When you hear the word "Bitcoin," what does it bring to mind? For some people, it’s the fact that it’s private and anonymous, that it’s possible to conduct a transaction without leaving a digital breadcrumb trail behind them. Bitcoin is currently the most valuable of the cryptocurrencies and was the first one to be introduced. It’s the one that even people who don’t know about cryptos will refer to, but that may change in time because there are challengers waiting in the wings, and one of them is called Monero.
It’s well known that cryptocurrencies offer greater privacy for transactions, more so than with any normal currency, but the developers of Monero were inspired to create it because they’d found privacy to be lacking in others. Monero was designed with privacy in mind right from the beginning, but does that mean it’s good enough to dethrone Bitcoin? Let’s compare them and see.
Every Bitcoin transaction is linked to your wallet, but it won’t be linked to your personal information. However, it is possible to discover a bitcoin user’s identity by analysing and cross-referencing data. This is not very reassuring.
It’s possible to discover the area where someone is when they make a payment with Bitcoin. The person you pay won’t know your identity, but they will be able to see how much money you have in your bitcoin wallet, so a high balance could put you in jeopardy.
If your business pays its suppliers in Bitcoin those individuals can see how much money your business has, and possibly what other suppliers you do business with too. This amounts to business intelligence that may give them a couple of valuable bargaining tools to use in future negotiations.
Algorithms enable cryptocurrencies to be mined, but they don’t all use the same ones. Bitcoin uses the SHA-256 algorithm while Monero relies on another one called Cryptonight. What this means in practical terms is that Bitcoin needs to be mined using silicon that’s dedicated—application-specific integrated circuits or ASIC chips. At first, glance, investing in the specialist equipment might look like something that could put you ahead of your competition, especially if you have the money to throw at ASIC computers, but it also comes with its fair share of problems.
ASIC setups have much more computing power than typical CPU and GPU setups which means it’s pointless for miners who don’t have them to try and beat them. Because they are power-hungry workhorses it’s natural for operators to want to run them in the countries that have the lowest energy costs, so this rules out your country if it’s not one of them.
Monero mining is different though. ASIC computers don’t give you any special advantage compared to typical PCs, so it’s more of a level playing field. This opens up Monero mining to everyone with a computer, and not just those who can afford the specialist setups.
Bitcoin’s network has a maximum block size which can slow down at peak times, so you have to wait for transactions to go through. You can increase speeds by paying higher transaction fees that can quickly become prohibitively expensive.
Monero’s block size limit is movable, which means that as transaction volumes rise, block size can rise to match it. This advantage makes it very attractive to cryptocurrency users because with some payees asking for double verification, there can be significant delays in transaction times.
One feature that has boosted the popularity of mining Monero is the extra security and privacy that it offers, and the addition of passive network monitoring may make it even more safe in future. Developers are currently working on an extra layer of protection that could potentially shield users from passive network monitoring. This means that no one would be able to spy on the system in the hope of picking up information about transactions and learning about users’ identities. The system as it stands does offer a great deal of privacy, but this extra measure would make it even more so.
It’s worth remembering that there is more to cryptocurrency than just Bitcoin. Monero may have come to the market later than its rival, but as with any industry, just because a company or product showed up first does not mean that it cannot be improved upon later.
Monero has certainly added greater degrees of privacy, and Bitcoin can be thanked for bringing those concerns to light. It’s also more accessible for the average person because it runs on typical off-the-shelf equipment instead of state-of-the-art dedicated ASIC boxes that demand cheaper electricity.
IQMining offers you a great start into Monero mining with our cloud hosting solution. We designed it to be as accessible and useful to people just starting out with cryptocurrencies as it is for cryptocurrency veterans and large-scale users. We offer a highly scalable multi-algorithm cloud-mining service that doesn’t require any upfront investment in equipment.