Monero’s (XMR) New Privacy Feature and Its Impact on Security
The privacy-oriented cryptocurrencies are very popular with the older users of blockchain technology and thus have a privileged place among the many existing projects. The downside of it is that the development of privacy-focused coins such as Monero makes it a perfect choice for cybercriminals that enables an end user to cloak their identity.
Monero has succeeded in completing this update, including tweaks on the PoW-algorithm to improve ASIC resistance, changes in order to reduce attacks and improve the homogeneity of transactions, to increase privacy.
Monero’s new dynamic block-size upgrade will help prevent specific attacks, such as the big bang attack, which makes the blockchain bigger than nodes are capable of supporting, i.e., a bloating spam attack.
For the last five years, XMR developers have changed Monero’s software PoW mechanism three times to achieve “ASIC resistance.” For a range of reasons such as improved security or privacy features, XMR development team’s upgrades are scheduled twice a year. In consequence of the disagreements over the years the protocol was divided into several versions.
In the Monero case, we find that the project is a 100% privacy-driven project, in which problems such as scalability have been left behind, but the development team is working on solving problems when a problem is noticed.
The change in their PoW algorithm, however, marks the third change in ASIC resistance over the presence of the coin. However, previous forks in Monero had no lasting effect on preventing ASIC miners, since ASIC resistance is essentially a continuous cat and mouse game.
It was interesting to note that this hard gap was to be held in the coming months but was promoted due to the domination of ASIC miners in the Monero network. According to data from 2miners, the bifurcation decreased its dominance by more than 80%.
The Binance Research report stated that “it made it more difficult” to detect the origins and destination of a transaction by upgrading the dumped encrypted payment ID.
The core development team of Monero has given a lot of thought and a lot of community excitement and revealed that it would impose a ban on ASICs by changing PoW protocols several times a year. A network-wide hard fork came into being in April 2018 with the first PoW shift. This anti-ASIC fork came just a few weeks ago when the heavyweight cryptocurrency mining company Bitmain released their Monero-friendly X3 machine. The hash rate of Monero fell in days after the fork from 1,000 to 150 megahashes.
The addition of dummy information is a new element of confidentiality, making it more difficult to identify both the origin and the location of each transaction. As several countries and individual talk about banning coins for privacy, this additional feature of privacy could result in more pressures from countries to create legislatures to deal directly with the status of the coins for privacy.
In addition, the report by Binance Forschungs, which states that the long-term block size may increase by “up to 1.4x after 50 000 blocks.” The second addition to that was related to the change in the fees for miners, “as it is calculated now on the basis of the median long time weight of the block compared with the previous median weight of 100 blocks.”
For this hard fork, there are two possible results. First, the mining continues to be rather unprofitable for household miners and secondly; the low hash rate is 51 percent more likely to attack.