What is Monero?
As you’ve probably established by now the cryptocurrency market has a vast range of options to invest in. Although most cryptocurrencies are focussed on privacy and anonymity, some allow public viewing of their blockchain transactions, where others like Monero made it optional or strictly confidential.
Monero gained popularity over the years for its enhanced privacy features. Let us find out more about Monero, its features, and challenges.
Monero is an open-source, privacy-oriented cryptocurrency that was launched in 2014. Just like any other cryptocurrency, it is built and operates on a decentralised blockchain. The blockchains provide a public ledger to display the transactions of all the participants on the network.
Monero’s blockchain is designed to disguise the sender and recipient identities and the amount and detail of every transaction. The mining process is based on an egalitarian concept; that everyone is equal, with entirely equal opportunities.
The developers did not keep any stake of coins for themselves when they launched Monero. Instead, they chose to depend on contributions from the community they built to support the development of the cryptocurrency further. Monero rewards both the individuals that take part in mining pools and those who mine individually. Monero can be mined on standard computer systems and does not require specific hardware. It also runs on all leading platforms such as Windows, macOS, Linux, Android etc.
How does Monero ensure privacy?
Delegated proof-of-stake (DPoS) is a real-time election mechanism that decides which validator will add a new block to the network. One of the key concepts of Monero is that it works on ‘ring signatures’ and ‘stealth addresses’. The ring signatures allow a sending participant to hide their identity from other participants.
A ring signature is generated by the Monero platform which corresponds with the output from the sender’s wallet, making it both private and unique. This way, the sender’s identity is concealed and it is impossible to ascertain which group members’ keys were used for the signature.
Stealth addresses provide an extra layer of privacy by generating a one time use address for each transaction and recipient. The stealth address also conceals the actual destination address of the transaction and the receiver’s identity.
In addition to this, the Ring Confidential Transaction or RingCT hides the transaction amount and was made mandatory for all transactions on the network in 2017.
Challenges
Anonymity always brings both benefits and challenges; although privacy is a huge plus point of Monero, the non-traceability and privacy feature of Monero has made it a channel often associated with illegal activities.
