A hard fork is when a single cryptocurrency splits in two. It occurs when a cryptocurrency’s existing code is changed, resulting in both an old and new version. Sometimes the forked-out product retains the name of the original but adds a prefix or suffix to it to differentiate itself.
- The cryptocurrency network MoneroV is a hard fork of the popular privacy-focused Monero cryptocurrency.
- Monero is known for its high level of security, privacy, and anonymity.
- MoneroV claims to address some of Monero's shortcomings, including Monero’s scalability problems.
Monero is known for its high level of security, privacy, and anonymity. The MoneroV project is not related to or affiliated with the Monero project development team. Both projects have continued on their own path and development after the hard fork. Monero's cryptocurrency uses the symbol XMR, while MoneroV's tokens will be known as XMV. The hard-fork split will occur at block 1564965; at this point, MoneroV miners will start to create blocks on the MoneroV network. As a result of the fork, all Monero XMR coin holders will become owners of XMV tokens.
Technical Differences Between the Two Coins
Since both cryptocurrencies focus primarily on anonymity and privacy, there are a lot of similarities between them. Both use the same concepts of ring signatures and stealth addresses for user’s privacy and have a block interval of around 120 seconds. In addition, the difficulty level is dynamically adjusted at every block for both networks.
MoneroV claims to address some of Monero's shortcomings, including Monero’s scalability problems due to an inflated blockchain, an infinite supply of coins, the high cost of transactions, and the centralization of the decision-making process.
The key difference between the two networks is that, while Monero has an unlimited supply of tokens, MoneroV has a fixed supply of 256 million XMV. The reason for MoneroV's finite supply of coins is to shield the holder from inflation which reduces the purchasing power of the coins.
Additionally, MoneroV claims that Monero is discouraging to genuine miners because its increasing hash rate is primarily based on the bulk usage of automated miners, like botnets (in addition to other forms of stealth mining, where a user’s browser is involved in mining without their knowledge).
MoneroV works on a separate, privacy-oriented Mimblewimble protocol. This protocol is a trimmed-down version of the Bitcoin protocol that improves upon the privacy and fungibility of the cryptocurrency network, leading to higher scalability potential. Its use is expected to result in lower transaction costs and a smaller blockchain size.
MoneroV will initially use the same proof-of-work (PoW) mining algorithm as Monero.
As a part of the hard fork exercise, around 158 million XMV tokens will be airdropped in order to maintain a circulating supply of the XMV coins. (In an airdrop, existing token holders are given new tokens for free; XMV coins were given free of charge to existing XMR holders as a part of promotion.) Essentially, this will make all existing Monero token holders the owners of 10 times MoneroV coins.
A new wallet with the same address, private keys, and mnemonic phrase that a user had in the original Monero network will be generated for the MoneroV user and their XMV holdings.
Reaction from the Monero Community
Although bitcoin has had many hard forks that have led to the creation of new cryptocurrencies, such as bitcoin cash and bitcoin gold, those new coins did not feature additional privacy protections like ring signatures and stealth addresses.
Because both Monero and MoneroV use these concepts, there were serious allegations that the planned hard-fork MoneroV would actually be a threat to the Monero network, including a significant danger to the key image reuse. (A key image is an essential part of the Monero network that helps to confirm whether an output has been spent or not.)
With both the Monero and MoneroV networks set to have the same address, private keys, and mnemonic phrases, any transaction by a user on any of the network chains will produce the same key image. It was alleged that this situation could lead to the possible revelation of the identity of the network participants on both the networks, which would dismantle the core aspect of Monero (as well as MoneroV)—the privacy and anonymity of the user.
Along with the user claiming and spending the XMV tokens, the privacy of other users who may have transacted with them may also be at risk.
The claims around inflationary impact due to Monero’s infinite coin supply have also been dismissed by some Monero proponents, citing the observation of historical inflation of Monero and bitcoin.
The Bottom Line
Similar instances of varying opinions were observed when the Ethereum network went for a hard fork that gave rise to two networks–Ethereum Classic and Ethereum. While MoneroV claims to offer extra add-on features, better governance, less possibility of spam and botnet mining, time will tell how the fork is performed and the success/failure of the resultant network.
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