All about Monero Coin for Dummies
I have been researching and writing about Monero for our Short Story slides, I have found out the information about the Monero, its mining, algorithm and statistics like circulation supply is so scattered and mostly old and not up-to-date. So, I decided to gather this short piece with a minimum bla bla bla & simple language to address everything in one place than even a dummy with English as second language can understand.
What’s Monero
Monero was launched in April 2014. It was a pre-announced launch of the CryptoNote reference code [source: Getmonero]. However, was not the first to use the CryptoNote. The goal of Monero is simple: to allow transactions to take place privately and with anonymity. Even though it’s commonly thought that BTC can conceal a person’s identity, it’s often easy to trace payments back to their original source because blockchains are transparent. On the other hand, XMR is designed to obscure senders and recipients alike through the use of advanced cryptography [source: Coinmarketcap].
Founder(s) & team
The origin of the Monero project is unknown and very controversial [big source: Reddit, source 2], you may read about it all over internet and in Reddit posts. What we know is: it is based on the CryptoNote v 2.0 white paper by Nicolas van Saberhagen [source: Bytecoin], who is an anonymous developer or a group, similar to Satoshi Nakamoto. Most if not all the current core developer team of Monero project are also anonymous [source 1: GitHub, source 2: Reddit], and in brief Monero is a fork of BitMonero that was a clone of Bytecoin. The www.getmonero.org website that acts as a major hub for community and user information also runs by anonymous custodians.
Monero mining algorithm
Monero inherited CryptoNight as its proof of work in 2014. Since then, Monero slightly evolved the algorithm to intentionally break compatibility with released ASIC-s. Three used variants existed: Cryptonightv1, Cryptonightv2 and Cryptonight-R. Monero no longer uses CryptoNight or any variant. Monero changed its mining algorithm to RandomX in November 2019 [source: Monerodocs]. To make it clear, the CryptoNight is the algorithm and CryptoNote is the protocol.
Deeper on RandomX
RandomX was developed for Monero by tevador, hyc, vielmetti, antanst and SChernykh [source: Moneroouteach]. Although it inherited many CryptoNight characteristics, but it is not a fork or modified version, but developed from scratch. The main purpose of development was to make it ASIC resistant. So, RandomX is CPU-oriented, giving GPU/FPGA-mining a significant disadvantage [source: Medium]. There are tons of articles on the web on the RandomX which is out of reach for this piece.
How to mine?
Monero uses a proof of work algorithm, RandomX, to validate transactions. The algorithm is designed to be resistant to ASIC mining, which is commonly used to mine other cryptocurrencies, such as Bitcoin [source:Wikipedia]. Monero is mined using mainly powerful and efficient CPUs. For this reason, the server grade CPUs with many cores and threads are most suitable. AMD EPYC series CPUs are most popular, the EPYC 7601 with 32 cores can be bought around $400 (July 2022) and generates about 11k–13k H/s. A regular server grade motherboard that can accommodate two EPYC CPUs can be found from $400, so a Monero mining rig with 20k-25k H/s hashing power can be built as low as $2000 overall including rest of the parts.
However, since the changes to reward block after June 2022, reducing to a fix 0.6 XMR per block reward, also much higher electricity & energy prices in 2022, mining Monero generates so little profit if any at all. The $2000 EPYC mining rig, that I mentioned mines 0.122004 XMR per month, and with a cheap $0.1/kWh still loses $10 every month because of energy costs (source: Whattomine).
At the current price of XMR ~ $150 (July.2022), mining with a home-built rig and residential electricity rate is not profitable at all, and far from it. The only option remains with industrialized high-power computers and very cheap electricity costs. Well, that is not far from the business model with ASIC miners. However, if XMR breaks above $200-$250 level, it may make it more affordable for an average dummy to mine Monero with a home-built rig and make a few bucks per month.
The Circulating Supply of Monero
Monero does not have a hard cap like Bitcoin. After June 2022 hardfork, every block with (~2 minute) generates 0.6 XMR reward. That makes 0.3 XMR per minute or ~157,680 XMR per year. The new rewarding mechanism kicked in when total XMR supply was ~ 18,150,000 XMR. Accordingly, the yearly expansion rate will be less than 0.87% a year.
Want to learn more about Monero? Watch Coin Bureau videos. He has an awesome YouTube channel, fair and square without shilling.
Please comment and contribute to this piece, let’s make it better. Let me know if I missed something or information is not correct.
