Monero, also known as XMR, is widely considered to be one of the first cryptocurrencies to have a built-in cryptography feature which, in turn, made great headway in terms of privacy and fungibility over other coins.

As such, Monero allows for its users to send and receive transactions but doesn’t make the data available to those who wish to examine the blockchain, as opposed to, for example, Bitcoin (BTC) where transactions reveal information regarding the amount which was exchanged as well as data concerning both the sender and the receiver, making it possible for their coins to be traced, marked, and even blacklisted.

Consequently, Monero has been categorized as a privacy cryptocurrency, much like Zcash (ZEC), but it is important to state that not all cryptocurrencies in this category achieve privacy through the same methods.

Monero constantly adds new features as it is programmed to undergo updates every six months. As Monero prioritizes privacy, recent updates include, for example, stealth, one-time-only addresses and ring confidential transactions where the amounts remain hidden. Monero is also the Esperanto word for “coin”.

Monero’s Privacy Explained

Monero finds privacy in its key features such as:

Ring Signatures

Obfuscation is only possible because of Monero’s Ring Signatures, as they mix the user’s digital signature with the signatures from other users while performing a transaction.

By means of a ring signature, when someone attempts to look at the data, the transaction is made to look like it could’ve been sent by any one of the ring’s signers.

Monero’s developers have experimented with tampering with the number of required signatures in this process and even allowed for its users to specify how many they wanted in it.

By 2019, the default transaction set is composed of 11 signatures total.

Stealth Addresses

Stealth Addresses are a feature which enables Monero’s users to publish one address which, in turn, will create a number of one-time-only accounts for transaction purposes.

This is accomplished by use of a secret “view key” which allows for its owner to properly identify transactions by means of what could be described as a blockchain scan.

Ring Confidential Transactions (RingCT)

Commonly known as RingCT, this protocol preserves user anonymity by effectively hiding and preventing the amount which users exchange in transactions from being recorded on the blockchain.

The History Behind Monero

Monero’s history remains somewhat of a mystery riddled with unknown developers, fraud accusations and multiple rebrandings.

In 2013, Nicolas van Saberhagen published the CryptoNote white paper, which, in turn, gained traction amongst cryptography enthusiasts.

CryptoNote paved way for a new cryptocurrency, Bytecoin. The project, however, collapsed on suspicion of its supply having been tampered with by its own developers.

Bytecoin’s codebase, however, served as the basis for Monero. In April 2014 Bitmonero was launched but amid controversy, the project was forced to forked and thus Monero was born.

The Inner Workings of Monero

Monero uses proof-of-work mining and new blocks are estimated to be added every two minutes.

Its governing algorithm is designed for its users to generate XMR when mining with either their laptops (CPU) or graphics gard (GPU), meaning it prevents against specialized hardware.

The Reasoning Behind Using XMR

Monero means privacy but also fungibility. As such, transactions remain secure and untraceable, and companies may not reject XMR coin even if it has been involved in or derived from questionable activities.