the same time. On top of this, Monero hides the amount being transacted so that only the sender and receiver know how much was sent. Not only are the addresses in transactions protected, the value at any address at any time is protected.
A new block is added to the Bitcoin blockchain once every 10 minutes, therefore a new transaction can be processed and included in a block as quickly as 10 minutes. However, the latest blocks are changeable until enough blocks have been added after them. The number of confirmations is the level of blocks including and after the block containing the transaction. For irreversibility, Bitcoin requires at least 6 levels of blocks and thus 6 confirmations are needed. Thus, a permanent transaction in Bitcoin requires an hour (6 times 10 minutes).
A new block is added to the Monero blockchain every 2 minutes. A new transaction can be tentatively completed in 1 confirmation in 2 minutes. Like Bitcoin, the current block is changeable until a certain level of blocks have been added after it. For irreversibility, 10-15 levels of blocks and thus 10-15 confirmations are needed. Thus, Monero's safe transaction time is 20-30 minutes.
A transaction fee is the cost of having a transaction included in a block on the blockchain permanent record. The fees are slightly lowered by competition between miners, and drastically raised by competition between transactions. Other factors can include the cost of electricity and hardware. The number of transactions that can fit in a Bitcoin block is limited to several thousand. Transactions paying higher fees are given priority over those paying lower fees, the latter of which may have to wait until future blocks to be included. Due to the fixed number of transactions per block, and the fixed rate of blocks per hour, the cost of a transaction is partly proportionate to the demand for transactions to be included in a block. Fees can skyrocket during periods of many transactions at once. The highest fees have been almost $60 in 2017. Still cheap to move millions of dollars, but impractical to pay for a pack of gum. Around 2020, the fees range from a few dollars to a few tens of dollars.
Due to the elastic block size of Monero's blockchain, the cost of including a transaction in a block is less extreme, since there are not a fixed number of slots. The high was in the 10s of dollars. Around 2020 the fees have been pennies. Historically and at present, Monero transaction fees are lower than Bitcoin.
Bitcoin gave birth to the Blockchain, groups of data (in this case transactions) known as blocks, each cryptographically linked to the previous. There has been much buzz about using blockchains for something other than cryptocurrency, however, it is really overkill for uses not requiring the maximum level of decentralization. True money in digital form requires total decentralization so that no single party can control it. Blockchain algorithms solve this problem by using cryptography alone to verify transactions, allowing any node to be a validator - every other system before this relied on a central authority, which Bitcoin was the first to eliminate as a fully peer-to-peer technology.
Monero's underlying blockchain technology is based on that of Bitcoin. Nodes processing transactions work to cryptographically connect the current block to the previous. The blocks comprising Monero's blockchain have a key innovation: The size of each block is elastic and not hardcoded, allowing blocks to be larger when there are more transactions, and smaller when there are less. Larger blocks minimize transaction fees in times of high demand, smaller blocks minimize blockchain size, thus this incredible idea from the original CryptoNote paper achieves the best of both worlds. (This is a far more intelligent solution than certain Bitcoin clones with the approach of "just make the blocks bigger and everything will magically be better".)
The Bitcoin Network is a fully peer-to-peer connection of equal nodes, the first digital currency to achieve total network decentralization. No node is more powerful or special than the others. There is no single point of failure. A network of equals is maximum redundancy. If any individual node is taken offline, the rest of the network is carries on, all the others contain an exact copy of the same blockchain. Nodes share the blockchain data using proven peer-to-peer filesharing technology. Any node can cryptographically verify the blockchain. Any node can attempt to process transactions into blocks. Nodes agree on what the blockchain should be, without a centralized authority, via Nakamoto consensus (voting).
Monero is based on the fully decentralized peer-to-peer model of Bitcoin, but not surprisingly, adds extra privacy to the network by obscuring IPs of nodes broadcasting transactions, a technique known as Dandelion++. Without this protection, spy nodes could attempt to trace the origin of a transaction as it was broadcast out to the other nodes. Monero solves this problem by first sending the transaction on a single random path through a varying number of nodes (the "stem") before broadcasting it to the whole network (the "fluff").
The Byzantine Generals’ Problem is a scenario representing a previously unsolved problem in computer science. Generals and lieutenants must find a way of coordinating with each other through messages in way that can withstand a minority of traitors. Some means of reaching a consensus and proving valid messages is required to achieve Byzantine fault tolerance. Bitcoin was the first fully peer-to-peer solution to the Generals problem applied to money, which it realized using Proof-Of-Work. A type of Zero Knowledge Proof, a Proof-Of-Work allows one party to prove to other parties they know something, without revealing exactly what they know. This is done by providing a problem that can only be solved by brute force, but is efficient for everyone else to verify.
Bitcoin uses HashCash as it's Proof-Of-Work, where the "work" is guessing the output of a cryptographic hash function, using a large number of random tries. It was invented in 1997 originally to slow down the volume of email spammers could produce. In 2013, miners figured out they could use speciallized ASIC (Application-Specific Integrated Circuit) chips to guess the cryptographic hashes. Any Proof-Of-Work that is solvable by expensive custom chips limits participation to only high-capital operations, concentrating the security of the network into fewer hands.
Monero is also Proof-Of-Work, but the developers learned from Bitcoin and came up with a hashing function that would allow anyone with standard computing device to successfully mine the coin, while discouraging custom hardware that would give those with the most capital a possibly unfair advantage. RandomX uses a virtual machine with an instruction set similar to a CPU, which is difficult to implement using an ASIC. Monero's security is distributed as widely as possible, by incentivising as many as possible to help secure the blockchain, by making mining accessible to all.
Bitcoin's mechanism for the creation and distribution of new coins, totally governed by code and completely free of any central issuer, was a first in the history of manmade money. (Gold has mining, but it is not manmade.) A coin is minable if the algorithm automatically increases the currency supply to directly subsidize producers of cryptographically correct blocks of transactions. Miners are those solving computational proofs of processed transactions in return for the first ownership of new coins. The reward for correctly mining a Bitcoin block began with 100 coins and continuously decreases in by half every 210,000 blocks. When the block reward reaches less than 1 Satoshi, it will effectively be zero, resulting in a fixed supply totalling 21 million. When blocks no longer have a built-in reward, those processing transactions will have to pass their costs onto those making transactions, increasing the cost of a transaction. Another problem with reducing mining to zero is replacing lost coins. Bitcoin has barely been around for a decade and up to one in five coins are permanently lost.
Monero also uses mining to distribute coins, although the block reward decreases by ~40% every year - but not eventually to zero like Bitcoin. Monero recognizes the problems that might occur if block rewards were to end for miners, thus it will be minable forever, although rewards will be limited to 0.6 of a coin per block. This allows miners to be funded without increasing the costs of transactions, and permanently lost coins can be replaced in circulation. Monero is designed to be mined by anyone on any hardware, which decentralizes mining to as many as possible. In contrast to Bitcoin, which requires an investment into specialized hardware which has no other use, and thus mining is more centralized.
Mining not completely hands-off passive income compared to other methods of coin generation like staking. Because of this, there are more factors affecting profitability, such as the cost of hardware (and the choice of buying new or used), the cost of electricity (some states subsidize electric costs, giving an unfair advantage), the number of transactions competing to be included in a block, the number of miners competing to validate a block. In coins where transaction fees go to miners, mining profitability can fluctuate with transaction fees, which vary day to day and even hour to hour. If a coin is going up over the long term, and one holds the coins mined instead of selling them immediately, this can drastically amplify the profit of mining over time.
When Bitcoin hit the scene, it was minable on anything that could crunch numbers, and as long as it was going up almost any kind of mining was profitable in the long term. Now Bitcoin mining is a moderate risk, low reward endeavor. For example, the Antminer S19 Pro, 110 TH/s, costs $9000, earns $45 a day, and requires 200 days just to break even - assuming the price of Bitcoin remains constant around $50,000.
Monero is minable on practically any device, unlike Bitcoin, which requires special custom hardware. The ability to use cheap general purpose hardware, and sell it later for general use to recover costs, must be factored into mining profitability. Making use of the otherwise idle cores a standard computer when it is turned on for some other purpose, is practically mining for free.
The one drawback of fully decentralized systems, compared to those more centralized, is throughput. Resilience to undesired changes is also usually less responsive to desired changes. Each node needs to update it's copy of the record, and there has to be an agreement among them. This is monumentally less scalable than a more centralized system.
Each Bitcoin block is exactly 1 megabyte every 10 minutes, regardless of how many transactions there are. For almost it's first decade, Bitcoin was limited to just 3-7 transactions per second. In comparison, PayPal can handle transactions in the hundreds per second, and credit cards in the thousands per second. A rare upgrade to Bitcoin occurred in 2017 that doubled the TPS, called Segregated Witness (SegWit), which reduces the transaction size by 60%, by moving signatures to the end of the transaction data. Another attempt to improve Bitcoin is the Lightning Network. All the LN does is combine recurring payments into one large payment, with the payer required to put the full amount of all future payments into an account upfront, and the payee not able to receive any funds until the account is ended. One of the few situations this would work for is a subscription service where there total upfront cost of all future incremental payments is not very much for the payer, where the payments are very small and numerous, and where the payee can survive without immediate access to the funds until the subscription is renewed. A similar use could be a large project which milestones are signed off, with the transfer occurring upon completion. The upfront total cost of all future micropayments is why this technology is almost totally useless, as it is the exact opposite of a buyer receiving a line of credit. Despite years of hype as only a year away from full adoption, the Lightning Network has no serious usage, because it doesn't solve the root problem of everyday non-recurring transactions, as it's only applicable to an incredibly small percentage of real-world economic activity.
Monero's scalability is similar to Bitcoin's and other cryptos of a comparable decentralization. Due to the extra data created to obfuscate real transactions, thus using extra blockchain and network resources, scalability could be something Monero developers might need to work on in the future, although it's currant usage has not hit a performance bottleneck. Bulletproofs allow Monero to scale reverse logarithmicly, such that two outputs might only be a quarter larger than one output. Monero has elastic block sizes, allowing larger blocks when there are times of more transactions to conserve fees, and smaller blocks when there are times of less transactions to conserve space. This should be standard on practically every cryptocurrency, instead of just making blocks some constant arbitrary size regardless of demand. Monero is only limited by physical disk space in the amount of transactions it can handle, which is estimated to be in the thousands.
It's one thing to theorize in academic papers about this or that privacy concept, it's another to actually trust one's life on a real world cryptographic implementation. Coins that lack true privacy will often sell their weakness as "transparency". Transparency coins put everyone's finances out in the open, relying on a password alone to stop theft. This doesn't really work against regimes that can kidnap and torture the password out of the public coin holder. Privacy coins keep the knowledge of wealth completely hidden to anyone but the owner, leaving nothing to be stolen and achieving perfect anti-theft safety.
Bitcoin was popular on the darkweb when it first came out, growing alongside The Silk Road and other clandestine sites. The never before seen fully decentralized nature of Bitcoin prevented the network as a whole from getting shut down, to the horror of politicians, but decentralization alone cannot protect individual nodes whose identifying information is public. Eventually the real-world identities behind Bitcoin addresses began to be uncovered, and it was no longer anonymous as it's users once thought.
Monero was built from the ground up to be as anonymous as possible. It's used day in day out in underground markets, right under the nose of tyrannical regimes that can do nothing about it. Every aspect of Monero use is protected by cryptographic tricks, so there are multiple levels to fall back on even if one were breached, like a fortress surrounded by extra walls and moats. Amounts are concealed using Pedersen Commitments. Senders are concealed using Ring Signatures. Recipients are concealed using Stealth Addresses. Clients are concealed using Dandilion++. Traffic is concealed using Tor.
When Bitcoin came out, it was the best option in the world for financial privacy. All other attempts before it had a public centralized authority with that could be compromised and the identities of all users revealed at once. Bitcoin's peer-to-peer nature means user identities have to be revealed one at a time, requiring much more resources. However, anonymzation is only achieved using 3rd party services called mixers, which send coins to and from various other addresses, costing time and money. Bitcoin has been surpassed by other coins in anonymity.
Monero transactions feature a built-in mixer with several layers of obfuscation. The sending party puts the funds in a one-time randomly generated stealth address based on the receiver's public key, which is only viewable to the receiver. Sort of like the anonymous safety deposit box with only a serial number in popular culture. This prevents anyone else from knowing the receiving party even ever received anything. The sending party is hidden by ring signatures, which combine their signature with random others, obfuscating who actually signed the transaction. The amount of a transaction is also potentially identifying information, so it's hidden with a special key. Monero is the coin of choice in incredibly high-stakes real-world underground transactions - people bet their lives on it's privacy features every day.
Although there were a few bugs in the early era when it was just a novelty, Bitcoin has never been hacked. Monero has also never been hacked. The more valuable a cryptocurrency becomes, the more financial incentive to hack it. Even with many billions of dollars on the line, and millions of security experts, hackers, and script kiddies trying to crack it, no one has been able rewrite the blockchain or move value from an address against the owner's wishes.
Bitcoin uses secp256k1 / ECDSA as it's elliptic curve key pair algorithm. Monero uses three instead of two, Ed25519 / Curve25519 / EdDSA, which could arguably give it a security advantage.
The Bitcoin blockchain uses the RIPEMD160 hash function, which means there are 2^160 Bitcoin addresses. A Bitcoin private key is 32 bytes, which represents a 256 bit number, 2 to the power of 256. The most powerful supercomputers are around 1 ExaFLOPS, although FLOPS refers to Floating Point Operations Per Second and cryptography deals with integers, a rough comparable would be 1 ExaMIPS, 1 Quintilian Integer Multiplications Per Second. A single key guess likely requires at least 1000 MIPS, thus the most powerful supercomputer can guess 1 quadrillion private keys per second, 10 to the power of 15. That sounds impressive, but the number of possible keys are well over 10 to the power of 49. So the fastest computer would require 10 to the 34th power in seconds - 10 to the 26th power in years. 100 Septillion Years. 10 quadrillion lifetimes of a universe 10 billion years old. An incomprehensibly huge number. Even if every decade a newer generation of supercomputers becomes one thousand times faster than the previous, from 1 ExaMIPS it would still take over a century to have anywhere near enough power to crack one key in a second. So contrary to what some people think, it is mathematically impossible for any regime to use supercomputers to break any mainstream cryptocurrency with brute force. All they can do is kidnap and torture the key out of anyone in their jurisdiction whom they know has crypto. And even that is impossible with coins that hide all identifying data.
Bitcoin was the first cyber money to achieve full peer-to-peer decentralization, with no single party controlling it. This is a monumental achievement in the history of the world, an amorphous network of nodes achieving de-facto monetary sovereignty. Monero is also at least as decentralized as Bitcoin. Shutting down a global peer-to-peer network would require taking every single node in every single country offline, which would require a worldwide jurisdiction or political authority. Monero is arguably even harder to shut down than Bitcoin, since it's users are anonymous. Because traffic is anonymized with Tor, even at the infrastructure level shutting down Monero would require shutting down all internet traffic.
Bitcoin and Monero can both be used for anything traditional money is used for: as a store of value, medium of exchange, as a measure of worth. A digital money has additional usefulness compared to a physical commodity, in that it can be sent anywhere in the world in minutes. Bitcoin is even more useful than centralized digital money, in that no single party controls it's supply.
Monero is even more useful for financial privacy than Bitcoin, in that the transactions are totally anonymous. Monero not only protects the identities behind a transaction from the rest of the world like physical cash does, but additionally also protects the identities of the transacting parties from each other.
Use of Bitcoin is fairly straightforward. A payer enters the payee address into their wallet and the amount to be payed, and broadcasts it to the network, which after a certain number of confirmations is permanently transferred to the new address. Monero is nearly identical. There is some additional manual re-syncing of blocks when receiving payments. Wallets can both be offline when the payment is transferred, simply send and forget, a huge convenience when compared to some systems of payment that require both wallets to be online at the same time during a transaction. Monero's privacy features are also incredibly easy to use in that they all happen behind the scenes.
Bitcoin is a very general use cryptocurrency that is now very basic compared to others. It's a distributed ledger where all addresses, transactions, and values are public. That's all it does: move balances around in one of the most redundant ways possible. One other useful feature is 2 of 3 multisignature transactions. Monero has the same basic functionality and uses as Bitcoin, but with the additional featureset in that everything it does is completely private. All of Monero's features are geared towards privacy.
Easy availability is one of the prerequisites for mass adoption. The harder it is for potential users to acquire something, the harder it is to acquire new users.
The more a cryptocurrency is adopted, the greater it's purchasing power. When Bitcoin was still in the experimental stage, it had very little purchasing power because acceptance was limited to a handfull of early adopters, thus two pizzas were sold for 10,000 coins in the first commercial transaction, on May 22, 2010.
Accepting cryptocurrency does not require holding cryptocurrency. Merchants worried about volatility can simply convert payments made in crypto to a more stable store of value immediately and automatically. Thus a huge number of vendors accept crypto through various automatic conversion systems.
Any coin that can be mined by a non-techie using a standard consumer hardware should be considered easy to get. In the early days of Bitcoin, anyone with a modest computer could get coins simply by turning on mining software and letting it run for a while. There were also faucets that gave away free coins. There are now less ways to get Bitcoin, and none of them are as easy as the beginning: Invest in specialized mining machines, Buy with a bank transfer, Sell goods or other cryptos for Bitcoin.
Monero can be acquired by mining using an ordinary computer. Not only that, but it will always be minable, and likely never required specialized devices. Slightly less exchanges deal in Monero, though it is still one of the most common cryptos. Selling things on a decentralized market like OpenBazaar is also another option for getting Monero (and Bitcoin, although the high transaction fees of the latter makes selling low-cost items practically impossible).
When Bitcoin was the only decentralized cryptocurrency, it's novelty alone generated press coverage. It was doing things nothing else had done before. Now there are coins doing things Bitcoin cannot do. Unfortunately, other technically superior coins are not given a fair amount of press coverage relative to their innovation. Which not only hurts the industry, but hurts Bitcoin as the developers don't need to out-innovate the competition.
Because there are fewer Bitcoin than other coins (21 million compared to billions or more), the price per coin is much higher. Even if Bitcoin and Ripple both had an equal market capital of 10 Billion, the price per coin would be $500 vs pennies. The high price of any status symbol or luxury item has an exclusivity allure which attracts press attention, but the fact that Bitcoin is the highest price of any coin makes it have the most allure. This creates a feedback loop where the press attention generates more investment, which drives the price higher and generates more press.
Google Trends data shows web searches for Bitcoin actually peaked in December 2017, as did Monero, although the former was 50 times more popular than the latter.
Everyone transacting on the Dark Web knows what Monero is, and in that world it is as popular as Bitcoin in name, and more popular in use.
In 2013, a couple traveled around the world using nothing but Bitcoin, which became the documentary 'Life on Bitcoin'. In 2020, Shopify allowed payment in popular cryptocurrencies, bringing acceptance to a million stores using it's software. In that year, an even bigger bombshell was dropped by PayPal, when it announced support for major cryptocurrencies, allowing it as a funding source for commerce with the 26 million merchants on it's platform. In 2021, Tesla announced it's automobiles could be bought with Bitcoin after investing $1.5 billion into the cryptocurrency.
Despite the acceptance by many merchants, it's unlikely Bitcoin will actually be used where alternative forms of payment have less fees. No one is going to buy pack of gum for a dollar and pay twenty dollars in fees.
Monero is accepted by many of the same vendors Bitcoin is accepted, but Monero is also accepted in markets which Bitcoin is not, such as high-stakes underground transactions requiring maximum anonymity. While there are many alternative payment methods to Bitcoin, some faster and cheaper, scenarios exist which there are practically no alternatives to Monero. On the Dark Web, Monero is the de-facto standard currency, used more than any other coin.
Cryptocurrency in general has been the investment of the decade, likely the investment of the century. If it doesn't crash, it will go down in history as one of the greatest investments of all time. What started out as a penny novelty is now worth more than a entire house (in some areas). Cryptos have blown away the stock market, real estate, precious metals. The price rise has almost no parallel in history, and can only be vaguely compared to the the dramatic parabolic spike of speculative bubbles. Some have written off this world-changing technology as entirely a bubble, merely because it's rise loosely resembles the charts of other unrelated bubbles. Only time will tell if the visionaries or the naysayers were right.
Almost a year after it's debut, on October 12, 2009, the first transaction of Bitcoin to dollars occurred, 5,050 coins for $5.02 - about a tenth of a cent per coin. Almost half a year later, on March 30, 2010, ten thousand Bitcoin could not even be auctioned for $50 - the maximum offer was $25. Had the seller got their price, it would have established the value of one Bitcoin equalling half a penny. The famous pizza transaction less than two months later set a price of 0.4 cents per coin (10,000 BTC for $41) - a 4x return on investment in the first 7 months. By September 5, 2010, Bitcoin had reached 0.7 cents each, with 50,000 offered for $15 - a 7x increase in 11 months. Even in the earliest days, when it was less than a penny, Bitcoin was exploding exponentially in value.
On February 9 2011, Bitcoin reached 1 dollar - a 1000x return in less than a year and a half from the first transaction. On June 1st of that year, it went to 10 dollars, gaining 10 more fold in value in less than 4 months - a 200,000% gain in 1 year. On April 1st 2013, the price broke 100 dollars - 10 more fold in 10 months. The price reached $1000 on November 27, 2013 - 10 more fold increase in less than 8 months. It took four years and a day to go up another 10 fold, reaching $10,000 on November 28, 2017. At 10K per coin, the original $5.02 transaction for 5,050 coins would be worth over 50 million dollars - a one billion percent increase. If Bitcoin were to reach 100K, that $5 investment would become half a billion dollars.
During the price-discovery phase of Monero when it first hit the market, in the first half year it fluctuated wildly, from $1.60 to $5.00 to back down to half dollar. However, it stayed stable under a dollar for over a year. From December 20, 2015 to December 20, 2017, the price of Monero went from 50 cents to around $450 - a 900 fold increase in two years. Bitcoin is older than Monero, so a fairer comparison would be Bitcoin at the same age as Monero. When Bitcoin was three and a half years old it was less than $100.
In the early 2020s, Bitcoin targets 6 figures while Monero aims for 4 figures. Despite the superior technology of Monero, the media continues to hype Bitcoin, and thus it's dollar value is not representative of it's technical value.
In order for one Bitcoin to equal a million dollars, the market capital would have to reach $20 trillion. The entire GDP of the United States is $20 trillion. There are estimated to be 40-50 million millionaires in the world; $1 million for a Bitcoin would be equivalent to 20 million millionaires for the total supply. Bitcoin's market capital of $1 trillion could already be maxed out. Unless "greater fools" are able to continue driving the price up until Bitcoin's market capital is greater than everything else on the planet combined, there has to be an upper limit.
With a market cap of only a few billion dollars, Monero has a lot of growth potential. There are coins with purely on-paper theoretical usefulness having a higher on-paper market capital than Monero, their price based on hope and hype that mass adoption for some purpose will happen someday. In terms of actual commerce of goods and services, Monero's real-world usage ranking is well above it's market capitalization ranking. Due to the fact that obtaining Monero is more or less necessary to transact on the Dark Web, it has an inherent real-world demand that the overwhelming majority other coins do not. Thus it could be argued Monero's market capitalization is undervalued when compared to Bitcoin (and many other altcoins) - it's hundreds of times less on paper, but the coin is certainly not hundreds of times less of an incredibly useful technological wonder, with more of an inherent real-world necessity.
Due to the heavy media and culture influence, Bitcoin's rises and falls tend to be more dramatic than coins like Monero, although the latter's price is still influenced by the crypto boom-bust cycle.
The first price collapse of Bitcoin occurred in 2011 upon news of a successful hack against the early exchange MtGox. Although the cryptocurrency itself was not hacked, the loss of faith in several exchanges was enough to demolish the price from $29 to just $2, a decline of 93% from June to November 2011. A year later on August 28 2012, a Ponzi Scheme involving Bitcoin investment defaulted, bringing down the price of a coin by almost 57% in just 3 days, from $16 to $7. In April 2013, the price of Bitcoin was driven up by media attention which generated interest from new investors, peaking above $260 on the 10th. Cyber attacks on MtGox spooked a selloff, and the price freefell to $68 in 3 days, a decline of over 73%. On December 4, 2013, the price of Bitcoin hit a new peak at around $1150. The gradual freezing and eventual collapse of MtGox triggered a long selloff which took over a year to reach the bottom at $177 on January 2015, a nearly 85% decline. The next cycle was known as The Great Cryptocurrency Bubble of 2017, with intense media coverage getting many average people to invest, and thousands of Initial Coin Offerings for newly invented cryptocurrencies. The buying frenzy peaked on December 17th, 2017, with Bitcoin just barely missing the $20,000 mark. A strong bear market ensued, and almost exactly one year later on December 16th, 2018, Bitcoin was worth less than $3270 - a decline of 83%.
For comparison, the 1929 Dow stock market crashed from a high of 381.17 to a low of 41.22 in 1932, resulting in a loss of about 89%. The Nikkei 225 crash from it's peak of 39,000 at the end of the 1980s, to 15,000 in the 1990s, was a decline of over 60%. Most of Bitcoin's many crashes equal or exceed the worst stock market crashes of all time.
Monero was first sold for around $1.60, starting from May 21, 2014. Over the next year and a half, it declined to just under 40 cents, on November 29, 2015 - a shrinking of 75% in a year and a half. However, it was still in the early price-discovery phase, and the price remained relatively stable for a year. Monero did not escape the Great Cryptocurrency Bubble of 2017, ballooning to $450 on December 20, 2017, then following Bitcoin's downward path to below $40 on December 16 of the following year - a loss of 91%.
All early investment in Bitcoin required the investor to manage the coins directly themselves. Modern institutional investment products allow exposure to cryptocurrency without having to personally hold coins.
Launched on September 25, 2013, the Grayscale Bitcoin Trust, GBTC, was the first publicly quoted security dedicated solely to Bitcoin investment. On December 17 of 2017, the world's largest futures exchange, CME, launched Bitcoin futures, with the contract equal to 5 BTC and settled in dollars, following Cboe Global Markets launch of similar futures a week earlier. On February 7, 2018, Grayscale Investments launched the Grayscale Digital Large Cap Fund, a basket of various cryptocurrencies including Bitcoin. On December 10, 2020, Massachusetts Mutual Life Insurance Co. bought $100 million worth of Bitcoin.
In 2021, Grayscale filed for a Monero Trust, suggesting an investment fund for the cryptocurrency is in the works.