The attackers behind last month’s WannaCry ransomware were planning to extort $300 in Monero cryptocurrency to unlock encrypted files. Until this crisis, who had heard of cryptocurrencies? or Monero? How could you even buy Moneros to unlock your PC, if you wanted to take that chance? More people are probably aware of Bitcoin (BTC). The Visual Capitalist explains that Bitcoin. Bitcoin is the original cryptocurrency. Its meteoric rise has made it a mainstay of conversation for investors, media, and technologists.
Despite its shady history, Bitcoin has spawned over 800 new markets and cryptocurrencies. Bitcoin is the dominant cryptocurrency, with a market cap of $37.2 billion. The rest of the cryptocurrencies are worth even more. All of the other cryptocurrencies are worth nearly $40 billion.
The leaders of the altcoin movement
Ethereum (ETH) launched in 2015, is the second-largest by market capitalization. It is also quite different from Bitcoin. The Visual Capitalist explains the difference. Bitcoin is designed to be a payments protocol first. Ethereum is designed to work as a blockchain-based computing platform. It is designed for developers to build and deploy decentralized applications, while also enabling smart contracts. The tokens used to power the network are called Ether, but they can also be traded online. At the time of writing, Ethereum’s market capitalization is $15.4 billion.
Ripple (XRP) is the native currency of the Ripple Protocol. It is a broader catch-all for an open-source, global exchange according to the Visual Capitalist. Ripple is aiming to be a settlement protocol for major banks, It’s already being used by banks such as Santander, Bank of America Merrill Lynch, UBS, and RBC. Ripple has a market cap of $10.9 billion.
Ethereum Classic (ETC) The Ethereum network actually split into two in 2016. The Visual Capitalist says it’s a complicated situation. You can read about the hack v. hack battle here. This cryptocurrency is based on the original Ethereum blockchain and has a market capitalization of $1.4 billion.
Litecoin
(LTC) is one of the first altcoins. Litecoin is nearly identical to Bitcoin after being “forked” in 2011. Litecoin aims to process blocks 4x faster than Bitcoin to speed up transaction confirmation time. The improved process time creates several other challenges as well according to the Visual Capitalist. At the time of writing, Litecoin’s market capitalization is worth $1.3 billion.
Monero
Monero (XMR) is an open-source, privacy-oriented cryptocurrency launched in April 2014. It is the result of a fork of the Bytecoin cryptocurrency. CoinDesk says Monero is private by default. It has achieved the widespread adoption of those interested in using cryptocurrencies to remain anonymous. Monero has a market capitalization of $6.2 million.
The price of Monero’s XMR has experienced significant volatility at times. It has gained more than 1,300% since it began trading on CoinMarketCap. Since its start, the cryptocurrency has fluctuated between roughly $0.25 (in January 2015) and close to $60 (in May 2017).
Monero leverages ring signatures and stealth addresses to obscure the sender’s and recipient’s identity. Ring signatures combine or ‘mix’ a user’s account keys with public keys obtained from Monero’s blockchain. This creates a ‘ring’ of possible signers, meaning outside observers cannot link a signature to a specific user.
Originally, ring signatures obscured the senders and recipients involved in a Monero transaction without hiding the amount transferred. However, an update called RingCT implemented a new ring signature. RingCT concealed the value of each transaction and the sender’s and recipient’s identities to make transaction tracking harder.
In addition to leveraging ring signatures, Monero also enhances anonymity through stealth addresses. Stealth addressed are randomly generated, one-time addresses created for each transaction on behalf of the recipient. With this feature, recipients publish a single address, and transactions they receive go to separate, unique addresses. As a result, Monero transactions cannot be linked to the published address of the sender or recipient.
Cryptocurrencies fungibility
By providing a high level of anonymity, Monero offers fungibility. Fungibility means that each individual unit of a currency can be substituted for another. Another way of putting this is that every coin has equal value.
Due to Monero’s untraceable nature, no two coins are distinguishable from one another. They are both equal in the eyes of merchants. Without this level of fungibility, a vendor that accepts cryptocurrency might refuse a unit of one of these assets because of its past possibly illegal transaction history.
CoinDesk points out that Monero has enjoyed a steady increase in adoption since its release. This adaption seems to be led by Dark web marketplaces like AlphaBay and Oasis which have embraced it, reportedly due to popular demand.
For those who want to purchase Monero’s, to pay a ransom, or for other reasons, they can buy them at any exchange. The Monero market operates like that of many other cryptocurrencies. Those interested in buying the cryptocurrency can get it through exchanges including Poloniex, Bitfinex, and Kraken.
Bitfinex, offers XMR/USD and XMR/BTC exchanges along with deposits and withdrawals of Monero. Kraken offers the same options as Bitfinex as well as XMR/EUR.
Other cryptocurrencies in the altcoin universe include NEM, Dash, ByteCoin, and Golem.
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If the fraudsters who set off the WannaCry crisis were expecting to make a fortune in cryptocurrency, it didn’t work. Apparently, they have only made approx. BTC 50.91735344 or just under $150,000 on 320 payments worldwide. This, according to a twitter bot actual_ransom from @collinskeith which is watching the bitcoin wallets tied to the ransomware attack.
I dunno – Until somehow cryptocurrencies break their implied link to illegal activities online, they will be relegated to the black market.
The value of cryptocurrencies are really hard to pin down. No one really knows how much they should be worth. Unlike a company, there are no assets or revenues that can be used to assess a predictable valuation. So cryptocurrencies are subject to wide swings in valuations because they operate without any tangible value behind them.
The underlying technology of blockchain seems to have a brighter future
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Ralph Bach has been in IT long enough to know better and has blogged from his Bach Seat about IT, careers, and anything else that catches his attention since 2005. You can follow him on LinkedIn, Facebook, and Twitter. Email the Bach Seat here.
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Cowboy