The fast and secure cryptocurrency Monero has been quietly rolling along since its initial release in 2014. Upgrades and new features continue to drop on-schedule at the biannual hard forks, with some of the community’s long-standing requests coming to fruition in 2017.
While Monero may have had a good 2017, it’s nothing compared to what’s to come. Bulletproofs, multi-signatures, hardware wallets, and a decentralized anonymous overlay network are all on the roadmap. Monero is proving there is a market for private digital currency, and 2018 could be the year it takes off.
Monero’s Key 2017 Accomplishments
Monero’s 2017 can be summed up in three words: faster, and more secure. Several big features made their first appearance this year, including block structure improvements and privacy updates the community was eager to see put into practice.
Ring signatures are what give Monero its untraceability. Think of them like signatures for a paper check. Instead of being signed by just the check writer, though, they’re signed by anonymous network users. When the digital “check” is approved, the network knows it’s valid, but there’s no way to trace the transaction back to find out who initiated it.
Part of this signature process involves splitting transactions into smaller pieces to hide the original amount. The problem is that transaction amounts are visible to users on the network. It’s theoretically possible to piece them together to discover the original amount, which could lead to finding the sender’s identity.
To remove this potential vulnerability, Monero introduced Ring CT (Ring Confidential Transaction). Ring CT hides the amounts of each split transaction so they’re invisible to anyone other than the sender and receiver. Even if the unlinked amounts were harvested from the network, it would be impossible for an outside party to determine the transaction’s original amount.
Ring CT represents a strong boost to Monero’s already robust privacy features. The new protocol was introduced as an optional feature in the January 2017 hard fork, but was made mandatory for all transactions in September 2017.
Blocks are the fundamental units of a blockchain. Each one usually contains a header and a transaction record, both of which are constantly changing size to incorporate new data passing through the network. The size of these blocks directly impacts how much bandwidth a cryptocurrency’s network consumes. More transactions and bigger blocks means everything slows down, including payment verifications and mining.
To keep the network as lithe as possible, Monero’s dev team introduced a new kind of block. Fluffy Blocks only contain a header, an index of transactions, and transactions the node receiving the block may be missing. This pulls out redundant data to cut the size of each block, dropping transaction times and allowing for faster wallet syncs.
Fluffy Blocks made their debut in September 2017. They remained an optional feature until the early 2018 hard fork, at which point they became default and mandatory.
Helium Hydra was a mandatory software update released before the September hard fork. It added support for Fluffy Blocks and significantly decreased initial sync times, alleviating one of the community’s biggest frustrations with the official wallet software.
Helium Hydra also introduced full node support for iOS and Android. This allows users to run network nodes from any compatible device, hinting that better core support for smartphones and tablets will come in the future.
Monero’s 2018 Roadmap
Monero’s development team doesn’t keep a strict roadmap. Instead, they focus on a set of development and research goals pegged with important milestones along the way. Hard forks happen approximately every 6 months, so the community knows when to expect big network upgrades.
The team’s goals are largely an extension of the technology introduced in 2017. In short, they intend to provide more security, more anonymity, and faster transactions, three things that are sure to make everyone extremely happy, including investors.
Scalability is a huge concern for every successful cryptocurrency. The more people who use a coin, the more transactions the network has to verify. Delays can stall payments and send transaction fees through the roof.
Monero is taking aim at scalability problems by introducing bulletproofs. These short, non-interactive, zero-knowledge proofs can cut transaction sizes by 80%, leading to speedier blockchain validation, lower fees, and faster payment resolution.
At the time of writing, bulletproofs have been deployed on Monero’s testnet and seem to be working as planned. Users report fees dropping 60-77% per transaction. Single-output bulletproofs will likely be deployed in the late 2018 hard fork, although no firm date has been set at the time of writing. Multi-output will follow at a later time, which should cut transaction size even further..
The shift to bulletproofs could attract a lot of attention to Monero. The currency already boasts low transaction fees compared to many major digital currencies, including Bitcoin. Dropping them even further while increasing network speed is a great way to stir up headlines and make more people spend their Monero.
Kovri is a decentralized anonymous overlay network under development by members of the Monero community. It’s based on I2P’s open specifications and will be used to give Monero transactions a significant boost in privacy.
Monero provides anonymity by obscuring the sender, using stealth addresses, and hiding the amount of each transaction from the rest of the blockchain. A potential vulnerability still lies at the network level, however, which could allow user IPs to be discovered by outside parties. Kovri addresses this through Tor-like garlic routing, which uses layered encryption and bundled data packets to hide information from everyone except the sender and receiver.
Kovri is extremely important for Monero. The currency is already more private than most competing coins, but with an I2P overlay protecting user identities, transactions will be more secure than ever. It will also help protect against node attacks, metadata leakage, and aid in mining efforts in adversarial environments, making Monero a viable currency in the most restrictive of countries.
At the time of writing, Kovri is in pre-alpha, having hit 10 out of its 16 major milestones. It’s likely to receive full Monero integration by the end of 2018, though the team hasn’t set an official date yet. The plan is to bundle Kovri with future Monero releases and enable it by default.
Monero has lagged behind in adopting multi-signature technology, partly due to its unusual architecture inherited from CryptoNote. The team finally announced at the end of 2017 that the feature was merged into the master and would be fully implemented by the next hard fork.
Multi-sig essentially means any transaction must be authorized by multiple users before funds are transferred. It facilitates things like escrow services and shared transactions, making it extremely important for merchants looking to use Monero as a payment method.
Cryptocurrency exchanges also like multi-sig coins. When the tech rolls out in 2018, it could prompt a lot of major exchanges to list more XMR pairs, opening Monero access to a wider marketplace.
Helium Hydra was 2017’s big software release from the Monero team. Lithium Luna is the one to watch out for in 2018. Version 0.12.0.0 brings several necessary compatibility features for the spring hard fork, most of which are invisible to the end-user.
Lithium Luna ships with default support for Fluffy Blocks. Hydra users had optional access to the feature, but it had to be enabled manually. Luna has them on by default, meaning it should sync faster with the network. It also supports Monero’s new post-fork ring sizes, subaddresses, and multi-signature transactions.
Another nice feature in Lithium Luna is increased language support. Helium Hydra was localized in 17 languages, but the new version takes that to 29. Once again, this is the result of the Monero community chipping in to make a better platform for everyone.
Securely storing large amounts of cryptocoins usually means picking up a hardware wallet. Trezor and Ledger are two of the most popular manufacturers, yet neither of them offer Monero storage. That’s likely to change in 2018.
Trezor has Monero support “in the timeline” for its Model T. The project has started and stalled a few times in the past, but efforts are still underway as of March 2018.
Ledger Nano S support for Monero is a bit more promising. Working prototypes have been shown off by the Ledger team, and the release notes for Lithium Luna displays the tantalizing line “initial support for Ledger Nano S hardware wallet.”
Adding hardware wallet support makes secure Monero storage extremely easy. Current holders will use this as an excuse to go all-in, which could do wonders for Monero’s market value.
Trading Value in 2018
Two key things are likely to happen once Monero rolls out its main 2018 features. First, new exchanges will pick up XMR trading pairs. More people will have easier access to Monero, which could drive the value steadily upwards.
Second, darknet adoption. It’s no surprise that a currency as privacy-aware as Monero would be highly sought after by anyone who needs anonymity. Darknet markets using the currency would be a massive catalyst for a sharp increase in Monero’s value. Multi-signature support and Kovri alone are likely to encourage darknet transactions to rely on Monero, at which point you’ll have to hodl your XMR and ride sky high.
Monero started 2017 valued at US$180. In January 2018, it was at US$400. Like most cryptocoins, XMR follows the general trends of the overall market. But with multi-signature implementation, Kovri, Ring CT, hardware wallets, and Fluffy Blocks hitting in the same calendar year, Monero could finish out 2018 with some new record highs.
Monero is in a great position for an extremely successful 2018. The upcoming milestones cement tested tech in place, providing faster transactions and lower fees. New releases promise to boost the coin’s already strong security features, making Monero viable for more exchanges and alternative marketplaces alike. Put both of these together and you have the right ingredients for a breakout year.