So many cryptocurrencies have been launched in the past decade. Among these, many are aimed to improve privacy and anonymity in transactions, but each one has achieved a different level of success in this aspect. A cryptocurrency named Monero achieved great popularity and acceptance due to its features of privacy.
Monero (also known as XMR) is a private and untraceable currency system. This cryptocurrency uses a special kind of cryptography “Cryptonote protocol” which keeps all the transactions untraceable and makes XMR more desirable in the virtual world.
Monero was originally created in April 2014. It is a fork of Bytecoin built on the Cryptonote protocol.
It is an open-source cryptocurrency that focuses on security, privacy, and decentralization. XMR uses an obscured public ledger which is intentionally built to be opaque. This means that the user can perform transactions, but an outside observer cannot say transaction’s source, amount or destination. The transaction details such as the sender and recipient’s identity and amount remain anonymous by covering up the users’ addresses. This feature of Monero is very much liked by those who seek financial privacy, as account balances and payments remain hidden here.
The cryptocurrency Monero uses Proof of Work to issue new coins and encourages miners to validate transactions and secure the network. Mining of Monero can be done on a usual computer and does not require any specific hardware.
How Monero Improves Privacy?
Till now we discussed how Monero is created and how it works. Here we are going to talk about how it improves the privacy.
Monero uses ring signatures and stealth addresses to reduce privacy violations.
Monero (XMR) utilizes ring signature to secure users’ privacy in the input side of transaction. Ring signature is a digital signature. Ring signature requires a group of signers to generate a unique signature that can validate a transaction. This is an anonymous signature of one participant from the group, that does not reveal which members signed the transaction.
Stealth addresses are the crucial part of Monero built-in privacy. These addresses are known as one-time public key which are generated randomly and created on behalf of the recipient for each transaction. The use of stealth addresses makes covering up the true destination of a transaction and also secures the receiver’s identity and funds linked with their wallet.
One other privacy benefit it provides is Ring Confidential Transactions or RingCT. This hides the amount of a transaction. RingCT was introduced in January 2017, after the successful achievement of hiding the senders and receivers identities.
Features of Monero
We have discussed the creation and privacy of the Monero in the earlier sections. Let’s have a look at some features of XMR which makes it different from the other cryptocurrencies and increases its demand in the crypto market.
Monero comes up with all the benefits of decentralized cryptocurrency unaccompanied by any typical privacy concerns. When using Monero, only you are responsible for your money and have control over your transactions. XMR uses ring signatures and stealth addresses to hide the amount and destination of every transaction. As your identity remains private, no one will be able to see what and where you are sending your money.
Monero is fungible as it is private as a matter of course. Units of Monero can’t be boycotted by vendors or exchanges because of their association in the foregoing exchanges.
Bitcoin was created with a block size limit of 1 MB. In its early stages, it didn’t have any block size limit, but to stop spam transactions, the size limit was imposed.
On the other hand, Monero has no fixed size limit, which means that hostile miners can block the system with unbalanced huge blocks.
In some cryptocurrencies like bitcoin, ethereum, etc. there is only one public key and one private key. But in Monero, you have View Keys and Spend Keys.
View Keys are of two types- One is a public view key and the other is a private view key.
- Public view key is used to create one-time stealth public address which is used to send funds to the receiver.
- Private view key is used by the receiver to obtain the funds sent to them.
Spend Keys are for the sender. Spend Keys are also two types- Public spend key and private spend key.
- Public spend key helps the sender to participate in ring transactions and verify the signature.
- Private spend key helps in creating the key image which allows the sender to send transactions.
According to CoinMarketCap, this cryptocurrency facilitating rich privacy is holds the 13th position in terms of market capitalization, at the time of writing. Monero is supposed to allure people more and more in the coming future because of its privacy features.