Monero (XMR) Hard-Fork: What You Should Know
May 02, 2018
What is a hard-fork?
A hard-fork is a dramatic shift in a cryptocurrency’s blockchain that requires all nodes, or users, to upgrade to the latest version of the protocol software. A prerequisite action to participate on the new blockchain is that all users must update to the new blockchain. Therefore, a hard-fork requires a permanent divergence from the previous version of the blockchain. Hard-forks are permanent, and typically enhance the network’s functionalities or change a core rule on the blockchain.
An example of a hard fork is a change in coin supply, or an upgrade in the block size printed on the blockchain. In contrast to a hard-fork, a soft-fork is an update to the blockchain that is backwards compatible with older versions. Therefore, a defining feature of a soft-fork is that users who did not upgrade to the new software will still be able to recognize new blocks and maintain compatibility with the network.
Monero (XMR) is one of the more popular cryptocurrencies, and currently has a market capitalization of ~USD$3.96bn. At the moment, Monero (XMR) is the 12th most valuable cryptocurrency in the world by market cap. Monero (XMR) advertises itself as being a privacy-centric cryptocurrency that features untraceability and unlinkability. Untraceability comes from use of “ring signatures”, which shuffle a user’s public key to eliminate the possibility of identifying the user on the blockchain. As a result, Monero (XMR) has a protocol which focuses on driving out “bad money” from the blockchain since “bad money” can disintermediate and decrease the value of the cryptocurrency. It is exactly this scenario of “bad money” negatively impacting the cryptocurrency, called Gresham’s Law, which Monero (XMR) seeks to avoid.
In addition to its innovation around untraceability, Monero (XMR) claims to have accomplished unlinkability which asserts that for any two outgoing transactions, it is impossible to prove that they were sent to the same person. Monero (XMR) accomplishes untraceability and unlinkability by providing stealth addresses; blockchain addresses that are encrypted and cannot be tracked because they are shuffled. Additionally, transactions are grouped together which make it increasingly difficult for bad actors to negatively impair the cryptocurrency and the blockchain itself as the length of the blockchain extends. Another feature of Monero (XMR) is that it is possible to create new public addresses for each transaction which keep one’s private address secure.
Monero (XMR) has undergone some structural issues this month as the protocol has experienced four separate soft-forks/hard-forks. Monero (XMR) traditionally has hard-forked every six months to provide updates to its protocol, and these most recent updates have brought a variety of changes. In April 2018 alone, there have been four separate forks/hard-forks which have led to the creation of Monero Original (XMO), Monero 0 (ZMR), Monero Classic (XMC), and a Monero-Classic (XMC). MoneroV (XMV) is set to be the next planned hard-fork for Monero (XMR) which was originally planned for April 30th but is now postponed until May 4th 12:00AM EST.
The rationale behind the four forks/hard-forks arises from the fact that professional miners use ASIC technology to mine on the blockchain. The forks/hard-forks demonstrate a divergence from the original Monero (XMR) protocol, showing a difference of vision from the different leaders within the Monero (XMR) community. MoneroV (XMV) will attempt to inhibit ASIC mining technology on its blockchain. In addition, MoneroV (XMV) will have a capped coin supply of 256mm, in contrast to Monero’s (XMR) infinite supply, which will only be reached by 2067.
By implementing these changes, MoneroV (XMV) hopes to improve the speed of decision making in regard to scaling. The leadership team is promising to adopt bounty programs for professionals to incentivize them to implement new features within the protocol. MoneroV (XMV) will also feature a max block size with the difficulty of subsequent block retargeted every block, not based on the last 720 blocks like other versions of Monero (XMR). MoneroV (XMV) will adjust the proof-of-work (PoW) protocol; making changes to mitigate unethical mining (browsing mining, botnets). Holders of MoneroV (XMV) will receive crypto-dividends and outstanding users who own Monero (XMR) will receive 10x the amount of Monero they currently own in MonveroV (XMV) coins.