Monero offers a high level of anonymity for both users and transactions. Unlike Bitcoin, Monero prioritizes privacy, ensuring that all parties involved remain anonymous. This focus on Monero privacy and transactions makes it stand out as a decentralized peer-to-peer cryptocurrency. It provides more privacy than Bitcoin, making it an attractive option for those who value confidentiality.

Monero’s past

Monero started as a grassroots initiative without a pre-mine or venture capital funding. It was introduced as a Bytecoin fork in April 2014.

In the majority of cryptocurrency designs, a fork occurs when an initial coin splits into two, creating a new version. Most forks aim to improve and fix the shortcomings of the original currency.

Monero’s inventor used the moniker ‘thankful_for_today’ in a Bitcoin Forum post to announce the project. After some conflict, the creators of ‘thankful_for_today’ and Monero parted ways, with the forked version becoming widely used.

To make it processor-friendly and resistant to application-specific integrated circuits (ASICs), which dominate other cryptocurrency networks, Monero uses a proof-of-work method.

In November 2023, hackers targeted the Monero Community Crowdfunding System and stole 2,675.73 XMR, the total amount at that time.

Exchanges

While Monero handles transactions in a fundamentally different way, Bitcoin keeps track of who owns unspent transaction outputs. The transmitted cryptocurrency is divided into many quantities, with each amount being handled as a separate transaction. When a user swap XMR – 200 (Monero’s currency unit) and send it to a buyer, for instance, the money may be divided into 83, 69, and 48 XMR.

Each split figure in Monero generates a unique one-time address and functions as a distinct transaction. The recipient’s 200 XMR becomes extremely difficult to trace, as these divided amounts, combined with ring signatures, mix with other split transactions.

Even if the sender knows the recipient’s public address, Monero prevents the sender from viewing the recipient’s holdings. Monero’s design prioritizes privacy, ensuring such information remains hidden. Transactions conducted with Monero are both untraceable and unlinkable. To deliver coins to their destination, Monero redirects senders through a randomly generated address for each transaction.

The currency symbol for Monero is XMR, and its plural form is Moneroj, pronounced like “Monero-whey.”

Bitcoin vs. Monero

All Bitcoin addresses and transactions are recorded on its blockchain, making them accessible to the public. In contrast, Monero enhances privacy by using ring signatures to mask the sources of funds, preventing the parties involved from identifying each other. Every Monero transaction links to others involving unrelated parties through the ring signature, creating a web of obscured connections.

This mechanism makes tracing the source or destination of a recipient’s assets nearly impossible, as transactions blend randomly with those of other Monero users. The ring signature also obscures the actual amounts transferred in each transaction. Unlike the coinjoin and mixing techniques used by competing privacy-focused cryptocurrencies, Monero’s approach ensures greater anonymity.

The Monero ledger does not store real stealth addresses of senders or recipients. Instead, it records a one-time address that cannot trace back to the real addresses of either party. As a result, Monero’s opaque ledger prevents anyone from identifying the addresses or individuals linked to any transaction, whether current or historical.

Additional Features of Monero

The main factor contributing to Monero’s rise in popularity in the cryptocurrency space was its anonymization feature, which permits transparency at the discretion of the user. Every user has a “view key” that they may use to get access to any account that has the matching private key. A user may provide specific parties access to their view key, subject to restrictions like:

• Just to see the contents of the account;
• Access to every transaction, both past and present;
• Access to just particular account transactions.

Users can designate certain parties as auditors to grant access for auditing their account holdings and value. They may also assign parents the view keys to monitor their children’s transactions.

In addition to the view key, users have a “spend key.” This key, also 64 characters long, consists of numbers and letters. It allows users to share access with a selected entity to spend or transfer funds from their account.

Monero is growing in popularity, not just among those engaging in illicit activities, but also among individuals who prefer making purchases discreetly or anonymously online, without leaving a digital “paper trail.”