What is Monero (XMR)?

How Monero works

Here are three technologies Monero uses to anonymize transactions:

• Stealth Addresses: Senders are required to create random one-time addresses for every transaction on behalf of the recipient. This prevents transactions from being linked to the recipient's public wallet address.
• Ring Signatures: Every transaction includes a ring signature with a group of users, including the actual sender who signed the transaction and multiple decoys. This prevents transactions from being linked to the sender.
• RingCT: Short for Ring Confidential Transactions, this technology encrypts transaction amounts so that only the sender and the recipient know how much was sent.

With the combination of these technologies, as well as the Invisible Internet Project (I2P) and Dandelion++, Monero is able to hide the sender, recipient, and amount of the transaction on its blockchain.

To process transactions, Monero uses the proof-of-work consensus mechanism. Like Bitcoin, it relies on cryptocurrency mining. Participants use mining devices to solve complex equations, with the winner earning the right to validate a block of transactions and earn rewards.

There's a key difference between Monero's proof-of-work algorithm and Bitcoin's. Monero's algorithm is resistant to ASICs, the high-powered machines designed specifically for mining cryptocurrency. Miners must use consumer-grade hardware, meaning CPUs and GPUs. Due to that characteristic, mining Monero requires significantly less energy than mining Bitcoin.

Monero’s partnerships

Monero hasn't had many big partnerships. That's due in part to its reputation since it's known for being a cryptocurrency used by criminals.

The most notable partnership initiative for Monero has been Project Coral Reef. Monero's developers collaborated with dozens of musicians for the cryptocurrency to be an accepted payment method in their online stores, as well as exchanges that include bisq, Local Monero, and Hodl Hodl.

Monero was briefly linked to the popular online battle game Fortnite in 2019. The game's official merchandise store started accepting Monero payments through a cryptocurrency payments provider. However, it turned out to be an accident, and Monero payments were quickly disabled.

Can I make passive income with Monero?

You can make passive income with Monero by lending it. There are multiple crypto lending protocols that support Monero, including CoinLoan and KuCoin. U.S. residents are prohibited from using KuCoin, but CoinLoan is an option.