What Is MonaCoin?

MonaCoin, or MONA, is a digital currency that is predominantly used in Japan. The cryptocurrency uses blockchain code that is originally based on Litecoin, another cryptocurrency. Unlike Litecoin, however, it does not use the Scrypt algorithm. Instead, it uses the Lyra2REv2 algorithm, which uses less power and is not dependent on the availability of ASIC machines for mining.

MonaCoin was launched in 2013 and is named after an internet meme—a cat-like figure created using ASCII characters. The cryptocurrency is the brainchild of an anonymous "Mr. Watanabe," whose identity has never been confirmed. The total supply of MonaCoin is set at 105,120,000. A MonaCoin foundation was set up in 2014 to promote the cryptocurrency's use and development.

Key Takeaways

  • MonaCoin is a cryptocurrency that is predominantly used in Japan.
  • Like Bitcoin, MonaCoin uses the proof-of-work operating protocol.
  • The MonaCoin blockchain can typically process transactions faster than Bitcoin.
  • MonaCoin is approved by Japan's regulatory authorities for use in daily transactions.

How MonaCoin Works

Imagine that you want to buy MonaCoin. This is how the process would work:

  1. Transaction is initiated and submitted to MonaCoin blockchain: Using a cryptocurrency exchange such as Bittrex, which lists MonaCoin, you can initiate a transaction to purchase MonaCoin. You need Japanese yen or a cryptocurrency including Bitcoin to buy MONA.
  2. MonaCoin blockchain processes the transaction: Your MonaCoin transaction is processed using the proof-of-work operating protocol, which requires miners with vast networks of computers to quickly solve complicated math functions. At the same time that miners process MonaCoin transactions, new MonaCoin is minted and paid as rewards to the miners.
  3. MonaCoin blockchain is updated: Within an average of 1.5 minutes of initiating your MonaCoin purchase, the transaction is complete, and the MonaCoin blockchain becomes longer by one block.
  4. MonaCoin is stored in your digital wallet: Your newly purchased MonaCoin is accessible through a digital wallet. That wallet may be hosted by the exchange where you purchased the MONA, or can be a non-custodial wallet such as a hardware device that enables offline storage.

MonaCoin Halving

MonaCoin miners earn MONA rewards for processing new blocks of MonaCoin transactions. The amount of MONA paid as a block reward is, by design, halved every 1,051,000 blocks. The current reward paid per block, in January of 2022, is 12.5 MONA.

With the MONA block reward halving after every 1 million blocks approximately, the block reward changes about every three years. The most recent halving occurred in October 2020.

Price History of MonaCoin

The price of MonaCoin has remained below $2.00 for most of its history. The coin's price for the first four years after its 2013 founding did not rise above $1.00, until MONA briefly traded for as much as $16.61 in December 2017. As of January 2022, MONA trades for around $1.00.

How MonaCoin Is Used

MonaCoin was one of the first coins to implement Segregated Witness (SegWit). Therefore, it has faster transaction processing time as compared to Bitcoin and other cryptocurrencies. When he introduced MonaCoin on an online forum, Mr. Watanabe stated that the cryptocurrency was not a security. He said that the coin was part of a game whose goal was to find hashes in the MonaCoin network. According to him, MonaCoin was meant to be similar to points spent in the Monacoin network. MonaCoin is commonly used for a couple different purposes:

  • Tipping: MonaCoin is frequently used through third-party mobile applications to pay tips, such as in online games.
  • Payment: MonaCoin is accepted as payment by some Japanese stores, including both online and brick-and-mortar shops. Monappy is an online platform where MonaCoin holders can exchange MONA for digital assets like coupons, electronics, and other items.

MonaCoin in Japan

MonaCoin bills itself as the first Japanese cryptocurrency and is predominantly used in Japan. Throughout Japan, many "smart" automatic teller machines (ATMs) support cryptocurrency trading, including purchases and sales of MONA.

While the Monappy platform is the unofficial hub of the MonaCoin community, MONA also trades on several Japan-based digital currency exchanges. MonaCoin has been approved by Japan's Financial Services Agency, which deemed cryptocurrencies to be a legal method of payment.

Speculation about why MonaCoin was created often focuses on a cultural desire in Japan to create national versions of well-known products. This desire is borne out of a demand for products and services that feel relatable, by being both created in Japan and having Japanese documentation and other content written in Japanese. But despite its strong association with Japan, MonaCoin is not designed as a national cryptocurrency, like Iceland's Auroracoin.

MonaCoin Hacks

Hackers have made away with MonaCoin by hacking exchanges and taking advantages of vulnerabilities in MonaCoin's storage app Monappy to hack it. The first hack occurred in 2018, when cryptocurrency worth $60 million was stolen in Japan from a virtual exchange. In a second hack, a year later, an 18-year-old hacker stole 15 million yen worth of MonaCoin from 7,700 users of Monappy.

Where can I buy MonaCoin?

You can buy MonaCoin through cryptocurrency exchanges including Bittrex and Zaif, which is based in Japan. Also in Japan you can visit a smart ATM that supports MONA purchases, in addition to using the Monappy platform.

Is MonaCoin a good investment?

MonaCoin is largely used for tipping in online games, and its use is somewhat isolated to Japan. You may decide to buy and use MONA, especially in the Japanese economy, but should be aware of MonaCoin's limitations before making any purchase.

What can I buy using MonaCoin?

You can use MonaCoin to pay tips to gamers. You can also buy digital assets and other goods, using the section of the Monappy that functions like an online auction site. MonaCoin holders can pay for some goods and services in Japan using MONA.

The Bottom Line

MonaCoin is a cryptocurrency developed for use in Japan by an anonymous inventor called Mr. Watanabe. It has been forked off Litecoin but does not use the same algorithm. MonaCoin was one of the first coins to implement SegWit in its blockchain; hence, transactions using the coin are much faster as compared to Bitcoin.

MonaCoin can be purchased using Japanese yen or Bitcoin at cryptocurrency exchanges, or at "smart ATMs" in Japan. The coin is mainly used for tipping in online games. Some stores in Japan also allow purchases using MonaCoin.

Article Sources

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