Can Monero overtake Bitcoin?

Bitcoin and Monero are two of the most popular cryptocurrencies today.

Bitcoin (BTC) is the original cryptocurrency that started an entire movement. The fact that someone or some group (no one knows if pseudonymous creator Satoshi Nakamoto was an individual or group) that isn't a government can start their own global currency is an incredibly revolutionary idea. So revolutionary that Bitcoin led to the creation of nearly 5,000 other cryptocurrencies as of writing.

One of these other crypto assets that resulted from Bitcoin is Monero (XMR). Launched in 2014 as "Bitmonero" (Bit from Bitcoin and Monero from Esperanto word for coin), Monero was born with the aim of focusing on user privacy. While Bitcoin offers more privacy than something like your credit card, it isn't fully anonymous.

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Although you don't have to provide your name or other identifying information in order to use Bitcoin, as you would with a credit card, all Bitcoin addresses and their transaction histories are publicly recorded on the Bitcoin blockchain (full record of transactions). Therefore, if someone can tie your real world identity to a Bitcoin address, you lose anonymity.

Monero vs. Bitcoin: Privacy

It's worth exploring Bitcoin and Monero’s privacy features in more detail.

Stealth Addresses

One of the features that gives Monero its privacy is the stealth address.

Stealth addresses are random one-time addresses that can't be linked to a previously published or shared standard address. In other words, sending multiple Monero transactions to the same standard Monero address will appear on the blockchain as going to different addresses. Although you can retrieve any Monero sent to your stealth address, these funds cannot be linked to you in any way whatsoever. Only you and the sender can know where the Monero was actually sent.

Ring Confidential Transactions (RingCT)

Another Monero feature that gives it its strong privacy is Ring Confidential Transactions (RingCT), which is a combination of two privacy innovations: ring signatures and confidential transactions.

With regular cryptographic signatures, such as in the case of Bitcoin, you sign off on transactions with your Bitcoin address' private key, which proves your ownership of the Bitcoin that's about to be spent in a transaction. Ring signatures also prove ownership of funds but add another layer of complexity.

Monero vs. Bitcoin: Fungibility

One of the main reasons privacy is important for Monero and Bitcoin is that without privacy, money cannot be fungible. Fungibility means one unit of money is interchangeable with any other unit of money.

Imagine that a political dissident fighting against the oppressive government in your country came to eat at your restaurant. You have no idea that this person is wanted by the government and accept BTC as payment for his meal. Later on, you learn that the BTC you received are not spendable anywhere because they have been blacklisted by the government.

Monero vs. Bitcoin: Transaction Speed

A Monero transaction takes about 2 minutes to confirm. Nevertheless, a Monero transaction isn't considered fully confirmed until the network confirms the transaction 10 times. Therefore, a Monero transaction takes about 20 minutes to be considered fully confirmed and the funds unlocked for spending.

On the other hand, Bitcoin transactions take about 10 minutes to confirm and funds can be spent after 1 confirmation. So while Monero transaction speeds are faster, Bitcoin has the upper hand here based on the average time it takes for a transaction to complete with spendable funds.

Monero vs. Bitcoin: Transaction Fees

Until recently, Monero and Bitcoin transaction fees were relatively comparable (with Bitcoin fees being a bit higher).

However, in late 2018, Monero adopted a new technology called bulletproofs, which increased privacy but also decreased transaction size. This means that more transactions can fit into a Monero block (grouping of transactions), making it less competitive (don't have to pay as much transaction fees) for your transaction to get confirmed.

As a result of bulletproofs, Monero's average transaction fees decreased by about 97 percent from ~60 cents to ~2 cents.

Monero vs. Bitcoin: Scalability

Scalability, or the ability to handle lots of transactions, is another factor we can use to compare Monero against Bitcoin.

Crypto needs to be able to handle lots of transactions, like major payment networks such as Visa, if it is to ever become mainstream. Unfortunately, both Monero and Bitcoin struggled to handle lots of usage in late 2017, when the cryptocurrency space was getting a lot of media attention and mainstream usage.