By Mark Fidelman
If cryptocurrency history is written by the winners, then this is the year for Monero (XMR), the anonymous crypto coin, to add its name to the ledger. As of this week, Monero has a market cap of $4.5 billion, trading at $287 and is the 13th largest cryptocurrency in the world.
Released in 2014, Monero has faced several challenges from governments and law enforcement around the world because of its non-traceability and privacy features that allow people to transact without oversight.
Sounds a lot like cash.
The Monero evangelists believe that the completely anonymous currency can revolutionize the global monetary system around the world. There isn't a centralized Monero authority (like a bank), so there are no wire transfer fees, no multi-day holding periods, no risk of fraudulent chargebacks and it can't be shut down by any one institution or government.
But that also means it is incredibly risky to send Monero to people whom you don't know.
Valuing Monero is difficult. How do you value a currency that does not pay a dividend? Monero's value is in its ability to simulate cash: to keep currency transfers private, quickly and without a lot of fees.
Monero's value is also in its network effect, found when the value of a product or service increases according to the number of others using it. Monero's network effect is starting to produce a bandwagon effect, as the bigger the network becomes, the more that people want to join it. The network effect also serves as a competitive advantage, as we've seen with sites like LinkedIn and YouTube, because the inconveniences of switching to a competitor are too high.
Once Monero matures as a currency, it will develop a degree of stability based on expectations of its past performance. Even though Monero is still a toddler in currency years, it has very little competition. Dash (DASH) is closest, but its privacy is an illusion and optional. I know many in the community like to compare the two, but they are miles apart in terms of privacy.
Unlike Dash, anyone who uses Monero receives automatic, built-in transaction privacy, which gives it a huge advantage over cryptocurrencies whose privacy features are optional. There's no need to verify that the person at the other side of the transaction has turned on privacy features, because Monero guarantees that it is applied it to every transaction.
There's no doubt that governments will try to shut Monero down. How? Through the major exchanges. If you cut Monero's volume down, the network effect will be lessened. Whether it reaches a tipping point or not will remain to be seen. But it's going mainstream.
In December, Monero announced that 45 top musicians, including Dolly Parton, Lana Del Rey, and Sia will be accepting it. Many of those will even offer discounts to those who use the currency to pay for products and services.
So for now, it's not a secret: Monero is a crypto winner. It's the closest thing to cash, which is the primary reason you should own it. We should see Monero hitting $500 by December 2018.
Disclaimer: This article should not be taken as, and is not intended to provide, investment advice. Please conduct your own thorough research before investing in any cryptocurrency. The author does not own any Monero as of the date of this article.