Monero has gained a lot of attention due to its role as a Bitcoin alternative on the dark web. Following its success, many people are now attempting to speculate on its price. In this post I will give you a short overview about Monero and on the different ways you can buy it online.
In order to buy Monero (XMR) follow these steps:
- Get a Monero wallet (Ledger Nano S, MyMonero)
- Get your Monero address
- Go to Kraken and sign up
- Deposit money and buy XMR
- Withdraw your coins to your wallet
That’s it! If you want a detailed explanation of the process and Monero itself keep on reading.
1. What is Monero?
Monero falls under the category of anonymous coins – meaning cryptocurrencies, that unlike Bitcoin, can’t be publicly tracked. Within this category you will also find two other main competitors – Dash and Zcash. Monero achieves pretty good anonymity through the use of several methods.
Unlinkable Stealth Addresses
Address re-usage is one of the common privacy issues of Bitcoin. Receiving multiple payments to a single address allows anyone who knows your address to track its balance and all related incoming and outgoing transactions.
What’s worse is that even separate addresses in your wallet may become linked due to the way Bitcoin handles change. For this reason, Bitcoin core developer Luke Dash Jr. said that, “only a fool would use Bitcoin as it is today for darknet.”
No such privacy issues exist in Monero. All destination addresses are obscured within its blockchain, so that only the sender and receiver can identify them. Analysis of the Monero blockchain will never reveal the destination address at which one receives XMR.
Instead, only a cryptographic hash of the destination, unique to each and every transaction, is visible. Only the sender or receiver can decode this to reveal the actual address. These obscured addresses are known as “stealth addresses.”
Beyond the obvious privacy benefits, stealth addresses have a number of ramifications, such as making it impossible to determine the current XMR distribution among addresses.
Indistinguishable Separated Transaction Units
If you were to send XMR to an address it’d arrive as several discrete payment units. For example, if you were to send 18 XMR it would arrive in whole number units of 10, 5 and 3 XMR, totalling 18 XMR. Each unit would appear on the Monero blockchain as being transferred to a unique and distinct stealth address.
This same process is applied to any change which is returned to the sender and any fees paid to miners. This property makes the task of tracking specific payment amounts vastly more complicated.
By sorting all transactions into unremarkable units, the Monero system ensures otherwise-distinctive sums are “lost in the crowd”.
Untraceable Ring Signature Payments
Ring Signatures are essentially an advanced, mandatory system for transaction mixing.
Ring signatures ensure that transactions can’t be decisively traced back to specific computer’s IP address. The way it actually work is a bit too complex to explain without some prior cryptographic knowledge so we will cover this in a different post.
The combination of the above 3 elements makes Monero a maze of mirrors for any potential tracker. No definite linkage can be determined, only the fuzzy possibility of linkage.
2. How to Buy Monero (XMR) in 3 Steps
Now that you know what Monero is, let’s talk about how you can acquire it.
Step 1: Get a Monero Wallet
The most secure way to store Monero would be on a hardware wallet. Today, the only reputable hardware wallet to support Monero is the Ledger Nano S. Using a hardware wallet will give you the security of storing your private key (i.e. your “password” offline) while easily being able to send XMR through a desktop interface when needed. The downside is of course that hardware wallets cost money.
If you don’t want to use a hardware wallet you can always use a free software wallet. I recommend using the official desktop wallet from the Monero devs.
If a lower level of privacy doesn’t concern you, the MyMonero web wallet is convenient to use and doesn’t require you to download the full Monero desktop wallet.
MyMonero is a service providing free hosted Monero accounts for those that would prefer not to run a full Monero client themselves, or for those using devices with limited resources. It was developed with the assistance of the Monero Core Team.
You can access your account on any device, as long as you have access to your private login key. MyMonero never knows your private login key, and is thus unable to spend your funds without your authorisation. All of the private cryptography is done locally on your device.
Once you have your Monero wallet you will need to obtain your XMR address. The address is a very long string of letters (case sensitive) and numbers that starts with a “4”. Here’s an example:
Step 2: Find an XMR exchange
Local Monero is a marketplace that brings together buyers and seller where you can find a wide variety of payment options to buy Monero.
Kraken allows fiat deposits which then allow you to purchase Monero directly. This, however, requires you to go through the exchange verification process.
Another way to buy Monero is to first buy Bitcoin or Ethereum with fiat (i.e., USD, EUR, GBP) then exchange your Bitcoin for Monero through Binance. If you live in the United States, you can buy Bitcoin with a credit card through Coinbase or Coinmama. European customers can use BitPanda or Cex.io to buy Bitcoins with a credit card.
Additional options for trading Bitcoin or Ethereum for Monero include the following exchanges: Bitfinex (no longer accepts US customers), HitBTC, Poloniex, Bithumb, and Bittrex.
Step 3: Withdraw your coins
Once you’ve bought your Monero from the selected exchange, make sure to move it into your own wallet. Never leave your coins on an exchange, as it puts them out of your control.
Congratulations! You’re now the proud owner of some Monero!
The majority of cryptocurrencies are only good for speculation. Monero is one of the few I feel comfortable holding over the long term. Monero has proven itself to be both useful and (despite some of its uses) legitimate. Out of all 3 leading anonymous coins, Monero seems to have the upper hand when it comes to technology and adoption.