Cryptocurrency mining has become highly professionalised, particularly since the difficulty of Bitcoin mining doubled between 2020 and 2022. While Bitcoin is the largest and most well-known cryptocurrency, others have yet to gain global traction.
One of them is Monero (XMR). It is similar to Bitcoin in many ways, but differs in key areas that distinguish it. More importantly, they make it mining-worthy.
What Exactly Is Monero (XMR)?
Simply put, Monero (XMR) is a cryptocurrency focused on privacy. However, Monero and Bitcoin are similar in two important ways.
To secure the network, they employ Proof-of-Work consensus algorithms. In other words, they use physically-based mechanisms to verify and execute blockchain transactions for network operators. This physical foundation is provided by the electricity required to solve cryptographic puzzles. Proof-of-Stake consensus algorithms, on the other hand, use economically based mechanisms to achieve the same result. As a result, blockchain networks such as Cardano, Solana, and Avalanche employ validators rather than miners.
They have a total coin supply cap of 18.4 million XMR for Monero and 21 million BTC for Bitcoin. This makes both cryptocurrencies deflationary, in contrast to the USD, which loses value over time as the Federal Reserve increases its supply.
Monero (XMR) Supply Cap—Tail Emission Is Everything
Bitcoin has a limited number of coins that can exist at any given time—21 million BTC. At the moment, this leaves less than 2.1 million BTC to be mined in the next 120 years, or less than 10%. Many BTC coins, however, are permanently lost or destroyed because people have lost access to unlock them in the form of private keys or have destroyed the storage device on which they were stored. They are kept in non-custodial crypto wallets, which is why it is critical to keep your recovery phrase safe.
Monero, on the other hand, anticipates that some XMR coins will be lost in the same way. It has a mechanism that Bitcoin does not have: tail emission. While Monero will reach its supply cap of 18.4 million in May 2022, its tail emission ensures that Monero miners will continue to receive rewards.
In other words, Monero miners can expect block rewards of at least 0.6 XMR per block. In Bitcoin's original design, when there are no more block rewards to mine, Bitcoin miners will instead rely on transaction fees.
This incentivized concept, however, has not been tested (with Bitcoin). As a result, Monero's developers decided that there would always be a block reward via tail emission. The question now is whether Monero is as deflationary as Bitcoin.
Yes, the answer is yes. When one considers lost XMR as well as the increase in users over time, these forces cancel out the barely inflationary tail emission. Furthermore, unlike the USD or other fiat currencies, Monero's inflation is calculated in advance. Finally, tail emission encourages Monero owners to use it as a medium of exchange rather than just a store of value.
Monero's Key Advantage—Privacy
Although Bitcoin is referred to as a cryptocurrency, the crypto part is severely lacking. Crypto implies encryption to protect privacy, but Bitcoin is pseudonymous. This means that its transactions can be easily linked to a person's identity. In fact, Coinbase has created a suite of tools to accomplish this and has shared it with a number of federal agencies.
Mining Monero requires two prerequisites in addition to hardware:
The Monero wallet. Monero GUI Wallet or MyMonero are the two options. Both are appropriate for both novice and advanced users and can be installed on all major operating systems, including Windows, Linux, and macOS. Mining software that connects your computer to the blockchain network of Monero. XMR-Stak or XMRig would be sufficient.
With both in hand, you can easily join any Monero mining pool by pasting your Monero wallet address and begin receiving your block rewards as XMR. The mined XMR can then be sent to your crypto exchange account (Binance, Coinbase, Kraken, etc.) to be sold for fiat currency or swapped for another cryptocurrency.
Do You Want to Mine Monero?
Finally, if you already have a PC, it is worth investigating whether the mining venture will be profitable. By the time you read this, the XMR price may have skyrocketed, making even solo mining profitable.
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