Monero is currently the anonymity-oriented digital currency of choice, whose market symbol is XMR. Since its launch in 2014, it has gradually but surely progressed to become one of the leading cryptocurrencies currently in existence. Its developers and community have primarily concentrated on optimizing its codebase to guarantee a high level of privacy.
As a result, they have paid very little attention to cosmetic factors. This has made this altcoin to be downplayed and even overshadowed by technically alluring and aesthetically pleasing alternatives like Dash. Yet all along, many pundits have enthusiastically shown a high regard for it. This includes Vladimir Van Der Laan, the maintainer of Bitcoin core, Peter Todd, a noted cryptographer, and Andrew Poelstra, a Bitcoin contributor, to name but a few.
By securing the trust of these individuals through its impressive merits, Monero has gradually gained a solid reputation for dependability. The blockchain of Bitcoin and most other digital currencies are typically ‘public ledgers.’ Conversely, this cryptocurrency’s blockchain is opaque in nature.
Bitcoin utilization can leak adequate info to connect a user with a specific address. Similarly, tracking down his or her transactions is also possible. While it doesn’t yet provide complete anonymity, this cryptocurrency’s default privacy level is well beyond what can be achieved with its competition. This has made it a practical option for all manner of Darknet trading, as well as other privacy-oriented utilizations.
Monero offers a variety of services to its users. To begin with, you can use it to conduct monetary transactions online. This includes purchasing goods or services. Alternatively, you can use it to trade for other digital currencies in exchange markets like Poloniex, BitSquare, and ShapeShift. Finally, you can mine it, and its algorithm has been specifically designed to uphold the viability of CPU mining.
Like it was previously stated, this cryptocurrency’s main benefit is facilitating for unparalleled user anonymity. It incorporates a number of highly intricate and sophisticated cryptographic methods, which enable it to bring about an exceptional level of privacy. Let us now take a look at these techniques.
Address re-usage is one of the most rampant privacy concerns that many digital currencies, including Bitcoin, routinely deal with. When you receive multiple payments via one address, anybody who knows this address can easily monitor its balance along with its incoming and outgoing transactions.
Even worse, different addresses in your wallet can be easily connected due to how most cryptocurrencies deal with change. However, with Monero this isn’t so. All destination addresses are obscured in its blockchain to let only the sender and recipient identify them. Any analysis executed on its blockchain will never disclose the exact destination address you use to receive funds.
Rather, only a cryptographic hash of the destination address that is distinct to all transactions will be visible. The sender and recipient are the only ones who can decipher this hash to unveil the actual destination address. These obscured addresses are referred to as stealth addresses.
Separate Transaction Units
When you send XMR to any particular address, it will be delivered in several discrete payment units. For instance, should you send 18 XMR, it will be delivered in whole number sums of 10, 5 and 3 XMR. All of these units will be separately recorded on the blockchain as having been transferred to its own distinctive stealth address.
This technique is also applicable to any change, which is returned to a sender or fees disbursed to miners. All this makes it extremely difficult to effectively track down specific payment sums on this cryptocurrency’s blockchain.
This is yet another splendid example of the innovative cryptographic engineering Monero integrates to uphold its users’ privacy. Ring signatures are basically advanced systems for mixing transactions. The addresses of this digital currency are specialized types of cryptographic public keys. The money that is linked with these addresses can only be moved by utilizing their paired private keys.
Let us go back to the previous illustration for you to understand the concept of ring signatures. When you send 18 XMR to any recipient, any tracker will just see the private key that sent 10, 5 and 3 XMR across the blockchain since its 1st genesis. This private key can be a potential signatory to that particular transaction.
The exact number of potential signatories depend on what is known as ‘mixing depth.’ For example, setting a mixing depth of 4 infers any other 3 keys utilized can be potential signatories in the transaction. As such, ring signatures guarantee transactions cannot be completely tracked down to any specific IP addresses or their proxy addresses.
The above privacy-enhancing techniques are exorbitant in the context of their data requirements. Also, this digital currency’s block-size keeps on growing with its demand. This means it utilizes more system resources than most of its competition, a circumstance that can prove to be a potential major hurdle for its success in the foreseeable future.
Monero Final Words
As you can evidently see, this digital currency does indeed offer numerous benefits, particularly in upholding the anonymity of its users. So, it can be a godsend if, for one reason or the other, you wish to obscure your online monetary transactions.