The advent of Monero might really be considered the dawn of the modern privacy coin era.
Monero is originally a fork of another cryptocurrency called Bytecoin.
Bytecoin, like Monero, used the CryptoNight protocol. CryptoNight is a much denser hashing protocol but yields a workable form of cryptocurrency.
Somewhere in its early days, Bytecoin had a massive inflationary bug, making it functionally very cheap because there were so many tokens in circulation. Monero sought to head this off by not having billions of tokens. However, Monero does have what’s known as a long-tail emission plan, in which for the long-term, people will still earn a small amount of Monero for each block mined.
Monero is called a privacy coin because it has an opaque architecture. It’s not immediately easy to see all the details about a Monero transaction. You need a view key. You might be able to see the amounts transacted, but that will be all without a proper key.
This is in contrast to Bitcoin and other cryptocurrencies, which allow anyone with a web browser to look at virtually all of the details of a given transaction. There are methods within Bitcoin to help work around this, such as never using the same address twice. However, the desire to do so illustrates the need of the technology already implemented in so-called privacy coins.
Any cryptocurrency is only as strong as its mining network, however, and Monero has done a lot to keep its mining “pure.” The cryptocurrency even underwent an algorithm change to avoid the coming ASICs, or devices dedicated to mining Monero.
Monero would prefer if only people with CPUs, or computers, and GPUs, or graphics cards, are able to mine the cryptocurrency. The fork resulted in a coin called Monero Classic, which is functionally worthless.
Monero stands at about $60 today, but at one point it was up over $400. The 2017 cryptocurrency boom saw everything from Bitcoin to any random token get a pump. Monero has maintained a good bit of its market capitalization.
The cryptocurrency has a dedicated community, and is actively used on several darknet markets. Monero is preferred over Bitcoin by certain types of users for obvious reasons, but many like privacy anyway.
Monero is developed by a large team of cryptographers and computer scientists, who have pushed the code far from its Bytecoin roots. The Monero client does not resemble the Bytecoin client today, and much of the code has changed on the inside as well. In essence, Monero has long since become its own thing to reckon with.
One of Monero’s most active developers is Riccardo Spagni, best known as Fluffypony. He frequently tweets on the subject of privacy and cryptocurrency. Here’s a recent example:
Also just to be clear, miners don’t have magical extra insight into your transactions than anyone with a block explorer has.
— Riccardo Spagni (@fluffypony) January 23, 2020
Monero is an option for privacy, but it’s not the only one. Some prefer to use Bitcoin with innovations like Wasabi Wallet, which can safeguard data about transactions using a convention called coin mixing.
Then there are protocols like Dash, which has a built-in coin-mixing feature in the wallet, which comes from its original days as Darkcoin. Then there is, of course, Zcash.
But Monero seems to be the one most dedicated to privacy, community, and open source at this point. While Zcash is nice, there’s no company dedicated to Monero. Instead, developers work out of their own self-interest, being Monero users and holders, or as part of their work for crypto firms.
Of course, a feature like privacy is something Bitcoin could add relatively easily. What would be interesting to see is what would happen to the whole privacy coin set if Bitcoin did such a thing – making it as difficult to trace Bitcoin transactions as some other chains, like Monero, make it.