SWOT Analysis of Monero [draft]

Please take a look below at our draft of a Monero SWOT analysis and submit any feedback or suggestions you can find. If there is a webpage that could be linked to support any of these or other suggested items, please share as well.

We will take your input into consideration for the final draft, which will be translated into multiple languages and made available on monerooutreach.org

Thanks for contributing!

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SWOT Analysis of Monero

Monero has been in development since 2014. It utilizes the CryptoNote protocol, which was created in response to the inherent weaknesses of Bitcoin. Here we take a look at the Monero project to determine it’s strengths, weaknesses, opportunities, and threats.

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Strengths

• Strong development. Third highest code contributor count (547+ all time developers), led only by Bitcoin and Ethereum.
• Privacy. Obfuscating every layer of the transaction (sender, receiver, and amount), Monero seeks to find the right balance between absolute privacy and usability.
• Highly researched. Uses proven encryption protocols to maintain privacy for the network and it’s users. Also has it’s own Monero Research Lab which sends new developments through formal third party auditing before implementing into Monero code.
• Active community. 23 repositories in the Monero Ecosystem. 340 repositories on the Monero topic. 200+ active contributors to the Monero code. Workgroups ranging from general Community organization, Research, Translations/Localization, Outreach, hardware wallets, and event planning.
• Fixed supply schedule of 0.3 XMR per minute, so a rise in demand could see appreciation for the long term and it incentivizes miners to secure the network indefinitely. Also creates stable, predictable inflation which supports good economics.
• ASIC resistant proof of work consensus algorithms acknowledge the centralization issues inherent in a small group of companies manufacturing most of the world’s ASICs. The Monero community has established consensus to resist ASIC mining until ASICs are commoditized and accessibility problems improve. This currently makes mining Monero something that is accessible to anyone with a CPU.
• Great communication with exchanges, wallet providers, community, investors, miners and the public via Reddit, Twitter, GitHub, and their mailing list. Communicating network upgrade requirements and critical updates and notices. Additionally, they provide full logs of development meetings going back as far as 2016.
• Usability. Desktop GUI wallets are available and relatively easy to use for Windows, MacOS, and Linux. User friendly mobile wallets are available on Android and iOS. Hardware wallet support on Ledger and coming soon on Trezor. Monero community has also funded development of an open-source hardware wallet.
• Auditable by choice. Unlike Bitcoin that has a transparent blockchain and can be audited by anyone at anytime, Monero can be audited by choosing to share it’s private view keys, allowing auditors to confirm an individual’s amount of Monero and giving individuals the power to control when they choose to share.
• Accessible and acceptable through dozens of exchanges and a number of payment gateways. Accepted by a long and respectable list of merchants. See official website and Project Coral Reef for examples.
• Public. The lead maintainer, Riccardo Spagni, is not afraid to show his face in public. This is also true of many of the most active community members.
• Business Oriented. Many developers and community members have built and are building businesses around Monero to enhance the ecosystem.
• Scalable. Dynamic block size limit depending on network demand allows for automatic scalability.
• Decentralized and Global. The Monero community and it’s developers are made of individuals from around the planet and has an incredibly active Localization/Translation system that produces Monero content and services for a wide range of languages around the world.
• Future Oriented. Monero’s community has donated to fund development of Kovri, a decentralized network-traffic hiding tool that will allow users to hide their location and IP address. The Monero Transmissions Lab also aims to brainstorm solutions for future off-grid or off-main-net Monero transactions, using open-sourced protocols and infrastructure for satellite and mobile ad hoc mesh communications.
• Savvy and Dedicated Community. Monero’s online community is known for it’s no-frills attitude and has consistently demonstrated the depth and breadth of it’s knowledge-base by contributing to online forums, research, lectures, and other cryptocurrency related developments.
• Talent Magnet. Monero has attracted several talented individuals who contribute to it’s code and ecosystem. A notable example is Howard Chu, Founder and Chief Architect of Symas Corp. and former technician and consultant of NASA’s Jet Propulsion Laboratory who supported Shuttle missions as a lead software engineer.

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Weaknesses

• Liquidity. Due to the relative complexity of Monero’s code (compared to Bitcoin or ERC20 based cryptocurrencies) it is more challenging to integrate Monero on cryptocurrency exchanges, services, and markets, thus making liquidity a bigger challenge.
• Bi-annual Network Upgrades (Hard forks). While currently a strength because it patches bugs and enhances the performance, efficiency, and usability of Monero, it is not a good long-term strategy. Creates more opportunities for scam forks to arise, which can create confusion and decrease network privacy if users share secret keys with forked coins.
• Scalability. Monero solves the fungibility and privacy issues of bitcoin at the expense of additional technical complexity through privacy layers. It also means the scaling issues of bitcoin are magnified to some extent with Monero. Monero’s dynamic blocksize helps, but these other issues must be addressed.
• Governance of the Monero project is not completely decentralized. However, the core developers communicate transparently and attempt to find consensus among the community before major decisions are made. So far they have not abused their powers.
• Relatively centralized development team and social media channels that so far has been benevolent, but does make some people concerned about centralization.
• Community Discussion is found primarily on IRC, Reddit, and GitHub. For some, this is not decentralized enough.
• Complex and highly technical. The encryption protocols, hashing algorithms, and various features like Payment ID, Subaddresses, Ring CT, and others can create confusion and uncertainty among less technical users and community members. It has also shown to be a barrier to adoption because it creates challenges for exchanges, merchants, and others to integrate Monero into their ecosystems. It is a challenge to articulate the complexities of Monero into layman’s terms, much less usable plug-and-play software and hardware integration.
• Large blockchain size over 60 GB, which must be synced to show balance and transact with wallets. Steps are being taken to mitigate this, but it is still a challenge for easy usability.
• Funding Model is based on donations. Potential donors are incentivized to “free ride”, and see if someone else will donate instead. It also makes it hard to raise funds for other important things like quality control, customer support, and documentation. This puts pressure on those who own a lot of Monero and can lead to slower development in general.
• The code and especially APIs could be cleaner for developers to help improve adoption and integration with business and services.
• Transaction size. The enhanced privacy layers of Monero make for a larger transaction size than bitcoin. Bulletproofs made a significant improvement for Monero transactions, but more needs to be done to ensure scalability to and beyond the level of daily bitcoin transactions.

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Opportunities

• Market Cap. Monero has the opportunity to remain the highest-ranked privacy-based cryptocurrency.
• Bitcoin hedge. As the inherent issues with Bitcoin and it’s lack of privacy at the protocol level become more realized by the public, Monero has an opportunity to significantly increase by market cap as well as adoption and liquidity.
• Economic empowerment and human rights. Monero’s privacy features are aligned with human rights values and could become more widely recognized and used in countries that are experiencing political or economic oppression.
• Private Wealth. Monero’s privacy features make it attractive to high-net-worth individuals and institutions that want to participate in cryptocurrency while keeping their wealth private.
• New developers. Being the number three cryptocurrency in terms of developers, Monero has an opportunity to attract new talent and surpass the amount of developers as Bitcoin or Ethereum, the only two current leaders over Monero by number of developers.
• Open Source Community. The free and open source ethos of Monero are very strong, which make it a candidate to be adopted by the ever expanding global open source community. Continued adoption can lead to an even stronger ecosystem and increased liquidity.
• Artists. Artists of various genres have begun to integrate Monero payments, a trend that may continue and thus, support the use case of Monero.

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Threats

• Regulation. Monero faces a threat of being removed from exchanges in the future if regulation around exchanges continues. The privacy focus of Monero also makes it a potential target of KYC/AML regulation. Although the ability to share private view keys for auditing Monero will curb this threat substantially, it could create near-term challenges until regulators are educated.
• Market share. Monero could lose market share to other privacy coins.
• Network Attacks. A variety of attacks on the Monero network are theoretically possible and have been explored in depth by the Breaking Monero series.
• Misinformation and censorship. Coordinated misinformation campaigns could potentially lead to attempts to ban Monero in certain jurisdictions or decrease it’s popularity in general. While Monero cannot technically be censored, this theoretical threat could hurt it’s adoption and decrease liquidity in certain jurisdictions.