An Introduction to Monero — The Father of Privacy Coins
We have spoken about privacy coins and Monero briefly before in our introduction to privacy coins article. The use cases for privacy coins will likely increase over the next few years as the cryptocurrency market grows. The open source nature of Bitcoin and its public blockchain infrastructure means that transactions can readily be traced back to a particular user through wallet addresses.
The rapidly evolving nature of technology, not just in the blockchain and crypto space, means that we often give up personal information and data in exchange for convenience. Large tech giants like Google, Facebook, Amazon and many more collect and leverage our data for advertisers, market research and much much more.
As we move towards a decentralised digital world, it gives us the opportunity to take back some element of privacy. We can take back control of our data and who we share it with. We can also take back privacy related to out finances and the transactions that we make. This is where privacy coins like Monero come in.
What is Monero?
Monero is largest of all the privacy coins (in terms of market cap at just over $1.9 Billion) and is generally considered the “father” of privacy coins. It was originally launched in April 2014, and it is designed to be a private and untraceable digital currency.
As per the Monero website:
Monero is a decentralized cryptocurrency, meaning it is secure digital cash operated by a network of users.
Monero is fungible because it is private by default. Units of Monero cannot be blacklisted by vendors or exchanges due to their association in previous transactions.
Monero utilises an obfuscated public ledger, meaning anybody can broadcast or send transactions, but no outside observer can tell the source, amount or destination. This is how it differs from the likes of Bitcoin and Litecoin.
Bitcoin actually works in a manner which is extremely transparent. Every single Bitcoin transaction is public, traceable and permanently stored on the Bitcoin network.
Therefore, Bitcoin is only anonymous in the sense that the name behind the address is not placed on the blockchain. If your real world identity is linked to a Bitcoin address, through KYC or AML on an exchange for example, then your anonymity can be compromised.
How does Monero work?
Monero utilises technology called Ring Confidential Transactions to protect privacy and anonymity in three ways:
Monero uses ring signatures, ring confidential transactions, and stealth addresses to obfuscate the origins, amounts, and destinations of all transaction.
- Ring signatures mix a spender’s transaction with a group of others, making it exponentially more difficult to establish a link between each subsequent transaction.
- Stealth addresses generated for each transaction make it impossible to discover the actual destination address by anyone other than the sender and receiver.
- Ring confidential transactions mechanism hides the amount that is transferred from sender to receiver.
The Monero Team
In keeping with their theme of privacy the Monero core developer team has seven members. Five of which are anonymous and use pseudonymous names and email addresses. Riccardo Spagni, who goes by @fluffypony on Twitter is one of two core developers who are publicly known. Riccardo does much of the PR work and promotion of Monero.
The project does boast well over 400 additional contributors on top of the core development team. Further details about contributors and documentation can be found on their GitHub.
Originally published at cryptosuss.com on October 3, 2018.
