Privacy coin Monero has recently undergone a long-awaited hard fork that introduced several significant features and improvements to the network. The upgrade was initially supposed to happen in July 2022, but it was postponed for valid reasons.
Let’s see what this hard fork brings to the blockchain and how it can affect you.
What is Monero?
As you probably know by now, Monero is an open-source and decentralized cryptocurrency created in 2014. The coin is characterized by privacy and anonymity features, for example, that we don’t see in Bitcoin. Monero uses a public and distributed blockchain ledger. But except for the two parties involved in a transaction, no one else can view information on the senders, receivers, or amounts being transferred.
This coin is already superior in terms of privacy thanks to its use of ring signatures, which make transactions untraceable. It’s practically impossible to unmask the users of Monero by analyzing blockchain records or relying on cryptography to break the integrity of the network. With the changes brought about by the recent hard fork, this privacy-oriented digital asset has become even stronger.
The Monero Hard Fork and Its Aftermath
The hard fork triggered at block 2,688,888 introduces privacy and security enhancements. The upgrade was initially planned for July 2022 after a consensus was reached. Still, it had to be delayed because the developer’s priority was fixing the security of the multi-sig protocol and other issues that appeared related to hardware wallet integration.
This Monero hard fork isn’t backward-compatible. What does that mean? All network participants must update their software clients to take advantage of all new features. There is no need to worry because it’s just a matter of replacing an outdated wallet with a new one. The latest version of the Monero software that supports the fork is ver. 0.18, named "Fluorine Fermi."
Ring Size and Ring Signatures
Among the changes, it’s worth highlighting the ring size increase from 11 to 16. Every transaction requires a digital signature. Monero uses ring signatures, where a person’s signature merges with those of other users. This system results in an inability to identify which signature belongs to which network participant. Before version 0.13 of the Monero software client, users could arbitrarily select an X number of signers for their transactions. With the 0.13 upgrade, the ring size was fixed at 11. And now, with software version 0.18, the number of signers has been increased to 16.
The Bulletproofs+ Algorithm
The second noteworthy update was to Monero’s Bulletproofs algorithm. The better-performing zero-knowledge proving system is now called Bulletproofs+. Bulletproofs+ achieves several things:
- It decreases the overall size of Monero transactions.
- It makes transactions faster and easier to generate for supported wallets.
- It makes the verification process of transactions quicker.
Why are the Bulletproofs or Bulletproofs+ algorithms even needed? Since Monero supports confidential transactions and user anonymity, there has to be a system in place that verifies that the transaction data is correct. Inputs and outputs are hidden, remember? Bulletproofs+ ensures that the people broadcasting transactions to the blockchain have the right amounts and aren’t trying to spend coins they don’t own.
Improvements are observable in the time needed to generate new transactions. A 2-output transaction that takes advantage of the new Bulletproofs+ system is created 10% faster. The synchronization times are now shorter if we are talking about verification by other nodes and network participants.
As we can observe from the table below, transaction verification has clearly improved by up to 10%:
Whoever has run a full-node client knows that plenty of time is required to download and sync the entire blockchain to be up-to-date. Depending on hardware strength and internet speed, this can take several hours or a few days to complete.
Monero is no exception to this inconvenience. In fact, the synchronization time for the Monero blockchain is even greater than that for Bitcoin. This is because of all the privacy-preserving features that exist.
But luckily, the developers have introduced View Tags that reduce the time needed to be fully synced with the network by 30-40%. This update doesn’t negatively affect on-chain fees or cause network congestion.
View Tags add a unique 1-byte sequence containing a shared secret to each transaction. This piece of data is known only to the parties involved in the transfer of value. It improves sync times for the participants in the transaction, allowing their clients to first check and verify that 1-byte array.
Some of the other revamped features include an improved multi-sig protocol, all-around security patches, greater resilience of the blockchain to malicious attacks, and optimization of the wallet fee system.
How Did the Hard Fork Affect Monero?
The upgrade had a significant impact on network scalability. The average block size of the Monero blockchain was 78kB before the hard fork. Immediately after, it jumped to over 300kB, activating a system called "dynamic block size algorithm" for the first time in Monero’s history. That cleared the mempools of unconfirmed transactions much faster than with the older software versions.
The August hard fork positively affected XMR enthusiasts because we witnessed an almost 40% higher Monero market capitalization and doubled trading volume. Engagement over social media also increased by over 100%.
The impact on the price wasn’t as significant. XMR was trading around $145 a coin before the hard fork, and its new peak came at the beginning of November when Monero reached a value of $161.