A new cryptocurrency network called MoneroV is now emerging as a hard fork of the popular Monero cryptocurrency that is known for its high level of security, privacy and anonymity. MoneroV claims to be a truly anonymous, decentralized, and a finite version peer-to-peer electronic currency network. While Monero has its own cryptocurrency with symbol XMR, MoneroV comes with its unique tokens that will be known as XMV. (See also, What Is Monero (XMR) Cryptocurrency?)
The concept of creating forked versions of successful cryptocurrencies is gaining momentum. Although not official, it is also becoming a common practice for the forked-out product to retain the name of the original, and add a prefix or suffix to it to differentiate itself.
For instance, the most popular cryptocurrency network, Bitcoin, has spawned several new virtual currency avatars that share the Bitcoin name. They include Bitcoin Cash, Bitcoin Gold, and Bitcoin Diamond.
Once the scheduled forking exercise is complete, all Monero XMR cryptocoin holders as of block 1564965 in the original Monero blockchain will become owners of MoneroV XMV cryptocoins. (See also, Monero Price Tops $350 Ahead of March 14 Hard Fork.)
The big question – what’s the difference between the two?
MoneroV’s Claims, and Technical Differences to Monero
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, both have a block interval of around 120 seconds, and the difficulty level is dynamically adjusted at every block for both the networks.
MoneroV claims to address some of its relation's shortcomings: Monero’s scalability problems due to an inflated blockchain, infinite supply of cryptocoins, high cost of transactions, and centralization of decision-making process that may lead to delayed or no implementation of new features.
Additionally, MoneroV claims that Monero is discouraging to genuine miners, as its increasing hash rate is primarily based on the bulk usage of the automated miners like botnets, and other possibilities of stealth mining where a user’s browser is involved in mining without his/her knowledge.
MoneroV claims to offer comparatively lower transaction cost, and expects to improve on the scalability challenge of Monero.
It works on a separate, privacy-oriented Mimblewimble protocol. This protocol is a trimmed-down version of the Bitcoin protocol that is expected to significantly improve the privacy and fungibility of the cryptocurrency network leading to higher scalability potential. Its use is expected to result in lower transaction costs and smaller blockchain size.
While the use of Mimblewimble protocol by MoneroV remains in a developmental stage and is expected to take place during late 2019 or early 2020, it is the basis on which MoneroV claims to offer improved scalability compared to the Monero network. How it emerges in the future remains to be seen.
The total number of XMV cryptocoins is capped at 256 million making it a finite network, compared to the infinite supply of the XMR cryptocoins. Citing a comparison with the central bank freely printing the money leading to inflation which eventually hits the currency valuations, MoneroV justifies its finite supply of cryptocoins to shield the holder from such inflation which reduces the purchasing power of the coins.
To begin with, the MoneroV network will retain the CryptoNight proof-of-work hash algorithm of the Monero network, but is scheduled to change to an alternate one (yet to be decided) around the first quarter of 2019.
As a part of the hard fork exercise, around 158 million XMV tokens will be “airdropped” to maintain a circulating supply of the newly introduced XMV coins. These XMV coins will be given free of cost to the existing XMR holders as a part of promotion. Essentially, all existing Monero coin holders will become owners of 10 times MoneroV coins.
A new wallet that has 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 his/her XMV holdings. The immediate focus of the MoneroV development team is to introduce a light-weight GUI wallet and web wallet expected to be released around June 2018.
Views from Monero Community
However, not all the claims by MoneroV are being accepted by the Monero community.
Though Bitcoin has seen many hard forks leading to other cryptocurrencies like Bitcoin Cash and Bitcoin Gold, those coins did not feature privacy protections like ring signatures and stealth addresses.
As both Monero and MoneroV use these concepts, there are serious allegations that the planned hard-fork MoneroV is actually 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 phrase, any spend transaction by a user on any of the network chains will produce the same key image. It is alleged that this situation will lead to possible revelation of the identity of the network participants on both the networks, which will dismantle the very 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 him/her may also be at risk.
The claims around inflationary impact due to Monero’s infinite coin supply are also rubbished off by the Monero proponents citing the observation of historical inflation of Monero and Bitcoin, which are not that different. Monero community advises Monero users to avoid claiming the airdrop XMV coins.
The Bottom Line
Despite all claims and counterclaims, the MoneroV fork is scheduled around April 30, 2018, and development efforts continue. 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. (For more, see An Introduction to Ethereum Classic.)
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