Monero is a privacy and security centric cryptocurrency that has surged the world of cryptocurrencies since mid2016. What Monero does is that it pads users’ transactions with decoy coins called “mixins”. Transactions that spend RingCT coins cannot be traced. Basically, every transaction has some inputs and outputs; the input is linked to the output of a previous transaction.
In monero, the transaction links are obscured. Each transaction input and output contains multiple fake links such that it is difficult to which is the genuine one among the mixins. The mixins are dead ends.
How Monero Grants Anonymity
Monero hides all the details about the transaction so well that there is no evidence a transaction even took place. It does so by using a couple of technologies that enable anonymity to be granted to the four core aspects of the transaction. Let us have a look at each one of them:
- The Sender
The sender’s privacy is maintained by use of Ring Signatures. Ring signatures make it impossible for third partied to tell who exactly sentthe money. The sender identity is guaranteed by hiding the “spent inputs”.
In order to create and use a ring signature, you first have to determine the ring size. The ring size refers to the total number of signers in a ring signature which comprises the real output and other decoys i.e. the larger the ring size, the higher the number of decoys. A higher number of decoys means that the transaction will be harder to track.However, larger ring sizes have a bigger overall transaction fee.
- The Recipient
All incoming payments to the XMR wallet are sent to unique addresses (called stealth addresses) that cannot be linked to the recipient’s public address or any other transaction address. The onetime addresses ensure that only the sender and the recipient can determine the source and destination of the payment.
Stealth addresses are randomly generated and contain the recipient’s public view key and public spend key. These keys are combined with some random data in such a way that nobody can link the address to the recipient.
- The Transacted Amount
The transaction itself is kept confidential using RingCT protocol.Basically, RingCT is a protocol that hides transaction amounts in the blockchain, therefore, preventing information leaks. RingCT make is unnecessary for transactions to be broken down into different transactions.
- The IP Addresses
Kovri is an anonymity technology that is based on the Invisible Internet Project (I2P) specifications. This decentralized technology has, however, not yet been integrated with Monero as still under development. To create a private network, Kovri uses advanced encryption and routing techniques.
Kovri is a great solution for anonymous communications via email or IRC.
- The Account Details
An account contains details of all the transactions you have sent or received. The account will also receive all the necessary information required to send or receive monero. As a user, you have total control and responsibility for your account. It is therefore important that you practice sound security. Upon creation of an account, you are given a mnemonic seed that you can use to back your account. The mnemonic seed has all the information needed to view and spend monero. Make sure you keep it safe.