However, in a crowded privacy coin market, does Monero have the features and functionality needed to achieve further growth, or is its price headed for a dip?
|Launch date||April 18, 2014|
Monero price prediction
Predicting the future price of any cryptocurrency is a tricky business. Not only are digital currencies highly volatile, but their prices are also influenced by a wide range of internal and external factors.
Some of the issues that could potentially drive prices higher or prompt a drop in the value of Monero are outlined in the table below.
What could drive Monero’s growth?
- Supply. The initial supply of Monero will be ~18.4 million coins, after which time there will be a permanently fixed production of 0.3 XMR per minute to counteract the number of lost coins per year. At the time of writing (3/8/18), CoinMarketCap reported the circulating supply of XMR at 15,800,285.
- Demand. The sheer number of coins targeting private transactions would seem to indicate that anonymity is a key concern for many cryptocurrency users. The popularity of such currencies also indicates that there is demand for privacy coins, and this is the market that Monero is aiming to tap into.
- Privacy and anonymity. While some coins only offer a limited level of anonymity or provide private transactions as an optional feature, Monero’s key goal is to offer private and untraceable transactions. This is a unique selling point that sets it apart from many other coins.
- Increased regulation. As legislators and law enforcement agencies have battled to keep pace with the rise of cryptocurrency, there’s been an increase in the ability to track transactions using bitcoin and other coins. As a result, users who value their privacy may be forced to search for a coin that offers a higher level of anonymity, such as Monero.
- Its history. Monero has been around since 2014 and has established a reputation as a secure and anonymous currency with trusted privacy features. This could help it fight off challenges from other, newer competitors.
- MoneroV. On April 30, 2018, a new cryptocurrency known as MoneroV will be created from a Monero hard fork. The new coin integrates the MimbleWimble protocol, with the aim of being fully scalable. At the time of the fork, XMR holders will receive MoneroV tokens at a rate of 1:10, and at the time of writing (3/9/18), this was one factor contributing to a recent XMR price rise.
What could hold Monero back?
- Competition. There are plenty of other cryptocurrency projects focused on providing private transactions as standard or as an optional feature. Zcash, Verge and Dash are just a few of the competitors that could potentially challenge Monero for market share.
- Ties to illegal activity. Every coin that places an emphasis on private transactions inevitably ends up being linked with criminal activity, which can hamper a coin’s widespread public perception and impact its level of adoption. For example, Monero has been exploited in cryptocurrency mining operations, while it’s also been reported to have become the currency of choice for criminals on the dark web. Even North Korea has been reportedly mining Monero and stealing it by hacking servers in South Korea.
- Increased regulation. Another factor to consider is that governments in several countries around the world are regularly reported to be planning “crackdowns” on cryptocurrency. Due to their perceived connection to illegal activity, privacy coins could well be the target of any new legislation. Of course, whether or not coins like Monero could sidestep any new regulations remains to be seen.
- Scalability. Monero’s critics have pointed to potential issues with the currency’s scalability, as the privacy technologies used increase the size of Monero transactions, which could lead to slower processing times and higher transaction fees in the future. However, Monero’s developers are looking at ways to work around this issue.
- Mining centralization. Critics have also suggested that the centralization of Monero mining exposes it to the risk of someone else seizing control of the network. However, Monero plans to combat this problem with a hard fork.
Where to buy Monero
What’s coming up in Monero’s roadmap
New tech upgrades and releases could potentially have an impact on the price of Monero, so let’s take a look at some of the key developments coming up in Monero’s roadmap. The next items on the list include:
- Multi-signatures. The implementation of multi-signature technology, currently in the testing phase, could potentially increase Monero’s acceptance levels with businesses and merchants.
- Kovri alpha release. This C++ implementation of the I2P network is designed to increase the security of transactions.
- Second-layer solutions for speed and scalability. There are multiple solutions being considered to help improve transaction speed and reduce fees.
- More efficient range proofs for RingCT to reduce transaction sizes. Known as Bulletproofs, these are designed to reduce Monero’s transaction size by up to 80% and also lower transaction fees.
The level of adoption Monero can achieve will be influenced in part by the actions of its competitors, which could have a positive or negative effect on the price of XMR. Some of the other main contenders in the privacy coin sphere include:
- Dash (DASH). A peer-to-peer digital currency that aims to become the world’s most user-friendly and scalable payments-focused cryptocurrency, Dash offers optional private transactions using its PrivateSend feature.
- Zcash (ZEC). An open, permissionless cryptocurrency that uses zero-knowledge cryptography to protect the privacy of transactions, Zcash enables anonymous payments.
- Verge (XVG). Verge uses Tor technology and I2P routing to conceal user IP addresses and protect the privacy of transactions.
- PIVX (PIVX). A hard fork of Dash, PIVX features a built-in mixing mechanism to anonymize transactions.
- Bytecoin (BCN). Launched in 2012, this anonymous cryptocurrency uses a ring signature algorithm called CryptoNote to provide transaction privacy.
- Nav Coin (NAV). Created with the aim of providing fast and affordable online payments, Nav Coin also offers a range of privacy features, including optional anonymous transactions.
Beyond 2021: What does the future hold for Monero?
Unlike many other cryptocurrencies, Monero is private by default and has been designed with private and anonymous transactions at the top of its list of goals. This fact alone should stand it in good stead, as history has shown that there’s certainly demand for a coin that allows secret transactions.
However, Monero’s privacy is something of a double-edged sword. While its untraceable nature makes it an attractive proposition for anyone who wants to transact anonymously, this also makes the coin a suitable choice for anyone who operates outside the law. This could severely hamper the mainstream public perception of Monero, while it also raises the risk of potential regulatory changes.
The other main challenge for Monero looks to be scalability. While transaction sizes could prove a problem as the network increases in size, there are plans in place to help overcome this problem. If Bulletproofs can reduce Monero’s transaction size and fees as planned, there’s plenty of potential upside for this popular privacy coin.
The most important thing to remember with Monero, or any other cryptocurrency for that matter, is that nothing is certain. There’s a big market for privacy coins, and Monero is a leading player, but it’s far from the only fish in this crowded sea.
However, as an established coin with a solid reputation for providing secure and anonymous transactions, it’s well positioned for the battle that lies ahead. If the Monero community can successfully tackle scaling issues before they become major problems, and without impacting XMR’s privacy features, this should mean good things for Monero moving forward.
Just make sure that you thoroughly research Monero’s pros, cons and influencing factors before deciding whether you should add any XMR to your cryptocurrency portfolio.
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