Monero’s transaction fees have fallen by approximately 97 percent since its last update, according to CoinDesk.
Monero transaction fees over the last three months. Source: bitinfocharts.com
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On the 18th of October, Monero took on an upgrade called ‘bulletproofs’. The results are clear: transaction fees dropped from around 0.5 cents (US) on the day before the upgrade, to 0.019 cents as of now.
What are bulletproofs?
To start from the beginning: Bitcoin and other proof-of-work-based cryptocurrencies are pseudonymous. All transactions are open and written in the shared ledger, and all users are denoted by an alpha-numeric username. These can be tracked.
Some cryptocurrencies – such as Monero – want transactions to be completely anonymous. To this end, they obscure the transaction amounts in the ledger. The system validates these by using range proofs, which are algorithms that ensure that a transaction is somewhere between two values. In the context of Monero, they validate that no transaction is a negative figure, and that the sum of transaction inputs is greater than the sum of transaction outputs.
The problem with this system was that the majority of Monero transaction data was taken up by these range proofs.
Bulletproofs, which were invented by Stanford’s Applied Cryptography Group in December 2017, are a shorter, more efficient version of range proofs. One of the improvements is that they scale up logarithmically rather than linearly with the number of inputs.
According to Monero, these new algorithms reduce transaction size by approximately 80 percent. Transaction times and transaction prices drop along with it.
And because the scaling is logarithmic, the more bulletproofs used, the greater the saving.
Average fee has plummeted from 60 cents to 2 cents https://t.co/V6Nwejuo6L pic.twitter.com/d6d8qYB8WUSuggested articles
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Charity and illegal hacking
Apart from placing an emphasis on anonymity, Monero is designed so that it can be easily mined. This gives it extra applications – for example, the United Nations Children’s Fund has an online portal allowing users to donate computer power to mine XMR on behalf of the charity.
A drawback of this characteristic is that XMR is equally handy for crypto-jacking, which is when people make similar donations to less charitable beneficiaries, without being aware that they are doing it.
In August 2018, Monero altered its code to prevent Bitmain from taking over its blockchain with its new XMR-tailored mining machines.
Just a reminder that this WILL NOT work on Monero https://t.co/rhy6k2I4Yh
— Riccardo Spagni (@fluffypony) March 15, 2018
XMR has a current market value of $1.7 billion, according to coinmarketcap.com.