Monero — More Private than Bitcoin?

Security & Privacy

Monero is a proof of work (PoW) cryptocurrency that was created in 2014 by a group of developers under the pseudonym “Monero Core Team.” Monero is designed to be a secure, private, and untraceable digital currency that can be used for everyday transactions. As opposed to many other cryptocurrencies — for example, Bitcoin — Monero is specifically designed to be anonymous. Monero is built with features that intentionally obfuscate the identity of the sender, recipient, as well as the transaction amount. These features include ring signatures, stealth addresses, and confidential transactions.


Monero’s primary purpose, and the intention behind its development, is to provide a more secure and private form of digital exchange, and to provide users with greater control over their financial transactions while preventing outside entities from tracking and monitoring their activities.

History


Monero was created as an offshoot of Bytecoin, another cryptocurrency that is focused heavily on privacy and anonymity. The Monero Core Team made several changes to Bytecoin’s codebase to improve the security and privacy of the currency, including the implementation of ring signatures, stealth addresses, and the CryptoNote protocol. The team also made efforts to ensure that the development of Monero was decentralized, with multiple developers contributing to the project.

Technology


Monero uses a proof-of-work consensus algorithm, similar to Bitcoin. However, Monero’s mining algorithm, called CryptoNight, is designed to be ASIC-resistant, which means that it can be mined using consumer-grade hardware. Typically, mining cryptocurrency requires very powerful computers and well-maintained facilities, making it difficult for individuals to mine, for example, Bitcoin.


One of the key features of Monero is its privacy technology. Unlike Bitcoin, which uses a public ledger that records all transactions, Monero uses ring signatures and stealth addresses to obscure the sender, receiver, and amount of each transaction. Monero also operates on the privacy oriented CryptoNote protocol. This makes it nearly impossible for anyone to trace the flow of exchange of Monero funds. Additionally, Monero’s privacy features also prevent double-spending and protect against blockchain analysis.


Here’s a brief overview of Monero’s privacy-oriented technologies:


  • Ring signatures: Monero uses ring signatures to make it difficult to trace the source of a transaction. Ring signatures are a digital protocol that conceals the identity of the original signatory person or party, by allowing multiple users to digitally add their signature. A ring signature allows a user to sign a message or transaction without revealing their identity, as it is difficult for outside observers to determine who the actual signer is.
  • Stealth addresses: Monero uses stealth addresses to protect the identity of the recipient. By generating a one-time stealth address for each transaction, instead of using public addresses.
  • Confidential transactions: Monero uses confidential transactions to hide the amount being transferred. This prevents the public from seeing the exact amount being transferred, which can reveal sensitive information about both the sender and receiver.
  • CryptoNote: CryptoNote is the blockchain protocol that includes the above-mentioned technologies. Monero is one among several other cryptocurrencies that utilizes CryptoNote.



Use Cases


Monero has several use cases, including:


  • Private transactions: As mentioned, Monero is an ideal cryptocurrency for individuals and businesses who want to keep their financial transactions private, anonymous and confidential.
  • Trading: Monero is listed on many cryptocurrency exchanges, and can be traded for other cryptocurrencies or fiat currencies. Monero’s price has historically been less volatile than Bitcoin and Ethereum, but more volatile than Litecoin. Between 2017–2020, Monero’s has had an average daily price movement of approximately 3.6%. Bitcoin and Ethereum have been higher at approximately 4.5% and 5.5% respectively, and Litecoin’s has been lower, at approximately 2.5%.
  • E-commerce: Like many other cryptocurrencies, Monero can be used for online shopping. As cryptocurrencies become more mainstream and widely accepted, Monero will likely be accepted at ever more E-commerce markets.
  • Donations: Monero has been used as a medium for charitable donations, as it provides a way for donors to donate without revealing their identity or financial information.
Successful Algorithmic Trading Book

Algorithmic Trading Accelerator

Conclusion

While Monero may not have the same level of mainstream adoption as Bitcoin or Ethereum, it has a growing community of users and developers who are working to improve its technology and expand its use cases.


It is worth noting that while Monero provides strong privacy features, no cryptocurrency can provide complete anonymity or privacy. There are always potential weaknesses and vulnerabilities that can be exploited, and users should take additional steps to protect their privacy.

Share this post on:

About the Author

Related Articles

Stay in the Loop

Sign up to receive news & updates!