Is Monero (XMR) A Good Investment?

Ah, privacy coin. Since the beginning of the cryptocurrency era, everybody has been talking about the same issue - which is privacy. Yes, Bitcoin has solved the problem of money ownership and decentralization. But it did not allow its users to be anonymous, only pseudonymous. Monero is built under the same premise and idealism, but it adds a "privacy" feature on top of standard crypto transactions.

As a result, Monero became the biggest name in the crypto privacy space. While there are other privacy coins like ZCash, Zcoin, or even DASH, Monero is able to remain much more relevant compared to the alternatives. But here is one important question we need to ask ourselves. Is Monero (XMR) a good investment? Well, let’s find out together. Anyway, before we continue, it’s important to understand the basics and fundamentals of cryptocurrency wallet, as Monero can only transact/send/receive on these applications if you know how to use them. Click here to learn the basics of crypto wallet.

The Summary of Monero

On top of decentralization and scalability, Monero put its main focus on privacy. Monero transactions are considered not traceable because it has this concept that’s called "Ring Signatures" and RingCT or Ring Confidential Transactions.

A ring signature is basically a digital signature in which the transaction signer is mixed together with non-signers inside a typical ring group. Inside this ring group, they create a distinctive signature. The real transaction signer needs this ring signature because the non-signers can behave like decoys to make it hard for prying eyes to see through the ring.

As for RingCT (Ring Confidential Transactions), it works by hiding the size of the transaction from the prying eyes. The Monero core team claims that the combination of RingCT and Ring Signature allows them to be able to help its users stay private with their transactions while still able to verify the validity of each transaction. Monero also enhances its privacy ecosystem by introducing the concept of stealth address where it basically doesn’t use the same public address all the time.

Monero’s privacy features have been acknowledged by the mainstream crypto community. In fact, it’s still one of the most private coins on the planet, despite there are newer privacy coins out there. However, Monero is not fast enough when it comes to transactions per second. It still uses the same Proof-of-Work (PoW) algorithm that also powers the majority of first-gen and some second-gen blockchain platforms.

The Use Cases Of Monero

Everybody has the right to privacy. Monero prioritizes this "right" of human beings to be able to transact without any public visibility. However, the majority of Monero use cases are not exactly used by Monero fanatics to transact with each other.

The biggest use case of Monero (XMR) is still for speculative purposes. Just like every other crypto out there, the price could stay high because enough people believe that’s the real price you should pay for each XMR coin.

However, there’s some growing "dark side" of Monero. Recently, Monero has become the coin of choice for many criminals who transact on the darknet. While previously they preferred BTC over other coins (due to liquidity purposes), now some of these criminals chose to transact using XMR due to its privacy features I have explained above.

While Monero core team members never endorse this type of criminal activities using XMR, they know they cannot do anything to censor the criminals. Because the point of cryptocurrency is to be censorship-resistant and decentralized.

So, Is XMR A Good Coin To Invest?

Well, there will always be a need for privacy in the crypto space. As bigger money gets involved, you will have more and more whales who feel uncomfortable with prying eyes trying to track every single transaction from their wallets. However, privacy features can still be added on top of standard popular blockchains such as on top of Ethereum’s second layer solutions.

On the other hand, XMR can only do one thing, which is to transfer coins from one to another. For this reason, I feel Monero might become irrelevant in the long-term if people start using privacy solutions on top of Ethereum or other smart contract platforms.

Another problem is the fact that XMR is used for darknet transactions, it might be hard for them to ever go mainstream. Many government entities might never agree to legalize the usage of XMR. So, at the end of the day, XMR still has potential, but there are better altcoins with a brighter future out there.

If you are interested to store XMR on your own crypto wallet, you might want to check this article to learn more how blockchain wallets work.