Monero is a unique currency that works on a blockchain with greater anonymity. Unlike Bitcoin, which is entirely open to everybody, Monero strives to keep wallets and transactions strictly private. Its specified features enable rapid, secret transactions between any two people anywhere in the world. Although its privacy is more highlighted, it is built on the same blockchain system as other digital currencies, with community-oriented development and an open-source network.
Monero is a kind of cryptocurrency that relies on cryptography to protect its ecosystem, process transactions and produce new units. Monero’s currency sign is XMR, and it’s traded on a number of digital currency exchanges across the world. However, unlike many digital currencies, Monero prioritizes privacy protection for its users.
This digital currency is a fully automated system of nodes and miners that perform hashing activities to verify transaction legitimacy and preserve the blockchain’s security. Computers known as nodes and miners keep and use a copy of Monero’s blockchain. Both nodes and miners have responsibilities to enable and validate transaction validity.
2. Monero’s history in a nutshell
Monero is a derivative of Bytecoin, which was launched in 2012 as a privacy-focused cryptocurrency. Bytecoin was the first system to use CryptoNote, an open-source mechanism designed to address some of Bitcoin’s flaws. ASIC mining (the use of specialized mining equipment) and the absence of transaction privacy are two of these flaws. Most digital currencies that stress secrecy now use CryptoNote as their foundation.
In 2014, developers who were dissatisfied with Bytecoin’s first distribution tried to create a novel plan and split Bytecoin into Bitmonero. The term was eventually turned to Monero by removing the “Bit” from the name.
3. Monero’s founders
Five of the seven people that built Monero agreed to keep their names hidden. So Riccardo Spagni (the current main developer) and David Latapie have been the only two identified Monero creators. “Fluffypony” is another nickname for Riccardo Spagni.
3.1 The purpose behind founding Monero
Numerous digital currency investors have suffered limitations as a result of the market’s development and popularity, such as economic sanctions and pressure to pay taxes. As a result, companies like Chainalysis, which can scan and trace transactions in blockchains, have issued a dire warning for consumers’ privacy in the digital currency industry.
Monero currency could preserve clients’ privacy by establishing a blockchain that uses complex algorithms to encode transactions. Taking this into account, the Monero currency is employed in all transactions in which the two sides agree to keep transaction data private.
Monero currency also aims to improve the scalability of its blockchain technology during times of system congestion.
4. Privacy and security
Monero’s value stems mostly from its privacy characteristics. No one can trace your Monero coin transaction back to you. This makes it a popular currency among individuals worried about their privacy for several reasons. In this section, the key elements of XMR security and privacy are going to be discussed.
4.1 Ring signature
Imagine 5 $5 bills with a million fingerprints on them, but only one of them belongs to the payer. You cannot create a link between the payer and 5 $5 bills with a million fingerprints in this case.
This hypothesis explains how the Monero coin’s Ring Signatures mechanism acts. This approach causes the information from a million transactions to be jumbled up in each transaction, yet this does not result in an error while transmitting and receiving the transaction.
4.1.1 Understanding ring signature
Ring signatures allow a sender to keep his identity hidden from other members of a group. Anonymity is the core characteristic of ring signature; however, the members of the group do not identify who signs a transaction.
The Monero platform combines the elements of a sender’s account keys and public keys on the blockchain to construct a ring signature. This distinguishes it as both distinctive and private. Furthermore, it conceals the sender’s identity since determining which of the team members’ keys has been used to generate the complicated signature is computationally unfeasible.
Suppose Alice wants to start a transaction. Her output is assigned a one-time spend key that matches an output sent from Alice’s wallet. Alice’s output is now blended with random previous outputs obtained from the Monero blockchain. Such outputs are unrecognizable to a third party; thus, Alice can transmit XMR to Bob without worrying about the transaction being monitored.
4.2 Stealth address
Monero’s heavy emphasis on anonymity necessitates the use of stealth addresses (one-time public key). In a word, a stealth address is a one-time code produced for each transaction by the giver. Every transaction includes the automated generation and recording of a stealth address. This specifies who has the authorization to spend a future transaction’s output.
The destination of money is hidden behind a stealth address. They do this by requiring the sender to create a one-time address built on a public address that will only be included in this transaction.
5. Pros and cons
Like any other digital currency, Monero has a number of advantages and drawbacks that can affect its popularity and performance.
● Monero is a cryptocurrency that is known for being one of the most secretive.
● Individual transactions are hard to trace and refund.
● Dynamic scalability ensures that transaction costs and speeds are optimized when the network is congested.
● Public key and wallet info can be shown if desired.
● The Monero technical experts have experience working on the Bytecoin network and are very knowledgeable and competent.
● Monero currency is supported by a small number of wallets.
● The Coinbase Exchange does not allow Monero trades.
● Monero is used by a lot of black hat hackers and those who work on the Dark Web.
● There are no 100% secure methods of storing Monero coins.
● Sanctioned countries use the Monero cryptocurrency to make international payments.
XMR, which stands for Monero coin, is a private digital currency that branched from Bytecoin and is now one of the most valuable digital currencies in terms of market capitalization. Since it provides anonymity rather than pseudonymity, it is often utilized in darknet fields instead of Bitcoin. However, Monero’s success is contingent on the following elements:
Official Website: www.getmonero.org
Source: The Pipsafe Team (CryptoCurrencies List)