The cryptocurrency industry has fast-tracked its way to fame due to its secure and private nature as a digital payment method. Unlike cash, cryptocurrencies do not have check clearing fees or holding periods, allowing fast and inexpensive payments to be made anywhere in the world. Privacy and security redefined, cryptocurrencies provide a level of anonymity and protection that traditional payment methods simply can’t match.

While a lot of cryptocurrencies have been developed over the past few years, Bitcoin undoubtedly remains the most popular choice, but Monero is quickly gaining pace because it offers a level of anonymity like no other. This article will talk about the key differences between Bitcoin and Monero.

Fast Facts

Launched in 2009, Bitcoin is the first and largest cryptocurrency to date. It was first released as an open-source software by a programmer known as Satoshi Nakamoto. Bitcoin has a fixed supply of 21 million tokens, and as of writing, more than 18.8 million tokens have been released in the market. Privacy and security redefined, Bitcoin’s decentralized network ensures that transactions are protected and anonymous, setting a new standard in digital finance.

Monero was launched in April 2014. It is a donation-based and community-driven cryptocurrency that quickly gained interest among cryptocurrency enthusiasts because of its highly private and secure network that makes transactions untraceable. Unlike Bitcoin, Monero does not have a fixed number of tokens that can be mined. Monero can be stored in a variety of Monero wallet platforms.

Privacy

Privacy is a major concern in cryptocurrency. Bitcoin transaction records are publicly available, traceable, and permanently stored in Bitcoin networks. Bitcoin addresses can be used to determine who made a payment and where the payment was sent. Once an address is used, they also become linked with the history of all the other addresses they transact with, which means that the identity of the Bitcoin user can be gathered with a bit of research.

Monero (XMR), on the other hand, uses what is called “ring signatures,” a cryptographic tool that helps protect the anonymity of Monero users by using past transaction outputs from the blockchain to serve as decoys. These outputs make up the inputs of a transaction, and all outputs are equally likely to be the input being used for a particular transaction. As a result, this affords anonymity for both the sender and the receiver of the transaction. Ring signatures make it virtually impossible to trace the identity of a user.

Mining Algorithm

Bitcoin and Monero use different mining algorithms. Bitcoin networks use Secure Hashing Algorithm-256, or SHA-256. This cryptographic hash function outputs 256-bit values. It is used by encryption protocols such as SSL, TLS, and Linux operating systems. Bitcoin uses SHA-256 for creating addresses and verifying transactions. It is secure because its mechanism is not publicly known.

The US government uses SHA-256 to protect classified information. It uses digital signatures to verify data without disclosing it. This is why SHA-256 is also used for password verification. However, SHA-256 requires Application Specific Integrated Circuits (ASICs). These custom-made mining chips are not found on most computers.

Monero, on the other hand, uses the RandomX algorithm. This Proof-of-Work algorithm is ASIC-resistant. RandomX uses random code execution and high memory consumption to prevent specialized mining hardware from taking over. It is optimized for use with standard CPUs, making it accessible to more people. This allows Monero’s network to be more decentralized, enabling more users to participate in mining.

Transaction fees

In late 2018, Monero decided to adopt bulletproofs, a new technology that allows for a substantially low transaction size and, consequently, more transactions in one Monero block. This basically means that the more transactions, the less the competition, and the lower the transaction fees. With bulletproofs, Monero’s transaction fees dramatically decreased by 97%, averaging 2 cents at present. In contrast, Bitcoin’s transaction fees average 39 cents.

Block size limit

Block size limit pertains to the number of transactions one block can accommodate at a given period of time. Bitcoin has a limited block size, which means that transaction delays can occur when the maximum capacity is reached. Monero, on the other hand, has an adaptive block size limit. Monero blocks are able to expand automatically as more transactions come in, and transaction delays are unlikely to happen. Privacy and security redefined, Monero’s approach ensures both smooth transactions and enhanced protection, offering an unparalleled level of privacy for users.

While Bitcoin remains to be the undisputed frontrunner in the industry of cryptocurrency, Monero looks to be a formidable competition. With its robust privacy technology, cheaper transaction fees, an expandable block size limit, and a decentralized mining network, Monero is definitely changing the landscape of cryptocurrency.