If you’ve been using a crypto app or exchange for a while, you no doubt know that the world of cryptocurrencies has expanded beyond Bitcoin and Ethereum. One coin that’s attracted a large amount of attention in recent years is Monero, sometimes abbreviated XMR. Monero is currently one of the top 10 cryptocurrencies in the world, with a total market capitalization of $1.3 billion. But what exactly makes Monero stand out from the thousands of other cryptocurrencies you can invest in — and how can you get your own supply?
Today, we’re giving you a crash course on everything you need to know about Monero and how you can securely buy, sell and trade this popular offering.
Compare Online Crypto Brokers
What’s Monero?
Invented in 2014, Monero is a cryptocurrency centered around the principles of anonymity, privacy and untraceable transactions. Unlike most other cryptocurrencies, it’s impossible to know who initiated a Monero transaction or where the coins went. This focus on privacy has made Monero a very popular coin to buy, sell and trade. It’s also steeped the coin in layers of controversy, especially among government officials.
How is Monero different from Bitcoin? The main difference between the two is the traceability of transactions.
Here’s a basic explanation of how Bitcoin works. Everyone has a cryptocurrency wallet that they use to send and accept bitcoins. For the sake of this example, let’s say your bitcoin wallet address is XXX. Every bitcoin wallet address is unique — if your wallet address is XXX, it means that no one else has that XXX address. Every time you send or receive any kind of bitcoin, the transaction gets recorded on a public ledger called the blockchain. The blockchain ledger includes information on which wallet addresses are sending and receiving Bitcoin and how much is moving. This means that, in theory, if someone knows your Bitcoin address, they can look at the ledger and see your transaction history.
Like Bitcoin, Monero also has a public blockchain ledger. However, Monero’s blockchain is intentionally anonymous and opaque. When you send Monero, you use your unique public address, but this is not the address that appears in the ledger. Monero’s system automatically records the address as a random mix of the sender’s account key and other public keys on the blockchain. This is called a “ring signature,” and it makes it impossible to tell who sent what amount of Monero. The currency’s ring signature technology has expanded to hide the amount sent, making all transaction information private.
Stealth addresses add an additional layer of privacy over the ring signature. Stealth addresses are single-use wallet addresses that benefit the person receiving the Monero. When you send Monero, you don’t actually know who you’re sending it to because the randomly-generated stealth address doesn’t match up with the user’s true wallet address.
As an example, let’s say that you have a Monero address of XXX and your friend has a Monero address of YYY. Like Bitcoin, these public addresses are unique. However, if you want to send your friend Monero, you won’t send it to address YYY. Instead, Monero will generate a random stealth address. The public blockchain will then record the transaction with a unique address. You may send the Monero to address ZZZ, see the transaction on the blockchain as XYZ, and watch your friend receive the transaction at address YYY.
Monero’s total anonymity and impressive privacy features haven’t come without controversy. Monero came to the forefront of public attention during the May 2017 WannaCry ransomware attacks. During this attack, an anonymous group of hackers exploited a security hole in the Windows operating system to infect over 200,000 computers across 150 countries. The hackers collected millions of dollars in Bitcoin in exchange for decrypting the victims’ computers. No arrests were made because the hackers converted the ransom they collected into untraceable Monero.
Monero is also associated with the purchase of illegal drugs and weapons on the dark web. Because Monero’s sender and recipient can both send coins without knowing who’s on the other end of the transaction, the coin is useful for criminals and illicit activity.
Despite this negative publicity, Monero remains one of the most popular cryptocurrencies among investors. As of this writing, there are currently over 17 million Monero coins in circulation. Monero is available on some of the most popular cryptocurrency exchanges in the world, including Binance, Kraken and Poloniex.
Where Can You Buy Monero?
Despite Monero’s cutting-edge privacy features, you can buy and sell the coin in much the same way as other cryptocurrencies. There are two main ways that you can buy cryptocurrencies: though a broker or through a third-party exchange.
The easiest way to buy Monero or any cryptocurrency is to open an account with a brokerage that offers the coin you want to buy. These brokerages allow you to link your bank account information, import money into your brokerage account and buy the coins you want. From there, you should transfer your coins to a separate wallet for maximum safety and security.
Depending on where you live, you may need to use a 3rd-party exchange to buy Monero. If this is the case, you must first open an account with a brokerage that offers a medium currency. The most common cryptocurrency medium is Bitcoin, but you can also use Litecoin or Ethereum. Buy your medium currency, then transfer it to an international exchange like Binance. Convert your medium to Monero, then send your Monero to your wallet.
How to Buy Monero (XMR)
Ready to make your first Monero purchase? Let’s take a look at the steps you’ll go through to invest in Monero.
Step 1: Compare Brokerages
The easiest way to buy Monero is by making an account with a brokerage that offers fiat to Monero conversions. When you compare brokers, look for these key features:
- Security: If your cryptocurrency wallet gets hacked, it can be virtually impossible to trace the transactions and get your coins back. Look for a broker that offers advanced security features like 2-factor authentication and double-layer encryption to keep your cryptocurrency and payment data safe.
- Coin offerings: There are thousands of cryptocurrencies on the market and no individual exchange or brokerage offers all of them. If you want to buy Monero, make sure that your brokerage supports it. If you’re interested in buying more than just Monero, check out the brokerage’s full list of coin offerings before you create an account.
- Easy usage and access: The best cryptocurrency broker in the world is useless if you can’t use it! Choose a broker that offers a platform that you understand and that’s easy for you to use. You may want to check out a few YouTube reviews and tutorials while you’re comparing brokerages.
- Availability in your area: Cryptocurrency is a hotly debated topic, and the legality of cryptocurrency exchanges varies depending on your country and state. Before you sign up for a brokerage account, make sure the company offers service where you live.
- Mobile trading: Some traders prefer to buy and sell their coins from a mobile trading platform. Not every brokerage offers a mobile app, so if this is an important feature for you, make sure your broker offers an app that’s compatible with your phone’s operating system.
- Low fees and commissions: Every cryptocurrency trading platform charges some form of fees or commission. If you’re a frequent trader, these charges can quickly make a dent in your profits. Understand your broker’s fee schedule before you create an account and choose a platform that offers reasonable fees for your trading frequency.
- Multiple purchase options: Do you want to purchase your Monero using a credit card? Do you need the ability to import and store fiat currency in your cryptocurrency brokerage account? Not every broker offers these functions. Check with your individual broker to learn which purchase methods they offer.
Step 2: Create a Brokerage Account
Once you choose a cryptocurrency broker that fits your needs, it’s time to create an account. The specific process you’ll use to open an account varies by broker but be prepared to upload some of your personal information to finalize your account setup. Most cryptocurrency brokers must collect your email address, full legal name, phone number, address and a scan of a valid photo ID before they can allow you to begin trading.
The verification process might take a few days depending on which broker you choose. You may be able to start trading instantly after you create an account, or your account might have a hold on it until the broker can verify your identity. You’ll usually receive an email or text notification when verification is complete. Wait until the broker verifies your account, then enable 2-factor authentication to keep yourself secure.
Step 3: Link Your Payment Method
Link your payment method through your brokerage account. Depending on your broker, you may be able to buy cryptocurrency using a bank account, credit card or wire transfer. Keep in mind that most brokers charge an extra fee for credit card payments.
Step 4: Buy Monero
Once you link your payment method, you can finally buy Monero. You may want to wait a few days and see how the price of the coin is moving before you invest. Use your trading strategy and watch for buy signals for a few hours or days before you make a purchase.
When you think the price is low, you can put in an order with your broker to buy Monero. Use your broker’s platform to place an order and your broker will fill it on your behalf as soon as possible. Keep in mind that, like stock markets, cryptocurrency markets have varying liquidity. This means that before you can buy Monero, someone else on the market needs to be selling it. It may take anywhere from a few seconds to a few hours to totally fill your order. You can track the status of your order through your brokerage account.
Step 5: Store Your Monero
It’s usually not a good idea to store your cryptocurrency in your brokerage account unless you’re a frequent trader. Download a virtual wallet to store your Monero or use an offline hard wallet for maximum security. Then, link your crypto portfolio tracker to your wallet and chart your Monero’s value over time.
Buying Beyond Bitcoin
Cryptocurrency is still a developing market, which means there’s plenty of room to make profits with coins like Monero. However, it’s important to remember that cryptocurrency is also incredibly volatile. It’s also possible to lose large amounts of money very quickly when trading cryptocurrencies. If you choose to invest in cryptocurrency, have a plan in place and remember to never invest more than you can afford to lose.
Want to learn more about cryptocurrency? Read our articles on best cryptocurrency trading platform, best cryptocurrency in 2019, and best crypto wallets.
Hire a Pro: Compare Financial Advisors In Your Area
Finding the right financial advisor that fits your needs doesn’t have to be hard. SmartAsset’s free tool matches you with fiduciary financial advisors in your area in 5 minutes. Each advisor has been vetted by SmartAsset and is legally bound to act in your best interests. If you’re ready to be matched with local advisors that will help you achieve your financial goals, get started now.