What is Monero?
Monero is a privacy-focused cryptocurrency designed to keep user transactions private. For coins like Bitcoin, each time you send it to someone, the public from/to address and the amount of that transaction is available in a public ledger. Monero offers an option to shield the from/to addresses and amount, allowing for censorship-resistant private transactions.
This guide will go through other features Monero offers, how it compares against Bitcoin, and competitors to Monero.
How Monero keeps transactions private
As Monero is privacy-focussed, we'll first go through how this is achieved:
- Stealth Addresses are a way of unlinking a sender's public address to the recipient's address, where a one-time address is generated per transaction that only the recipient can use to link payments together (as only the recipient can derive the secret key associated with the one-time address). "Using stealth addressing, a recipient can publish one address and receive unlimited publicly unlinkable payments."
- Ring Signatures are a type of digital signature that can be generated by a group of users, but not linked to a specific group member's key. This allows something to be endorsed by someone in a particular group anonymously (a good example use case might be as a voting mechanism, where a single user might be penalised for voting a certain way - where a ring signature protects them through anonymity, but also guarantees they're in a certain group of people and so allowed to vote).
- Ring Confidential Transactions (Ring CT) are a method for hiding transactions amounts by changing amounts to commitments created with a blinding factor (this is quite technical to explain, it's best to read this if you're interested in how it works).
- Kovri is a free decentralised anonymity technology that allows Monero users to hide their IP addresses (as some nodes on the Monero network may log this, potentially allowing them to for example block the transaction based on political views). This is considered more private than both Tor and a VPN, and will be enabled by default in future versions of Monero (and will offer an API allowing other cryptocurrencies to use it).
Monero vs Bitcoin
As Bitcoin is currently the most valuable cryptocurrency, it's useful to compare Monero against it. Below are some differences between the two coins, where you can decide for yourself which coin's approach in each area is the best:
- The addresses and transaction amounts in Bitcoin transactions are publically visible on block explorers, for Monero they're not.
- Monero has a block time of 2 minutes vs Bitcoin's 10 minutes.
- Monero has much large blocks than Bitcoin.
- Monero's development team has taken an ASIC resistance stance (where if an ASIC is produced for Monero, they'll hard-fork to become resistant to it), whereas a large portion of Bitcoin's mining power is ASICs. See this guide for information on their April 6th hardfork, where they became resistant to Cryptonight ASIC miners.
- At the time of writing this, Monero transactions have double the transaction fee of Bitcoin (but this may just be a short-term trend).
Competitors to Monero include these privacy-focussed coins:
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Written by the Anything Crypto team
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