Monero is one of the most popular privacy coins to have been launched to date. It offers both stability and privacy to its users.
What are Privacy Coins?
While the basic need behind creating Bitcoin and other cryptocurrencies was to offer a decentralized monetary platform where transactions between users would be anonymous and untraceable without the intervention of any third-party, it wouldn’t be wrong to say not all of them have been able to fulfill the said need.
Majority of the blockchains only disguise the users’ identities and leave behind a public record of all the transactions that have occurred on the blockchain or the public ledger. The data in the public ledger often include the number of coins a user has within his/her wallet and the number of coins he/she has sent or received to other users in the historical transactions of the blockchain.
Despite the pseudo-anonymity of Bitcoin and other cryptocurrencies, the transaction history and the wallet amount of the users can still be tracked down. Even with their identities being cloaked, users can still be identified based on their activity within the blockchain. This is the reason why some users prefer investing in privacy coins. Privacy coins are also cryptocurrencies that offer better levels of security and anonymity to their users.
Though privacy coins are deemed to be controversial and illicit by some authorities as they think they can be used to provoke criminals in getting involved in illegal activities such as money laundering, still they are the safest way for users to conduct transactions on the blockchain without allowing their financial details to be exposed to the public.
Privacy coins are equipped with numerous privacy-centric features which are useful in hiding users’ details on the blockchains. One such privacy coin is Monero, which has been regarded as one of the leading privacy coins on the market cap.
What is Monero?
How about investing in a privacy coin where all your transactions, amount of coins in the wallet, and your identity remains undisclosed on the blockchain? Well, Monero (XMR) should be your call.
Launched in April 2014, Monero is being considered the ultimate privacy coin by many people in the cryptocurrency community. As per its official website, Monero is a secure, private, untraceable and fungible open-source, decentralized cryptocurrency, which is cryptographically private by default, unlike other privacy coins.
Monero’s cryptocurrency platform is the result of a Bitcoin folk. However, unlike Bitcoin, Monero comes with mnay privacy and anonymity features, most prominent being ring confidential transactions (RCT) and stealth addresses. Let’s discuss these privacy-centric features in details.
When a digital signature is created by bringing in a group of signers together then a ring signature is formed. Monero has an edge over providing privacy to its users as it makes use of this ring signature to bring in multiple singers, usually 5, into each transaction.
In a ring signature, only the sender can generate and spend the spend key and on the other hand, only the actual recipient can detect the key and spend the funds linked to it. With a ring signature at your disposal, it becomes impossible to link any transaction back to any one user, providing a higher level of privacy and thus hiding the identity of the users engaged in a Monero transaction.
Ring Confidential Transactions (RCT)
While ring signatures only concealed the senders and recipients engaged in a Monero transaction without hiding the amount transferred, a new update termed as RingCT – Ring Confidential Transactions or RCT brought in a new ring signature that not only obscured the value of each transaction but the identity of senders and recipients as well.
Basically, RingCT concealed the number of individual transactions on Monero’s network. With the help of a cryptographic proof, RingCT shows that the amounts of input and output are equal, without actually disclosing the actual amount.
Monero also uses a network of stealth addresses to obfuscate the destinations of all the transactions being occurred in the blockchain, allowing users to disconnect themselves from the blockchain. A public address is also given to the users on the Monero network that is published on the blockchain. Since recipients receive multiple payments through a single address, it needs to be ensured that no links are attached on the blockchain between their address and anybody else’s address.
To prevent any links on the blockchain, a stealth address is used. A stealth address is a random one-time address automatically created for each transaction being made by the sender. All the payments sent to the recipient will be passed through unique stealth addresses on the blockchain. As a result, the identity of the recipient will remain hidden and nobody will be able to see who else has sent payment to the recipient. This is how Monero provides untraceability to its users within the network.
Apart from providing high levels of privacy, unlinkability, and untraceability, Monero also offers fungibility. This indicates that each individual unit of a currency can be interchanged for another. The risk of blacklisting or debasing Monero does not exist, therefore it can also be said that all coins will be having the same value and are mutually interchangeable.
Future for Monero
The future for Monero seems promising because, at the time of writing, this privacy-centric cryptocurrency stands on the 12th rank on the market cap with its price set at $120.93. While Monero may be far behind Bitcoin in terms of its capital, reputation, and value, it wouldn’t be wrong to say that it may outdo Bitcoin or other leading cryptocurrencies if considered for long-term investments.
Monero (XMR) can be mined using any ordinary computer system, unlike Bitcoin that requires a special Application Specific Integrated Circuit (ASIC) for mining. Even the transaction cost of Monero is lower than that of Bitcoin which is not only higher but time-consuming as well.
As more users in the crypto community will begin comparing Monero with other top cryptocurrencies, the will soon be able to judge which one’s better in terms of long-term investment, privacy, and anonymity. If you are the one who wants to completely obscure your identity as well as financial transactions made on the cryptocurrency’s network, we would recommend you pick Monero.