Monero (XMR), the most widely used - and probably revered – privacy-focused cryptocurrency has successfully completed one of its twice-yearly (minimum) hard forks, and this one introduce features that saw its transaction fees drop over 90%.
This iteration of Monero, “Beryllium Bullet”, implements BulletProofs, a hotly anticipated piece of cryptography that will dramatically reduce the size of XMR transactions, possibly freeing up space to expand the coin’s already considerable range of capabilities.
Ring Signatures is one of the fundamental methods of Monero, which adds randomly picked past transactions into a current transaction, so that the identities of the transaction participants are mixed into the possibilities of the whole group. The “Ring” part is the group or bundle.
Confidential Transactions build on the functionality brought by Ring Signatures, and the suite of functionality they together bring is called RingCT. Confidential Transactions essentially add fake transaction amounts to the actual transaction, so that the amount of value transferred is lost - so with RingCT, not only are identities masked, the quantities of value transferred are also masked.
It is through a completely new cryptographic method that RingCTs are made vastly more efficient. With Bulletproofs, adding more fake signatures and transactions - “mixins” in Monero-speak - to the bundled transaction will scale logarithmically, rather than linearly. This is to say the transaction file sizes will increase much more slowly.
The amount of mixins could therefore be increased considerably because of the saved space, and with it the potential for much increased privacy. Already utilizing the new space in this update, the previous minimum seven mixins has been changed to a fixed eleven, which was a decision of some debate in the community. This update is therefore rather groundbreaking for Monero.
Monero’s hard fork seems to have been a great success. Available data shows the cryptocurrency’s blockchain was seemingly bloated as transactions are now taking negligible transaction fees to be processed, as the average transaction fees dropped from about $0.6 to $0.02.
Another headline feature of the Beryllium update is the new Proof-of-Work (PoW) algorithm, Cryptonight variant 2, adding more methods to resist Application Specific Integrated Circuit (ASIC) mining, which many fear centralizes cryptocurrency mining - including bitcoin mining.
Monero is often targeted, if not vilified, in mainstream press because of its ability to obfuscate so many aspects of transactions. The privacy coin featured heavily in a recent Wall Street Journal investigation into cryptocurrencies’ and cryptoasset exchanges’ alleged usage in money laundering - an investigation that was aggressively criticized as being inaccurate and amateurish.