MONERO [XMR] REPORT - Scaling New Heights in Blockchain Performance: 2025 Portfolio / Part Two

Part Two / Page 5

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User Adoption & Demographics: Monero’s user base can be segmented into a few key groups:

• Privacy-Conscious Individuals: This includes everyone from tech-savvy users in Western countries concerned about surveillance, to citizens in countries with capital controls or intrusive governments. For instance, people in jurisdictions like Belarus or Turkey have reportedly used Monero to move money privately or store savings out of sight. While hard data is scarce (by nature, these users are hard to survey), Monero’s presence in privacy forums and its integration into privacy-preserving services (VPNs, email providers, etc.) indicates usage by those who value discretion.
  
  
• Darknet Market Users and Illicit Actors: Monero gained notoriety on darknet markets (DNMs). AlphaBay, a large DNM, was an early adopter that encouraged users to switch to Monero in 2016–2017 (Monero: All About the Top Privacy Coin - Chainalysis) (Monero: All About the Top Privacy Coin - Chainalysis). By 2021, White House Market (a major DNM) accepted only Monero (Monero: All About the Top Privacy Coin - Chainalysis). Law enforcement success in tracing Bitcoin in DNMs pushed many operators and buyers to prefer Monero. However, as noted earlier, some markets fell back to Bitcoin when Monero liquidity became an issue after exchange delistings (It's Back to BTC for Darknet Markets After Monero's Binance Delisting: Chainalysis ) (It's Back to BTC for Darknet Markets After Monero's Binance Delisting: Chainalysis ). Still, Monero remains the currency of choice in parts of the darknet where anonymity is paramount. It’s also used in ransomware (some ransomware gangs demand payment in XMR to make recovery harder (Monero - Wikipedia)) and by coin-hijacking malware (stealth crypto miners on victim computers often mine Monero because CPU mining is feasible (Monero - Wikipedia)). While this illicit usage is a reputational negative, it does drive a baseline demand (albeit one that could vanish if those illicit actors are caught or cease operations).
  
  
• Investors and HODLers: A portion of Monero users treat it as a long-term investment or hedge. These include early adopters from the crypto community who believe in Monero’s ideology and hold XMR similarly to how Bitcoiners hold BTC. There are also speculators who trade XMR for profit (though XMR is less common in portfolios due to access issues). Some libertarian-minded investors hold Monero as an “insurance policy” against potential financial surveillance – akin to holding some gold or cash outside the banking system.
  
  
• Merchants and Payment Users: Monero’s adoption by merchants is small but growing. According to Cryptwerk (an online directory of crypto-accepting businesses), over 1,000 companies and online shops accept Monero as payment as of 2024 (1600+ businesses and stores accepting XMR as a payment in 2024). This is up from only 41 listed merchants in mid-2018 (Crypto Directory Shows Continued Interest in Monero Adoption) – a remarkable growth in five years. These merchants range from VPN providers, hosting services, gift card sites, to retailers selling electronics, apparel, and gift items. For example, Mullvad VPN (a popular privacy VPN) began accepting Monero in 2022, joining other VPNs like IVPN in supporting XMR payments. Several darknet market-inspired legitimate marketplaces (like AgoraDesk/Haveno for P2P trading, or online game marketplaces) also use Monero. The fact that Privacy-focused services (email providers, secure phone companies, etc.) have started to accept Monero shows alignment with their customer base’s desires.
  
  
• Developers and Contributors: Monero has one of the largest developer communities among cryptocurrencies (ranking consistently in top 10 by developer count in Electric Capital reports, with ~86 monthly active devs) (Monero - Electric Capital Developer Report). Many developers actively use and improve Monero, indicating a strong ecosystem of talent. Community developers and researchers often fund their work via Monero or request donations in XMR, which is a unique aspect of Monero’s ecosystem (e.g., Monero’s Community Crowdfunding System, CCS, raises XMR for development proposals). This creates an economy of its own around improving Monero.
  
  

Wallets and Infrastructure: The usability of Monero has improved, with a variety of wallets and tools now available:

• Official Wallets: Monero offers a reference CLI wallet and a GUI wallet maintained by the core team. These have full node and light wallet modes. The GUI has become more user-friendly over time and is available on desktop.
  
  
• Third-Party Wallets: A number of reliable third-party wallets exist. Cake Wallet (iOS/Android) is a popular mobile wallet that supports Monero and has built-in exchange features. Monerujo (Android) is an open-source Monero-only wallet. MyMonero (web and app) provides a light wallet experience (using server-side syncing, but without sharing private keys). Edge Wallet and others have also integrated Monero. Recently, hardware wallet support was achieved: Ledger and Trezor devices both support Monero through official apps, meaning users can store XMR in cold storage with hardware-protected keys.
  
  
• Node Infrastructure: Running a Monero node requires more resources than a Bitcoin node due to larger blockchain size (~170 GB in 2025) and heavier computation (Bulletproofs validation). Nonetheless, many in the community run nodes, and remote nodes are also offered by community members for light wallets to connect. The decentralization of nodes is decent – Monero has hundreds of reachable nodes globally (the exact number is not easily counted due to many running behind Tor/I2P). The network also supports Tor and I2P natively (you can run Monero daemon over these networks for added privacy (Monero: All About the Top Privacy Coin - Chainalysis)).
  
  
• Payment Processors: Services like NOWPayments and CoinPayments have added Monero support, enabling merchants to accept XMR and auto-convert to fiat if desired. This lowers the barrier for e-commerce integration. There are also open-source solutions like MERCURY and Monero Integrations for anyone to accept XMR on websites. The availability of payment gateways has helped Monero slowly trickle into more online shops.
  
  

Peer-to-Peer and Trading Ecosystem: Given exchange hurdles, Monero’s community has innovated alternative ways to trade and use XMR:

• Atomic Swaps: Monero developers and community contributors have successfully built atomic swap protocols for trustlessly exchanging Monero with other coins. In 2021, the first XMR–BTC atomic swaps went live via projects like Farcaster and COMIT. And in January 2024, the XMR–BCH atomic swap was completed ( Roadmap | Monero - secure, private, untraceable ) ( Roadmap | Monero - secure, private, untraceable ). Atomic swap services (such as the open-source Farcaster software and certain swap providers) allow users to swap BTC and XMR directly wallet-to-wallet without an intermediary, using cryptographic escrow. While still a nascent technology (requiring technical know-how and not super fast), it represents a lifeline of liquidity. As these tools become more user-friendly, they could mitigate the loss of centralized exchanges by allowing direct conversion between Monero and more liquid assets like Bitcoin.
  
  
• Decentralized Exchanges (DEXes): Traditional DEXs on Ethereum/BinanceChain can’t list Monero since it’s not an ERC-20 token and can’t be wrapped easily without trust. However, the Monero community has spawned its own DEX projects. Haveno is a highly anticipated Monero-centric decentralized exchange, essentially a fork of Bisq with Monero as the base currency. According to the roadmap, Haveno DEX was slated for a beta release in May 2024 ( Roadmap | Monero - secure, private, untraceable ), and by late 2024 it was connecting to Monero’s mainnet (Haveno (@HavenoDEX) / X) (Haveno adds support for buying XMR without security deposit). Haveno operates on a peer-to-peer model over Tor, allowing users to trade XMR for fiat or BTC using multisig escrow, without KYC. If Haveno gains traction, it could replace services like LocalMonero and provide more liquidity for Monero in a decentralized manner. Early versions show promise, and it being community-funded means it's aligned with Monero’s ethos.
  
  
• Bisq: Even before Haveno, Bisq (a decentralized BTC-fiat exchange) has long supported Monero trading. In fact, XMR-BTC is one of the most liquid pairs on Bisq. After the 2021–2022 exchange delistings, Bisq saw a spike in XMR trading volume as users flocked to P2P alternatives (It's Back to BTC for Darknet Markets After Monero's Binance Delisting: Chainalysis ). Bisq remains a key venue for acquiring Monero with BTC or vice versa, albeit with some spread and lower speed.
  
  
• Cross-Chain Bridges: A few experimental bridges have tried to bring Monero to other ecosystems (e.g., a project creating a one-way peg to Ethereum as wrapped Monero). But trustless bridges are extremely hard due to Monero’s privacy (you can’t prove an XMR was locked without revealing something). Thus, bridging Monero to DeFi hasn’t seen much success. Instead, atomic swaps are the favored approach.
  
  

Merchant Adoption and Real-World Purchases: As noted, 1000+ merchants accept XMR, but what is the quality of that adoption?

• Many listed merchants are online services (VPNs, hosting, web stores) catering to global users. These are likely to actually see usage of Monero because their customer base overlaps with the privacy community. For example, both Mullvad and IVPN reported receiving a notable number of Monero payments after adding support – privacy-conscious users often prefer it over Bitcoin (which can be tracked).
  
  
• Some brick-and-mortar or local businesses accept Monero, often promoted by the community (projects like Monerica map out Monero-accepting venues). This is still very niche. One example: in 2022 a cafe in Perth, Australia made news for accepting only Monero for a day (as a promotion). Generally, Monero is not widely used at physical retail points due to lack of easy mobile payment integration and low consumer demand versus more popular crypto like BTC or stablecoins.
  
  
• However, for certain use cases Monero is emerging as the payment method of choice. These include: darknet goods (as discussed), buying digital privacy services, donations to privacy projects (several non-profits and open-source projects now list a Monero address for donations next to Bitcoin). Even some journalists and dissidents have posted Monero addresses for support, recognizing the need for donor anonymity.
  
  
• A unique area of adoption: cybersecurity and bug bounty payouts. Some bug bounty programs in crypto (and even a few outside) offer Monero for anonymous payouts to researchers who want to keep their identity private when receiving rewards.
  
  

Community and Events: Monero has a vibrant community which supports its adoption:

• The annual MoneroKon conference brings together users, developers, researchers, and advocates. MoneroKon 2024 was held in Prague with talks not just on tech, but on user stories and adoption strategies (Blog | Monero - secure, private, untraceable). Such events help spread knowledge and onboard users.
  
  
• Monero community forums (Reddit, IRC/Matrix chat, Telegram groups) are very active in helping new users with setup, spreading merchant adoption links, and organizing meetups or “Monero meet” events. This grassroots support is vital since no centralized foundation markets Monero.
  
  
• The community has campaigns to encourage adoption, e.g., the “Merchants and Exchanges” page on getmonero.org lists places to spend XMR ( Merchants & Exchanges | Monero - secure, private, untraceable ) ( Merchants & Exchanges | Monero - secure, private, untraceable ). There’s also a Monero Merchant Directory and efforts like Monero Merchant Adoption Program that occasionally highlight a “merchant of the month” to patronize with XMR.
  
  

Adoption Metrics and Growth: While precise user counts are unknown, we can infer growth from multiple angles:

• Mining Distribution: Over 500,000 XMR have been mined under tail emission (June 2022 to mid-2025). The fact that network hash rate has grown to ~4 GH/s (Monero mining calculator - RandomX ⛏️ - Minerstat) (from ~2 GH/s in early 2022) indicates more miners joining – which often correlates with more users, as Monero mining is often done by community members on personal hardware rather than industrial farms.
  
  
• Community Funded Projects: The Monero Community Crowdfunding System (CCS) has funded dozens of proposals in 2023–2024 (new wallet features, third-party apps, research). The willingness of the community to raise funds in XMR for these (often hundreds of XMR per proposal) suggests a healthy, active economic loop – people value Monero enough to reinvest it into ecosystem improvements.
  
  
• Network Health: Monero’s transaction graph shows steady use. Unlike some hyped projects, Monero’s usage has been organic. There are no sudden spikes from bots or airdrops; instead, gradual climb consistent with word-of-mouth adoption. In particular, when Bitcoin transaction fees spiked in 2023 and 2024, some users and darknet markets temporarily increased Monero usage to avoid high BTC fees (Monero / Bitcoin Trade Ideas — KRAKEN:XMRBTC — TradingView) (Monero / Bitcoin Trade Ideas — KRAKEN:XMRBTC — TradingView). This demonstrates Monero’s role as a backup network for value transfer when Bitcoin is impractical, which is a niche that could grow.
  
  

Challenges in Adoption:

• Learning Curve: Using Monero can be slightly more complex for novices (running a full node, managing long addresses, waiting for blockchain sync). Efforts like light wallets and improved UX aim to fix this, but Bitcoin and others still have simpler onboarding for new users.
  
  
• Network Effect: Monero lacks the widespread name recognition of Bitcoin or even Ethereum. Many crypto newcomers simply haven’t heard of it, or if they have, they associate it with crime due to media coverage. Overcoming that stigma and raising awareness of legitimate use cases is an ongoing challenge.
  
  
• Merchant Reluctance: Some merchants might shy away from openly accepting Monero fearing regulatory impression (e.g., a U.S. business might worry that taking Monero could flag them with their bank). As travel rule compliance gets enforced, even if a merchant wants to accept XMR, converting it to fiat through a compliant exchange becomes hard. Payment processors can help by converting to BTC or stablecoin first via atomic swap and then to fiat, but it’s an extra step.
  
  

Nonetheless, Monero’s adoption trajectory shows a project that has steadily grown its user base from a tiny cypherpunk niche to a somewhat larger (but still niche) community with global reach. Importantly, Monero has cultivated strategic adoption in areas where privacy is valued: it’s not trying to compete with Visa or be a default payment everywhere, but rather to be the go-to option for private transactions. In that mission, evidence suggests it is succeeding (it dominates that niche).

For investors, adoption trends matter because they affect demand for the coin. The more people use Monero in commerce or transactions, the more they need to acquire and hold XMR. For example, if darknet markets continue pivoting to Monero, that creates sustained buy pressure from participants of those markets (even if morally questionable, it’s market demand). If more legitimate privacy services accept Monero, users will buy XMR to pay for them (some VPN providers actually report a decent share of subscriptions paid in Monero after adding it). On the flip side, any decline in such usage – for instance, if darknet markets shutter or if a competitor privacy coin gained favor – could reduce demand.

Right now, Monero enjoys a de facto monopoly on the private cryptocurrency use-case (Zcash usage is much lower and not default private; other privacy coins have minimal adoption). This means Monero effectively captures nearly all organic demand for private crypto transfers. The ecosystem’s continued maturation (atomic swaps, Haveno DEX, mobile wallets) is likely to further entrench Monero as the privacy coin of choice.

Additional Sources – Ecosystem & Adoption:

• Chainalysis Blog (2023): “Monero in action” section (Monero: All About the Top Privacy Coin - Chainalysis) (Monero: All About the Top Privacy Coin - Chainalysis) – details Monero’s legitimate vs illicit uses, darknet adoption, and market growth stats.
  
  
• Cryptwerk (2024): Monero merchant directory (1600+ businesses and stores accepting XMR as a payment in 2024) – live list and count of merchants accepting XMR, updated regularly.
  
  
• LocalMonero/Haveno Docs: Announcements and documentation for Haveno decentralized exchange (progress updates on Monero P2P trading improvements).
  
  
• Bisq Network Blog: Statistics on XMR trading volume on Bisq (some quarterly reports highlight Monero as top traded altcoin on the platform).
  
  
• Monero Merchant Testimonials: Blogs or forum posts from businesses that accept XMR (e.g., VPN providers discussing why they added Monero and the customer uptake).
  
  
• Reddit r/MoneroWeekly: Community weekly updates often list new services or merchants adopting XMR.
  
  
• Monero Observer: News on ecosystem developments, e.g., “Haveno adds new features” (Haveno adds support for buying XMR without security deposit) or “Cake Wallet surpasses X downloads.”
  
  
• Academic (2021): “Privacy coin usage in cybercrime” – a study or report quantifying how often Monero is seen in ransomware or illicit markets (e.g., references in ransomware notes).
  
  
• Graph of XMR Transaction Count: from a blockchain explorer (moneroj.net or localmonero explorer) showing historical tx count growth.
  
  
• Electric Capital (Developer): Stats on Monero’s developer community size (indirectly reflects ecosystem vibrancy).
  
  
• YouTube (MoneroKon presentations): Talks like “State of Monero Adoption 2023” (if available) where community members share adoption progress and challenges.
  
  
• VPN and email provider announcements: e.g., Mullvad’s press release on adding Monero, or stats from ProtonMail if they ever consider Monero. (Mullvad’s HN thread (Mullvad VPN now accepts Monero payments - Hacker News) confirmed Monero support added).
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• Perhaps a community survey (2022) on how people use Monero, which was circulated on forums to gather self-reported use cases.

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