What is Monero?
Monero or XMR is what most people believe is Bitcoin. Most people believe that Bitcoin transactions are private and untraceable, but this is not true at all. Monero, on the other hand, is a cryptocurrency where all transactions are actually private and untraceable.
Why is privacy so important?
There is a difference between anonymity and privacy. With privacy no one else knows what you bought with your money and who received it, with anonymity you don't care if anyone knows how the money was spent as long as no one knows where the sender is.
Bitcoin offers anonymity to some extent, but its anonymity is far from bullet proof, and all transactions are visible to anyone with a blockchain explorer. Once someone knows your address, they can see all your purchases on the public blockchain. If you get money in Bitcoin then your boss will definitely know your address and if you borrow money from a friend he will know it too, if you buy something embarrassing like a membership to an adult site then your boss and your friend would know it. You don't have to do anything illegal with your money to be uncomfortable with other people knowing your spending habits. Even if you send your BTC to another address and use that address for such purchases, it can still be easily traced back to your primary address.
But the lack of privacy isn't just embarrassing or inconvenient. If you were to use BTC for everyday purchases, by monitoring the daily transactions of an address long enough, anyone can find out who you are, where you live, what you like, how much money you have, and many other things. This data can be misused to exploit you. If your spending data looks like you might be addicted to gambling, then the casino owner may target you with ads or special offers to entice you. Any currency that is used for normal purchases must have some level of privacy, and most blockchains do not offer this.
How does Monero work?
Monero has no problem with people hacking your data because all transactions are absolutely private and untraceable. For every transaction that takes place on the network, the blockchain will also create a dozen fake transactions, and except for the sender and receiver, no one will ever know which one is true. This privacy feature is not optional, as with many other coins, privacy is the default setting for Monero.
Monero uses proof of work consensus, which means it can be mined. It is actually profitable to mine with a normal computer because the network is ASIC resistant, which is good for its decentralization. Transactions are relatively cheap and fast compared to many other coins.
The future of XMR
Monero is the privacy king. There are many other cryptocurrencies that have some level of privacy, but this is usually not the default setting and often has flaws. Dash for example has a private send feature, but private transactions have higher network fees, and Zcash has shielded and transparent addresses, but often you can't even use the secure version, and you can't send from a secure address to a transparent one. Monero does not require anything special from its users to keep its transactions private. Monero will remain the best privacy coin for some time.
However, this can also be a disadvantage for XMR, as regulators like to ban and restrict the use of privacy coins. Lack of privacy will become a big issue if cryptocurrencies become mainstream, and then it may be Moneros time to shine. I am bullish on XMR but only in the long term most other cryptos could take off before it starts to matter.