Many Cryptocurrencies have launched in the past few years. Many aimed to improve privacy and anonymity, despite the fact that their success varied. A few of these cryptocurrencies permit public viewing of all transactions, while others make privacy optional.
The Monero Cryptocurrency has achieved great popularity and acceptance for its privacy-oriented feature. Here we have tried to cover the key concepts, features, and challenges of Monero.Payments
What is Monero?
Do you already know about Monero or have you at least heard about it? If know then let me introduce it to you.
Monero (XMR), Launched in 2014, is an open-source, privacy-oriented cryptocurrency that is developed and operates on the concept of blockchain. These blockchains, that form the underlying technology behind digital currencies, are public ledgers of participant’s activities that show each and every transaction on the network.
The blockchain of Monero is intentionally configured to be opaque. It makes transaction details like the identity of senders and recipients, and the amount of every transaction, anonymous by disguising the addresses utilized by participants.
Along with anonymity, Monero’s mining process is based on an egalitarian concept, the principle that all people are equal and deserve equal opportunities. When the developers of Monero launched it, they didn’t reserve any stake for themselves and anticipate contributions and community support to develop this virtual currency further.
Monero supports a mining process where people get rewarded for their activities by joining mining pools, or they can mine Moneros individually. Monero mining can be performed on a standard computer and doesn’t need any specific hardware like the application-specific integrated circuits (ASICs).
Monero runs on every leading OS platform such as macOS, Windows, Android, and Linux.
How is Monero different from Bitcoin?
Majority of us might be knowing about Bitcoin, as it is the most popular cryptocurrency and works on a protocol that attempts to protect the identity of the participants using pseudo name addresses. These pseudo names are randomly generated through a combination of alphabets and numbers.
However, that approach offers constrained privacy as both the bitcoin addresses and the transactions are registered on the blockchain, opening them to public access. Even the pseudonymous addresses are not completely private. A few transactions done by a user over a time span can be linked to the same address, permitting the possibility of public, government, family, and friends to become aware of an address owner’s trends, and hence, his identity.
fungibility is another advantage of Monero over bitcoin, which means that two units of a currency can be mutually substituted and there is no difference between the two. While two $1 bills are equivalent in value, they are not fungible, as each has a unique serial number. In contrast, two pieces of 1 oz. of gold of the similar grade are fungible, as both have a similar worth, and don’t carry any distinguishing features. Utilizing this analogy, a bitcoin is the $1 bill, while a Monero is a gold piece.
The transaction history of every bitcoin is recorded on the blockchain. It permits identifying bitcoin units that might have been connected to certain events, like gambling, fraud, or theft, which prepares the way for blocking, suspending, or closing accounts that are holding such units. Imagine receiving a few bitcoins today that were previously utilized for gambling, and they are banned in the future, leading to a loss. fintech news
With its non-traceable transaction history, Monero offers participants a way safer network where they do not run the risk of holding the units be refused or blacklisted by others.
How does Monero help in improving Privacy?
Monero alleviates concerns related to privacy by using the concepts of ring signatures and stealth addresses.
Ring signatures empower a sending participant to conceal his identity from other participants in a group. Ring signatures are anonymous digital signatures from one member of the group, but the member who signed the transaction is not revealed.
To generate a ring signature, the Monero platform utilizes a combination of account keys of a sender and clubs it with public keys on the blockchain, this makes it unique as well as private. This empowers the capacity to hide the identity of the sender, as it is computationally impossible to determine which of the members of the group keys was used to produce the complex signature.
Stealth addresses give additional privacy, as these randomly generated addresses for one-time use are created for every transaction on behalf of the recipient. The utilization of these stealth addresses empowers concealing the actual destination address of a transaction, and it hides the identity of the receiving participant.
Also, Ring Confidential Transactions, or RingCT, enables hiding the transaction amount. After achieving success in hiding the identities of sender participant and receiver participant, the RingCT functionality was introduced in January 2017 and is made compulsory for all transactions executed on the Monero network.
The privacy-rich characteristic has helped Monero in becoming the 13th largest cryptocurrency worldwide on the basis of its market capitalization according to CoinMarketCap. One can trade in Monero on leading cryptocurrency exchange platforms such as Poloniex, Kraken, and Bitfinex. However, its privacy features have also led to questions about its utilization for illegal activities.
Aashish is currently a Content writer at FintecBuzz. He is an enthusiastic and avid writer. His key region of interests include covering different aspects of technology and mixing them up with layman ideologies to pan out an interesting take. His main area of interests range from medical journals to marketing arena.