Monero What it Means How it Works Features

Monero: What it Means, How it Works, Features

What Is Monero?

Monero is a digital currency that offers a high level of anonymity for users and their transactions. Like Bitcoin, Monero is a decentralized peer-to-peer cryptocurrency, but unlike Bitcoin, Monero is a more anonymous or privacy-oriented digital cash.

Key Takeaways:

– Monero is a popular blockchain-based cryptocurrency, or altcoin.

– Monero has privacy-enhancing features that improve upon Bitcoin.

– Monero is open source and created from decentralized, grassroots development.

Understanding Monero:

Monero was created as a grassroots movement with no pre-mine and no VC Funding. It launched in April 2014 as a fork of Bytecoin. A fork occurs when an original cryptocurrency is split into two to create another version, which is made possible due to the prevalent open source formats in most cryptocurrency designs. Most forks are formed to address flaws of the parent currency and create better alternatives.

Monero’s popularity in the crypto world has been rising due to its anonymization characteristic. All cryptocurrency users are given a public address or key unique to each user. With Bitcoin, when the recipient receives coins, they have to divulge their address to the sender. This allows the sender to see how many bitcoins the recipient has. Through the Bitcoin blockchain, all coins transferred from the sender to the recipient are recorded and made public.

However, transacting with Monero does not give the sender a window view of the recipient’s holdings, even though the sender knows the recipient’s public address. Monero transactions are unlinkable and untraceable. Coins sent to a recipient are rerouted through a randomly created address specifically for that transaction.

The Monero ledger, unlike blockchain​, doesn’t record the actual stealth addresses of the sender and recipient. The one-time created address that is recorded is not linked to the actual address of either party. Therefore, anyone examining Monero’s opaque ledger wouldn’t be able to track down the addresses and individuals involved in any past or present transaction.

Monero Features:

Monero also has a feature called the ring signature, which obfuscates the sources of funds, making them virtually untraceable to the parties involved in the transfer. The ring signature ensures that every Monero transaction between two parties is grouped with other multiple transactions that occur among unrelated parties.

This means that the recipient’s funds are mixed in with other Monero users’ transactions and moved randomly across the list of transactions, making it exponentially difficult to trace back to the source or recipient. The ring signature also decrypts the actual amount involved in any transaction. Note that the ring signature is different from the mixing and coinjoin anonymization technique adopted by other cryptocurrencies vying for anonymity.

Finally, Monero handles transactions by splitting the transferred amount into multiple amounts and treating each split amount as a separate transaction. For example, a user transferring 200 XMR (Monero’s currency unit) to a buyer would have the amount split into 83 XMR, 69 XMR, and 48 XMR, totaling 200 XMR.

Each of these split amounts is treated separately, and a unique one-time address is created for each of them. With the ring signature, each of these split amounts is mixed in with other transactions that have also been split, making it extremely difficult to identify the exact mix of 200 XMR that belongs to the recipient.

The currency symbol for Monero is XMR, and the plural of Monero is Moneroj.

Monero, Privacy, and Popularity:

Monero allows for transparency based on the users’ discretion. All users have a "view key" that can be used to access an account with the corresponding private key. A user can give their view key to selected parties with limitations in place such as access to view the account holdings but without the ability to spend any funds held in the account, access to all historical and current transactions, or access to only specific transactions in the account. Selected parties include parents who may need the view keys to monitor their kids’ transactions and auditors who the user would like to give access to audit their account holdings and worth.

In addition to the view key, users also have a "spend key" that authorizes a selected entity to spend or transfer funds from the account. Like the view key, the spend key is 64 characters long and consists of alphabets and numbers.

The popularity of Monero has grown not just for the intent of engaging in illegal activities in the underground market, but also for individuals who simply want to acquire goods and services online anonymously or discreetly without leaving a digital "paper trail."