Monero's Rising Popularity and Its Implications
Increasing Usage in Payments
Monero (XMR) is gaining traction among crypto users, often preferred over major cryptocurrencies by market cap. In June, Monero surpassed Bitcoin for the first time on a gift card payment platform, CoinCards, which regularly publishes monthly usage reports since April 2023. Initially, Bitcoin accounted for 40% of the total on-chain payment volume, followed by Monero at 23.64% and Ethereum at 13.9%. However, once Circle USD (USDC) was introduced, it took the lead in May with 33.21% of the volume, while Bitcoin and Monero had 30.04% and 27.58%, respectively.
In the latest report, Monero claimed the top spot with 34.4% of the June payment volume, with Bitcoin at 25.96% and USDC at 20.20%. Other cryptocurrencies like Ethereum, Litecoin, Solana, and Dogecoin accounted for less than 10% of the total volume.
Monero's Privacy Features and Darknet Usage
Monero is also the cryptocurrency of choice on darknet markets, favored over Bitcoin due to its strong default privacy features, lower fees, and faster transaction times. Monero, launched in July 2014 as a Bitcoin fork based on CryptoNote, focuses on user and transaction anonymity using three distinct technologies. This robust privacy has led to its increased use in illicit activities, as highlighted in the 2024 Crypto Crime Report by Chainalysis. The report notes Monero's role in the criminal economy, particularly in the proliferation of child sexual abuse material (CSAM). While CSAM vendors use Monero mainly for laundering proceeds rather than direct purchases, its use in instant exchangers has grown. These non-custodial tools allow quick crypto exchanges without leaving transaction traces and require no KYC, making them ideal for laundering money and acquiring Monero.
Monero is also prominent in ransomware payments. In such attacks, hackers demand a ransom in Monero to release control of infected computers. Notable examples include the 2017 WannaCry attack and the 2021 Colonial Pipeline ransomware attack, where Bitcoin ransoms were partially recovered by the U.S. government. Another illegal use is cryptojacking, where hackers hijack CPU power for illicit Monero mining through malware embedded in apps or websites.
Network Activity and Market Impact
Bitcoin's blockchain continues to validate more transactions than Monero's. On July 6, there were 658,877 Bitcoin transactions compared to 21,030 Monero transactions. However, when considering market cap and transaction volume, Monero processes more transactions relative to its market cap. With a market cap of $2.88 billion, Monero handles 7,304 transactions per billion dollars, compared to Bitcoin's 587 transactions per billion dollars of its $1.119 trillion market cap.
The growing popularity of Monero for payments boosts demand for XMR, potentially impacting its price. Currently trading at $156, Monero is recovering from a drop following its delisting from Binance. It often trades at a premium on decentralized exchanges, creating arbitrage opportunities for traders.