What is Monero?
Monero is a digital currency that offers a high degree of anonymity to users and their transactions. Like Bitcoin, Monero is a decentralized peer-to-peer cryptocurrency, but unlike Bitcoin, Monero is characterized as a more anonymous, privacy-focused cryptocurrency.
Key Takeaways
- Monero is a popular blockchain-based cryptocurrency.
- Monero has several features that enhance privacy.
- Like Bitcoin, Monero is open source and was created from decentralized grassroots development.
History of Monero
Monero was created as a grassroots movement with no pre-mining or VC funding and launched in April 2014 as a fork of Bytecoin. A fork occurs when an original cryptocurrency splits in two to create a separate version. This is made possible by the open source format prevalent in the design of most cryptocurrencies. Most forks are formed to address deficiencies in the parent currency and create a better alternative currency.
Monero developers used the name “thankful_for_today” in the Bitcoin forum post where it was announced. After disagreements among developers, thankful_for_today and Monero developers split, with the forked version gaining popularity today.
Monero uses a proof-of-work algorithm that is processor-friendly and tuned to be resistant to the application-specific integrated circuits (ASICs) that dominate other cryptocurrency networks.
In November 2023, the Monero community crowdfunding system was breached and 2,675.73 XMR (the entire balance at the time) was stolen.
Monero vs Bitcoin
Bitcoin's blockchain records and makes all transactions and addresses publicly available. Monero uses a feature called ring signatures to conceal the source of funds and make the parties involved in sending money virtually untraceable. Ring signatures ensure that every Monero transaction between two parties is grouped with multiple transactions occurring between other unrelated parties.
This means that the recipient's funds are mixed with other Monero users' transactions and moved randomly around in the transaction list, making it exponentially harder to trace back to the source or recipient. Ring signatures also decrypt the actual amount contained in the transaction. Note that ring signatures are different from the mixing and coinjoining anonymization techniques employed by other cryptocurrencies that compete for anonymity.
Monero's ledger, unlike other privacy blockchain projects, does not record the actual stealth addresses of senders and recipients, and the one-time created addresses that are recorded are not linked to the actual addresses of either party. Therefore, someone investigating Monero's opaque ledger cannot trace back to addresses or individuals involved in past or present transactions.
transaction
While Bitcoin records ownership of unspent transaction outputs, Monero has a very unique way of processing transactions: it splits the transferred cryptocurrency into multiple amounts and treats each split amount as a separate transaction. For example, a user transferring 200 XMR (Monero's currency unit) to a buyer can split that amount into 83 XMR, 69 XMR, and 48 XMR.
Each one is treated as a separate transaction, and a unique one-time address is created for each split amount. Due to ring signatures, each of these split amounts gets mixed up with other transactions, which of course also split other transactions, making it very difficult to determine the exact combination of 200 XMR that belongs to the recipient.
When transacting in Monero, the sender does not have a windowed view of the recipient's holdings, even if they know the recipient's public address. Monero transactions are unlinkable and untrackable. Coins sent to the recipient are rerouted through an address randomly created specifically for that transaction.
The currency symbol for Monero is XMR and the plural of Monero is Moneroj (pronounced like Monero-whey).
Other Monero Features
Monero's popularity in the cryptocurrency world is mainly due to its anonymizing properties, allowing transparency at the user's discretion. Every user has a “view key” that can be used to access their account with the corresponding private key. Users can give their view key to anyone they choose, with the following restrictions:
- Show only account-owned assets
- Access to all past and current transactions
- You can only access certain transactions within your account.
Selected parties could include parents who may need a view key to monitor their children's transactions, or auditors to whom the user might want to grant access to audit account holdings and values.
In addition to the view key, users also have a “spend key,” which allows selected entities with whom the user shares the key to spend and transfer funds from their account. Like view keys, spend keys are 64 characters long and consist of letters and numbers.
Monero's popularity is growing not only for the purpose of engaging in illicit activities on the underground market, but also among individuals who want to obtain goods and services anonymously or discretely online without leaving a digital “paper trail”.
Is Monero legal in the US?
As of June 6, 2024, Monero is not banned in the United States, but it is illegal in other countries due to suspected use for illegal activities.
Is Monero blacklisted?
Some countries don’t allow Monero because they fear that the anonymity it offers could be misused for criminal purposes.
Will Monero still be untraceable in 2024?
The way Monero mixes up transactions makes it very difficult to trace the movement of funds.
Conclusion
Monero is a privacy cryptocurrency designed to confuse anyone investigating transactions. Its technology splits and shuffles transactions into smaller amounts, making them nearly impossible to trace. For this reason, it is illegal to use in some countries, while others allow its use but carefully monitor transactions.
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