Monero (XMR) is an open-source cryptocurrency whose protocol implements a number of transaction anonymization techniques: stealth addresses, confidential transaction rings.
In the Monero network, only transaction participants and those who will be given a special access key know the amount, sender and recipient addresses.
Who, when and how launched Monero?
Monero was launched in April 2014 under the name BitMonero. The protocol was based on the code base of CryptoNote and Bytecoin projects. The name was later changed.
The CryptoNote protocol was introduced in 2012 by the developer Nicolas van Saberhagen. He described CryptoNote in the CryptoNote White Paper v 1.0 and the CryptoNote White Paper v 2.0.
The first mass implementation of CryptoNote was Bytecoin cryptocurrency. The project’s reputation was undermined by a pre-main, during which the developers kept 80% of the total issue. Led by Ricardo Spagna, some users created their own version of the coin with zero premain.
Almost all of the Monero developers use pseudonyms. Only two revealed identities – Ricardo “Fluffypony” Spagni and Francisco Cabanas.
The cryptocurrency is in third place after bitcoin and Ethereum in terms of the number of developers, but only some of them write code on a regular basis.
What anonymization technologies are used in Monero?
Ring signatures
In cryptography, “ring signatures” allow a member of the signer list to anonymously sign a message without revealing their identity.
Ring signatures in Monero include mixins (decoys) in the form of inputs/outputs of other people’s previous transactions in a transaction. They help to confuse the trail: you can’t tell exactly where in a transaction there are “impurities” and where there are real funds.
For a long time, the feature of adding impurities to transactions was unavailable, and then offered to be used optionally. Users ignored it. This allowed researchers to de-anonymize about 64% of all transactions made before September 2017.
Ring Confidential Transactions (Ring CT)
Confidential Transactions technology hides the time, payment amount, and participating addresses.
Ring Confidential Transactions was implemented in Monero in January 2017. Since September 2017, this feature became mandatory for all transfers. A minimum of 10 attachments are automatically added to the transaction.
Stealth addresses
Transactions in the Monero network are performed through unique, one-time “stealth addresses” that create sender wallets. Coins are sent to this address.
The addresses hide the connection between the sender’s address, the recipient’s address, and any other transactions/addresses.
The recipient will not lose anonymity by accepting multiple payments to the same address, since incoming payments will go through different stealth addresses.
Future implementation of the Kovri I2P protocol in Monero
The protocol is written in C++ based on I2P. It will allow all of a Monero user’s traffic (IP and other metadata) to be transmitted through anonymous volunteer nodes, similar to Tor.
The user discloses their IP address when making a transaction. Although it is not recorded in the blockchain, real-time network scanning will capture the IP.
What is the reason for the delisting of Monero on a number of exchanges?
Under pressure from the FATF and local regulators, exchanges are removing anonymous cryptocurrencies from their listings in an attempt to ensure legal compliance.
Monero lacks the ability to de-anonymize transactions even with tools like Chainalysis and Crystal Blockchain, preventing exchanges from getting rid of gray capital.
Download Monero wallets here.