One of the top cryptocurrencies which has some infamy associated with it. The King of Privacy coins. The coin I'm telling you is none other than Monero (XMR).
Monero is a digital decentralized peer to peer cryptocurrency like Bitcoin that is based on a proof-of-work consensus mechanism. Unlike Bitcoin, Monero transactions are untraceable which means no one else but the owner of an address knows how much money they have and what transactions they made. This is probably one of the most notable characteristics of Monero.
What is Monero?
Many people consider Bitcoin transactions to be private. After all, you are sending and receiving funds to addresses that makes no sense. In transactions that to the untrained eye are incomprehensible.
It is true that Bitcoin is pseudonymous - meaning that transactions happen between addresses that aren't necessarily associated with real identities, but it's not private.
The blockchain is a public ledger where all transactions are recorded, and since it's public, everyone has access to the whole history from the very first transaction to very latest. So anyone can track transactions using a block explorer which are sites that provides visual representations of that ledger.
Monero takes a different approach by using and obfuscated public ledger - this means that although transactions are public, an outside observer doesn't know the sender nor the receiver nor the amounts of transaction. But at the same time, it's easy for the miners to verify that a transaction doesn't spend money that has already been spent.
How does Monero achieve it?
Sender optification is achieved by something called Ring Signatures.
Imagine that all transactions have inputs and outputs.
The input needs to be at least the amount you want to send and any excess is returned to you as change. That change is one output, the other being the amount you are actually sending.
What Monero does differently though is it takes random outputs from all over the blockchain and uses them as decoys. So in the transaction both yours and the decoy outputs are present and although you are the one sending the funds, an outside observer isn't able to tell which one of the outputs is actually participating in the transaction. As a result, they can't tell where the funds actually came from, not even the receiver of the funds will know that they came from you, unless you tell them.
So sender optification comes from deniability. It is very likely that because of Ring Signatures. You may appear to have transacted with practically every user on the network, when in fact, you may not have opened your wallet in months. But even if you have made lots of transactions, so have all the other users apparently.
Receiver's privacy
If you want to send money to a friend, then you need their public address. However, with Bitcoin and most cryptocurrencies, you and anyone else who has that address can see exactly how much money there is in it.
Monero has the same concept of public addresses except nobody can see how much eczema each address has.
Unique property of Monero
With most cryptocurrencies, there is one public key and one private key for each public address. The public key is used to generate address and the private key is used to sign transactions from that address and send the funds in it.
With Monero, a user has 4 keys for each address;
The public view key
Private view key
Public spend key
Private spend key
Whenever you want to send XMR to someone, their public view key and their public spend key are combined cryptographically to create a single use address, specifically for that transaction that one time address is called a Stealth Address. So, although it seems like you are sending funds to their public address, you are actually sending them to that Stealth Address, which isn't associated with their public address at all. They're actual address that never appears on the blockchain, and as a result, no one can tell which or how many transactions have been sent to it nor what is its balance.
When the recipient opens their wallet, it scans the blockchain to see if any transactions have stealth addresses that correspond to their actual address. This reverse operation is done by virtue of the private view key. As the name implies, this key needs to be kept secret because it can reveal how many transactions have been received by this address, and as a result, its balance but somehow cannot spend funds from that address with the private view key. For that, they need as you've probably guessed the private spend key. Whoever has that can spend funds in that address, so it's imperative that it's kept well private. Also, the private spend key and the stealth address in that transaction are use to create what is known as Key Image.
Key Image is a unique identifier for each transaction that allows miners to verify that the funds in it haven't been spent before without revealing to them any of the details of that transaction.
Finally, Monero hides the amount of transactions as well, this wasn't a feature that Monero was born with, instead it was added later on January the 17th, 2017 with something called RingCT.
RingCT or Ring Confidential Transactions is s complex mathematical function that is applied to all funds sent with Monero, and the result is that the amount of each transactions are not visible on the blockchain. A third-party observer can see a transaction is legitimate, but only the sender and the receiver know the exact amount in it. This prevents any tracking of funds that could theoretically happen based on the amount being sent and received.
Conclusion
Privacy is a right and it's that right that Monero is built to protect. After all, wanting to protect your privacy doesn't mean you have something to hide.
Monero has certainly a lot to offer, but to find wide adoption is still isn't very possibly clear for me.
Image source : nigeriabitcoincommunity.com
I have subscribed you dear friend much money they have and what transactions they made. This is probably one of the most notable characteristics of Monero.
What is Monero?