Monero is a private, secure and untraceable currency system, that uses a special type of cryptography to make sure that all of its transactions remain 100% untraceable and unlinkable.
And, you know what? It is the Monero Blockchain that makes Monero this amazingly.
In this increasingly transparent world, you can see why a cryptocurrency like Monero can become so desirable.
In this guide, I will try to show you the mechanics behind Monero while comparing it with Bitcoin
Let’s get started!
You May Also Read: What Was The Highest Price of Monero?
Bitcoin vs Monero Blockchain
As we have previously discussed in “Block”, everyone has a public address which mostly looks like this –
You receive funds with the help of your particular public address, and anyone can see what those funds are.
If you feel like sending funds to someone, then they tell you their public address. You can see what funds they have already stored at their public address.
At the time you send funds to someone, you make a declaration to the entire Bitcoin network that the funds which you own now belong to the recipient’s public address.
As a matter of public record, everyone can see that the ownership of the funds has moved from your public address to the recipient’s public address.
You May Also Read: Will Bitcoin Price Reach $20,000 in 2019?
In the case of Monero, everyone has a public address that looks like this,
Unlike Bitcoin, the funds you own in Monero Blockchain will not have any links with your public address, meaning that if you tell someone your public address, they can’t see how rich you are.
When you send funds to anyone’s public address, what generally happens is that you actually send the funds to a randomly created brand new one-time destination address.
Now, that indicates the public record doesn’t contain any mention of funds which were received to the recipient’s public address.
It is for this reason, the funds that you are sending were not linked with your own public address, not even in the public record.
Therefore, at the point you send these funds to anyone, then the public record will not show that the funds originated from your public address and won’t show that the funds were sent to the recipient’s public address.
You May Also Read: 7 Reasons To Buy Monero in 2019
The Unlinkability of Monero Transaction with Public Address
In Monero, your public address will not at all appear in the public record of transactions. Rather, a ‘stealth address’ is recorded in a way that only you, as the recipient, can recognize the incoming funds.
When the recipient attempts to check out the funds, then they have to scan the Monero blockchain to check if any transaction is destined for them.
The recipient has a secret view key that is used to check each transaction to see if it was addressed to them.
Since the recipient is the only one that knows the secret view key, then only the recipient can see that the funds have been transferred to them.
That is the prime reason, if you launch your Monero wallet, you will be able to see it scanning the blockchain. This process is executed to check out if any transaction has taken place that you have as the recipient.
Ring Signatures of Monero
Well, so far we have discussed how senders of the transaction can’t notice when the recipient of the transaction, then spends the funds in a new transaction.
Well, this is the problem that Monero solves with the use of ‘ring signatures.’
Ring Signature is something that enables transaction mixing to occur. What does that mean is that when funds are transferred, the sender randomly pics several other users’ funds to appear in the transaction as a possible source of funds getting transferred.
The cryptographical nature of this feature means that no one can tell which of the funds were really the source of the transaction, not even the person who gave the funds to the sender in the first place.
A system of ‘key images’ associated with each ring signature guarantees that though no one can tell the true source of the funds, yet it can be effortlessly detected if the sender tries to send their funds anonymously more than one time.
You May Also Read: Top 5 Monero Mining Pools of 2018
The Mixin Level
The number of individuals who are added to the list of possible senders in a transaction is usually referred to as the ‘mixin’ level.
Since using a larger mixin level enhances the size of the transaction for the Monero network, there is a bit larger transaction fee linked with your transaction if you increase the mixing level.
In relation to providing that no one can tell whom they have received funds from, an extension to the system of ring transactions has been developed known as RingCT.
This is achieved by applying a mathematical function to all the funds such that public observers can take a look at transactions to check if they are legitimate. But only the sender and receiver can actually know the actual amounts.
There is a project called “Kovri”, which is, at present, under development. This project is intended to hide your internet traffic so the passive network monitoring can’t reveal that you are using Monero.
This is something that is achieved by the encrypting all of your Monero traffic and routing it through I2P nodes, who pass your message along and have no visibility over what is in them.
In short, it is the privacy that Monero maintains for its uses through its unique blockchain technology.
Here are a Few Articles for you to Read Next: