When searching for a cryptocurrency that will bypass any governmental tracking system, Monero (XMR) is the only coin that comes to mind. Although many cryptocurrency’s claim to be untraceable, Monero offers the greatest anonymity of them all.
Monero’s privacy-focused approach means it has more to offer than normal cryptocurrencies like Bitcoin and Ethereum. So today, we’ll take a look at what makes Monero (XMR) special and how it remains untraceable.
What Is Monero (XMR) and How Does It Work?
Monero, launched in 2014, is an open-source cryptocurrency which uses XMR as its native token. The coin is a community-driven and crowdfunded project, funded entirely by donations received through its website.
Monero is often referred to as the “privacy coin”, although it’s also known as a CryptoNote coin. The coins CryptoNote protocol aims at providing anonymous cryptocurrencies through the use of cryptography and advances in mathematics.
Cryptography in simple terms, refers to the coding of information with mathematical techniques which prevent third parties or the public from reading private messages.
In particular, Monero’s privacy components are at the heart of the cryptocurrencies success. Monero makes use of the latest cryptographic implementations to obscure its blockchain network.
So, how exactly does Monero achieve anonymity? The cryptocurrency does this through the use of key pairs and ring signatures, which provide privacy for the sender and receiver and disguise the signature of the transaction.
Moneros CryptoNote code base uses ring signatures to operate as digital signatures. Ring signatures hide the original signature of the sender by grouping it with other signatures from previous transactions in the network.
The randomization of signatures, therefore, makes it impossible for governmental institutions to trace who signed the transaction. Furthermore, ring signatures are used to verify the authenticity of a transaction’s signature.
Monero further combines ring signatures with key cryptography, which is used by every other cryptocurrency. Unlike Bitcoin, which uses one key pair—a private and public key—Monero uses two key pairs.
Monero’s two key pairs are a “spend key” and a “view key”. Each key pair has its own private and public key. Every Monero transaction is encrypted with a combination of private and public keys in order to remain anonymous.
Why Monero Has No Close Competitors
There are approximately just over 22,000+ cryptocurrencies available, which includes the likes of stable and meme coins. Monero is the largest private-focused token and the most reputable, for good reason.
Despite the coin being banned by several major crypto exchanges (both decentralized and centralized), Monero’s XMR remains the privacy coin of choice. XMR is ranked among the top 30 cryptocurrencies, far above any of its fellow privacy coins.
When comparing other privacy coins to Monero (XMR), the results lie in just how frequently Monero is used. In comparison to other privacy coins, Monero has more private transactions than Bitcoin and Zcash (ZEC) combined, clearly indicating a one-horse race.
Unlike other privacy coins, Monero doesn’t make privacy optional; it enforces privacy through its protocol. Zcash (ZEC) and other private coins use zero-knowledge proofs and other features to add privacy functionality. But users aren’t locked into them, and it adds to the price. The average XMR transaction costs just $0.0010. Realistically, Zcash has a name for itself, and it’s accepted in various places in the Darknet Market world as a secondary option to XMR. But the comparison is futile.
Monero’s Research Lab (MRL) further plays an integral part in the coin’s success. Researchers and cryptographers from all parts of the globe meet to discuss innovative ways in which to improve anonymity.
Heck, even those who hold and try to sell US Secrets and nuclear details use XMR to mask their identity.
Being one step ahead of your nearest competition and specializing in anonymity are two components which make Monero the leading privacy coin on the market.
Monero‘s Attractive And Unique Abilities
Since 2014, Monero has been at the forefront of privacy and anonymity for crypto transactions. This privacy coin is solely focused on the unlikability and untraceability of transactions, with a disregard for KYC/AML procedures.
XMR’s ability to provide anonymous transactions has resulted in the coin’s superior fungibility. This means that every unit of XMR is equal to another and is interchangeable because there is no transactional history which links them.
Fungibility is a desirable property for cryptocurrencies and creates financial censorship. If a currency has no fungibility, its units can be sold at different prices according to a transaction history. Over the years, Monero has undergone some key upgrades to improve anonymity for its users. The Monero-Bitcoin Atomic swap is one of the crypto’s key upgrades.
The Monero-Bitcoin Atomic Swap eliminates the need for a crypto exchange platform and allows users to exchange Monero for Bitcoin. The Atomic Swap provides Monero users with a method to interchange cryptocurrencies under the radar.
Complete anonymity wouldn’t be comprehensible if it wasn’t for Monero’s privacy-enhancing technologies and functionality features. Several of the coin’s key feature include:
Monero uses a unique digital signature algorithm which obscures the sender’s identity. The sender’s transactional address forms part of a large group or a “ring” of other addresses.
A ring signature obfuscates governmental tracking systems or anyone’s ability to link a signature to a transaction.
Ring CT (Confidential Transactions)
A ring confidential transaction consists of two features: Pederson commitment and a Multilayered Linkable Spontaneous Anonymous Group (MLSAG) ring signature.
The Pederson commitment is a cryptographic algorithm, which is stronger than encryption, that allows a user to commit to a certain value without revealing it or being able to adjust it.
In simple terms, Monero applies the Pederson commitment to ensure that input and output transactional amounts match each other, without actually revealing the amount.
The Pederson commitment is similar to zero-knowledge proofs, in which a party can prove to another party that a transaction is true, without revealing the content.
Further, the Multilayered Linkable Spontaneous Anonymous Group ring signature is used to obscure the origins, amounts, and destination of the transaction.
In addition, ring confidential transactions add decoy coins to a transactional amount, which makes it impossible for the true amounts to be uncovered by third parties.
Stealth Addresses add an extra layer of protection and privacy to Monero transactions. Stealth addresses create a one-time address/public key for every Monero transaction, with bits of data attached.
The data attached to a one-time address is used by the owner of the address in order to create a private key. A private key is then used to access the funds in the address.
In 2018, Monero decided to upgrade its network to include Bulletproofs, a protocol which made anonymous transactions more scalable and faster. Monero’s use of decoy coins meant that its confidential transactions were large.
Bulletproofs were implemented by Monero in order to cut down the size of the confidential transactions. While Bulletproofs may not have added to the coin’s privacy functionality, it improved scalability and lowered transaction fees.
In 2020, Monero made one its most recent upgrades when it implemented Dandelion ++. The key feature was implemented to conceal the IP addresses of the currencies nodes.
Dandelion ++ was essentially implemented in Monero upgrades because it’s able to locate a proxy node to broadcast from and then sends out “fluff” information symmetrically and therefore renders tracking transactions ineffective.
Dandelion ++, therefore eliminates the risk of third parties being able to ascertain information to decrypt Monero transactions. IP addresses have previously been used to identify individuals, which poses a serious risk for privacy-focused networks.
Challenges Monero Faces
Monero is an effective solution for individuals who wish to avoid financial surveillance. However, the anonymity coin faces several inherent challenges in which it can become compromised.
Poisoned Outputs are one of the many challenges Monero users face, as they present a human-based problem. So you may be wondering what exactly are poisoned outputs and what threat do they pose?
Well, poisoned outputs essentially involve two parties who target a third party in an attempt to learn by sending outputs and analyzing their transaction graphs.
In simpler terms, poisoned outputs can be likened to investigative officers who purchase banned products and then track down the funds to see where they end up.
This problem is essentially out of Monero’s hands, as the coin can’t prevent individuals from collaborating to identify an individual’s crypto wallet.
Dark Web and Illicit Trade
One of the biggest problems Monero currently faces is the use of currency on the dark web for the sale of illegal items. Dark web marketplaces originally used Bitcoin as a method of payment.
Since Bitcoin’s public ledger records every transaction, bad actors have begun to replace the coin with Monero. Although Bitcoin remains the most traded cryptocurrency, Monero has subsequently become the crypto of choice for cybercriminals.
Realizing the potential dark side of private coins, crypto exchanges such as Coinbase have delisted Monero. However, the coin is still available on several other crypto exchanges.
Conclusion: Monero Is The Ideal Privacy Token
Nothing can be perfect, especially when using the internet and remaining anonymous. Monero (XMR) is somehow at the forefront of perfection. A token created back in 2014 has changed the way we can use our funds, and every minor flaw identified in the token has been dealt with within a matter of days by its very own user base.
For Darknet users, it’s your gateway to OpSec perfection, and we at livedarknet.com see it as a valuable asset to everybody wanting to embrace the crypto world.
Hey there, I’m a dark web geek who’s been around for the last 8 years. More precisely, I’m livedarknet’s senior content writer who’s been writing about darknet marketplaces, tutorials, and cybersecurity stuff for educational purposes.