Adrian JulianCryptographers and privacy advocates are constantly searching for the holy grail of anonymous online transactions. This is what many people are looking for.anonymity absolute.
Initially, Bitcoin was considered the de facto currency of privacy. This is because the wallets did not have names and money flowed freely across borders without the intervention of regulators.
However, as it gained popularity, people realized that the completely public nature of its blockchain allowed individuals to effectively control and track online payments.
This realization is one of the main motivations behind the creation of Monero, the privacy-centric digital currency. Before looking at the technology of Monero, it is worth clarifying why Bitcoin does not respect privacy as much as we think.
Bitcoin is not anonymous but pseudo-anonymous
Despite the revolutionary nature of the technology underlying Bitcoin, it is already more than eight years old. We have recently seen that many developers are seeking to improve the Bitcoin protocol in terms of scaling, transaction speed, etc.
Despite the anonymity that characterizes Bitcoin, the nature of the Blockchain is such that anyone can easily view the transactions carried out on this wallet. Every time money flows between these wallets, the transactions are recorded on the public ledger.
Your Bitcoin address, which consists of a collection of random characters and numbers, cannot be linked to you. However, the chain of transactions linking your wallet to an account at a fiat exchange is likely to easily identify you. Companies such as Chainalysis have software designed to easily identify fund movements.
For some, this is a positive trend as it will help more people adopt cryptocurrency and help flush out criminals and dark web actors.
However, there are many people who want to use their cryptocurrencies without anyone knowing, without being informed of the amounts they have, the people to whom they send funds and those from whom they receive funds.
The difference between Monero and Bitcoin
Monero (XMR) is also a cryptocurrency that leverages Blockchain technology to facilitate transactions. These transactions are also mined by computers responsible for verifying them.
However, unlike Bitcoin, Monero uses advanced cryptographic concepts such as “circle signatures” to hide your transaction on the Blockchain, as well as the amount of money you have in your public wallet. Monero can additionally hide the amount of money sent to you.
Certainly, this solution is likely to fully satisfy defenders of the right to privacy, but Monero has many other notable advantages including:
- ASIC resistance mining : When Bitcoin mining was undertaken in the early days, it was possible to do it on personal computers using processors. This was because the calculation difficulty was not as high as it is today. Currently, very expensive application-specific integrated circuits (ASICs) are used to mine Bitcoin. These are generally held by gigantic mining platforms that have invested large sums of money. Thus, the very nature of decentralized mining has evolved towards centralization. In the case of Monero, the Cryptonote mining algorithm is resistant to this type of hardware, which preserves the decentralized nature of mining.
- Adaptive block size : Those who follow the current debates within the Bitcoin community are aware that increasing the block size limit constitutes one of the most thorny topics. The limit imposed on the size of Bitcoin blocks causes significant congestion on the network. Monero has been programmed so that block sizes are automatically adjusted if transaction volume requires it.
- I2P protocol : When you make transactions using Monero, these are all routed through the I2P invisible internet project. This way, no one can spy on your internet activity and monitor what you do. In other words, no one will be able to determine if you are using the Monero network when you are online.
How a transaction takes place with Monero
While Monero seems like a relatively simple concept, the actual mechanics of a transaction involving Monero are very complex. The system incorporates some of the most advanced concepts in modern cryptography and computing.
Those interested in studying the fundamental technology of a transaction are encouraged to review the original Monero whitepaper. However, we can give a very in-depth description of how a Monero transaction works and its private nature.
Sending Monero
Like Bitcoin, a Monero user has a public address made up of a set of character strings and numbers. But unlike Bitcoin, no funds are directly associated with this address.
When you send Monero to a third party, a temporary public address is created. The creation of this address is for this transaction only and is completely new. Therefore, the public Blockchain has no trace of it.
Of course, this goes both ways. When you send funds, the source of the funds is not identified as your own public address. Therefore, there is no way it can be known that you sent Monero to anyone else on the network. These addresses are called “stealthy” and are unknown to everyone.
Find the recipient of Monero
Of course, the recipient must be able to claim their funds from the stealth wallet. For the recipient to receive these funds, they must scan the Monero Blockchain to find their transaction. To do this, it uses what is called a “secret viewing key”. The latter checks each transaction to determine which ones apply to the recipient.
Only the recipient is in possession of this secret key. This means that no one else is able to view the Blockchain and identify a payment that is not intended for them. Furthermore, it is possible to transmit this secret key to a third party so that they can also consult the Blockchain to check whether funds have been sent to them.
Mix transactions
In other words, anyone viewing the Monero Blockchain cannot link a transaction to your public address. However, the original sender of the coin remains able to determine when the recipient sends funds. To prevent this eventuality, Monero uses “circle signatures”.
Thanks to these signatures, the transaction can be mixed. When the sender makes a transaction, they randomly select funds from other users to also be in the transaction. As a result, these senders are also likely to be the source of the funds being sent.
Using these circle signatures, it is impossible to know who is actually sending the funds, or even the person who originally sent the funds to the recipient.
Of course, the nature of crowds is such that the larger the mix of people, the murkier the transaction. The number of people who are in a transaction is referred to as the “mixing level”. You can increase the size of the mix level, but this has the effect of increasing the cost of using the network's computing resources.
The sender of the funds will have the impression that you are making transactions even if you are not. As long as you are connected to the network, it will appear as if you are sending money to everyone without interruption.
You may also be wondering that if all transactions are hidden and no one can know who is sending Monero onto the network, how can the people doing the mining ensure that Monero is not double spent? ? This is possible through the use of “keyframes”.
Keyframes constitute a cryptographic key derived from a spent output and are part of every circle signature on the Blockchain. There can only be one keyframe for each output on the Blockchain. Given the cryptographic properties, it is impossible to distinguish which output produced which keyframe. All keyframes used are stored on the Blockchain so that people performing mining can verify that no transaction is being spent twice.
They are based on a cryptographic function which hides the amount of the transaction at the Blockchain level, but not at that of the sender and recipient.
Where to buy and store XMR ?
To acquire Monero, you must go through a cryptocurrency exchange. XMR is listed on a number of different exchanges, the largest of which are Binance and Kraken.
- Discover the website of Monero
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Note: No financial advice is given in this or any other article on zonebitcoin. This is information of which you are the sole judge and master. Be responsible with your investments and only invest as much as you are willing to lose.
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