This pair Monero vs Bitcoin has drawn attention mostly due to their huge difference. Both are interesting projects. At writing, their price drastically differs. Still, had traders purchased them in the early days, they would have had a great ROI. What about usability, privacy, scalability, and other crucial aspects that make traders get interested in cryptos? Which cryptocurrency is better in terms of those things? Let’s get to know in detail.
What makes Monero and Bitcoin different?
You might often read Bitcoin transactions are confidential. They are not! One can trace the payments on the public blockchain. What’s more, it is absolutely doable to spot BTC stolen since the industry has already experienced notorious hacks over the years.
What makes them different is, first and foremost, the cryptography that all the transactions are based on. Monero exploits a so-called the ring signatures technology that ensures that no one involved in the transaction can be identified.
The concept behind this technology is easy to figure out. The one who is in charge of validating a transaction is a member of a group where other participants have already validated transactions the other day. This leads to a ‘riddle’ making it almost impossible for external observers to understand where payment has initiated from. Over the years, the usage of this approach was ginned up, which boosted the levels of privacy users might be counting on.
Another Monero vs Bitcoin difference to point out is tokenomics. At present, Bitcoin has a circulating supply of 18.9M coins (despite the fact that a big deal of this seems to be lost for good). In other words, 2.1M is still left to spot in the following hundred years or more.
As for XMR, 18M tokens are circulating on the market, and the total is simply expected to be about 18.4 million. The market cap seems to be achieved in May 2022.
Now, we’ve outlined the most obvious differences. Let’s dig deeper.
Tokens’ comparison: Accessibility
By this term, cryptopreneurs usually mean how it is possible to purchase the digital asset. You can get it for free on shady platforms that promise dubious methods to do it. We’ll be covering legitimate ones, such as crypto exchanges, mining, and ATM. Let’s take a closer look
at how Monero vs Bitcoin is available from these sources.
These are e-commerce online platforms where you can purchase or sell BTC and altcoins with fiat currency or other cryptos. Usually, they offer their own e-wallets that represent software where users can keep or withdraw their digital assets. Anyone, even a newbie in the field, can figure out how to access it and use it as they offer guides.
There are a lot of them offering different cryptos, various pairs, along with Monero and Bitcoin. The biggest drawback of using them is fees and identification obligations. However, you can always find exchanges that do not ask for personal data and still offer great services, privacy, and solid security.
This is the process through which new coins are produced into an existing supply. To make it happen, users or members of the blockchain need to approve transactions and make them join the blockchain public ledger. Mining is super important when it’s about performing as a decentralized peer-to-peer system with no need for intermediaries.
This method of acquiring coins is now considered less cost-effective. In due time, miners worked with an ordinary computer CPU or a rapid-fire video processor card. At present, Bitcoin mining is handled with special hardware to make the whole thing profitable.
As for Monero, it’s even worse as the token is supposed to be more resilient to the application-specific integrated circuit (ASIC) mining, usually exploited for getting other cryptos like BTC. Because of that, Monero is only mined on non-professional hardware. That way, in this Monero vs Bitcoin competition, Bitcoin mining is more predictable.
Tokens’ comparison: Privacy
We’ll cover the privacy features of each in more detail. First and foremost, it’s about stealth address. These are chaotic, single-use addresses that are not related to any already placed or shared ordinary address. Simply put, a few transactions sent to the same typical Monero address will look on the public ledger like they’ve been sent to absolutely separate addresses.
The thing is you can withdraw the coins transferred to this type of address, but funds cannot be related to you by any means. Only senders and recipients are aware of where XMRs were transferred.
Another great privacy feature is Ring Confidential Transactions. It represents the combo of two great privacy technologies – ring signatures and private transactions. Behind the project of Bitcoin, there are regular cryptographic signatures, participants confirm transactions with their Bitcoin address’ personal key – that fact proving the possession of the coin that will be spent in a transaction. Ring signatures confirm possession as well but they suggest an extra level of confusion.
The same transaction can contain absolutely hazardous digital assets that perform as ‘decoys’, and it’s unknown which ones were validated. This makes it complicated to find out which funds were approved and spent. So, ten decoys are mixed in every transaction. This makes Monero super difficult to follow.
Private transactions allow Monero transaction amounts to be unknown. With a so-called cryptographic algorithm – a Pedersen Commitment – everyone can check that the amounts are the same at the entrance and ‘at exit’ of the transaction. This helps eliminate double-check or unsolicited token creation. Although there is such a check, there’s no way users can get to know the exact amount of coins changing hands, besides a sender and a recipient in a deal.
In this Bitcoin vs Monero race, there’s “something to say” for Bitcoin as well. For instance, some Bitcoin-based wallets like Samourai Wallet suggest nonobligatory stealth addresses. Another feature mixing coins is called ZeroLink. This makes it unclear to find out the source of the coins and identify who actually has them.
What’s more, a lot of participants can use this feature at the same time (about a hundred in BTC-based Wasabi Wallet). Compared to Monero with its 10 decoys, this option here is way better. This makes us conclude that the ZeroLink is better as the more people are involved, the more it is harder to track.
Yet, one drawback exists here – it does not conceal amounts. All the operations, operations, and addresses are logged on the blockchain. In a mix, all amounts have to be equal. Therefore, this technology has a restriction with mixing, unlike with payments. So, Bitcoin has privacy characteristics but they are non-mandatory, while Monero’s one is integrated into a protocol.
Tokens’ comparison: Mining Algorithm and Opportunities
Both tokens work by the principle of “proof-of-work mining”. The participants, miners, approve what’s going in a ledger. These guys hurry to tackle mathematical equations with their hardware. Had someone been the first, they are compensated with brand new XMR or BTC and attach a novel block to the blockchain.
Bitcoin vs Monero projects use distinguishing mining protocols. Bitcoin’s one is SHA-256 and operates on devices called application-specific integrated circuits (ASICs). They are quite costly and designed specifically for mining BTC. Mining with a PC is useless nowadays as ASIC users make up a solid competition here.
Obviously, success is on the side of those who have ASICS. Yet, they are not that affordable and take a lot of energy. This made Bitcoin mining a decentralized process in areas where electricity is low-cost. For ordinary people, acquiring BTC this way seems complicated.
Monero mining system is RandomX. It is not compatible with ASIC and its users do not benefit from it compared to typical gear. This turns the mining process in Monero into a fairer one. What’s more, for newbies in the process it’s easier to get into Monero mining as this doesn’t require purchasing it outright, unlike with Bitcoin.
Tokens’ comparison: Transactions Fees
Until now, the commissions were almost the same, with a little bigger difference of Bitcoin one. In 2018, Monero worked out a novel technology – bulletproofs. The fact led to the privacy increase and in the meantime to the transaction size decrease. That way, a Monero block can contain more transactions, which makes it more affordable (users are not obliged to pay as much).
Using bulletproofs made Monero’s average transaction payment less by 97%, which is from $0.6 to $0.02. At present, the average Bitcoin transaction commission is about $0.39, meaning the fees were almost the same before the adoption of bulletproofs. In the Bitcoin vs Monero competition, they make Monero outshine Bitcoin in terms of fees.
Tokens’ comparison: Fungibility
Privacy means a lot for the tokens since without it they cannot be fungible. The term means one currency is interchangeable with another one. Bitcoin lacks it, meaning 1BTC is equal to 1 BTC in any case. All transactions are open and bitcoins related to redundant activity can be identified and blacklisted. Even if you were not involved in anything that would “overshade” some BTC, you might accidentally get “overshaded” BTC from some guy to later get to know that the coins make so sense because of this “overshaded” nature.
In real life, any Unites States one-dollar bill is a Unites States one-dollar bill. Even though American dollars are used for something illegal, they are still accepted everywhere without undermining their legitimacy.
Privacy of Bitcoin vs Monero differs in terms of protocol. Monero tackles this by automatically implementing privacy in each protocol. Even if XMR were previously involved in something illegal in the past, no one would find out as the transactions are all hidden. Transactions’ logs cannot be spotted that easily. Unfortunately, this token is used nowadays in many illegal markets and fungibility is the very reason for that.
To illustrate, while Bitcoin is moving through darknets and can be banned by exchanges that won’t allow people to buy it with fiat money like dollars, Monero does not have the same ‘destiny’. Illicit XMR will appear in the system just the same as will XMR from some charity foundation. This Monero characteristic led to its use beyond speculative trading.
Tokens’ comparison: Scalability
Scalability means how many transactions the project can handle per second. This is a very important factor to succeed in the domain as well. Scalability, or the ability to handle lots of transactions, is another factor we can use to compare XMR vs BTC. Unluckily, both ventures had bad times to deal with a massive demand in 2017, when the whole industry was hype.
Average transaction commission skyrocketed for both, demonstrating that they were not ready for frequent use. Although transaction commissions could have been similar or less similar than those of bank transfers, yet commissions were much higher than low-commission payment methods (i.e., PayPal, Venmo, credit cards).
However, Bitcoins win here as Monero has little experience with dealing with several thousand transactions per day. In the meantime, Bitcoin is doing it hundreds of thousands of transactions per day. At present, Monero cannot compete with giant payment networks as it already faced scalability issues with such a little transaction volume.
Tokens’ comparison: Price
The last but not least aspect that needs to be considered is XMR vs BTC price. Bitcoin wins here as well due to its established supply and other reasons. For the time of writing, 1BTC is equal to 49 052,49 $ and Monero is $197.27. A higher value might seem negative in terms of chances for bigger growth, however, BTC was doing better than XMR in terms of price.
If traders bought XMR earlier back in a day, the ROI might have constituted 2,059.19%. Compared to BTC, of course, the situation is drastically different – 24,147.12%, which is unprecedented in the realm of investing. A media giant, CNN, once called it the best investment over the last ten years.
Which one is better: Final Solution
Obviously, Bitcoin became the go-to crypto and many platforms accept it as a payment. In the meantime, it got a lot of hype undermining anonymity. The governments are not seeking a way to trace the blockchain. This is where Monero has an advantage. For many, Monero represents a safe haven and a more secure payment method.
The demand for Monero grew, so did the number of legal vendors and cybercriminal platforms. Notorious cases of removed forums and marketplaces state that Monero vs Bitcoin security and anonymity should prevail against ease of use and accessibility. However, Monero is not a solution for the cybercriminal community. There’s so much job to be done to become as known as Bitcoin. Recently, at Monero, they announced that the coin is becoming traceable, which does not contribute to its success.
Monero and similar coins have shown that they can potentially dethrone Bitcoin if arranging the demand and safety correctly. To have real shifts, cybercriminal community needs to stand up for the confidential and safe usage of cryptos.
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Disclaimer: Please keep in mind that the content of this article is not financial or investing advice. The information provided is the author’s opinion only and should not be considered as direct recommendations for trading or investment. Any article reader or website visitor should consider multiple viewpoints and become familiar with all local regulations before cryptocurrency investment. We do not make any warranties about reliability and accuracy of this information.