What is Monero?
Monero is a secure, private and untraceable crypto currency according to its website. Monero uses a special type of cryptography to ensure that all transactions are 100% unlinkable and untraceable. In an increasingly transparent world, it’s easy to see why a private crypto currency like Monero is growing in popularity. This Monero Guide explains how Monero works and the unique advantages that make it so special. Originally launched in April 2014 as “BitMonero”, Monero (symbol XMR) means “money” in Esperanto. Monero, originally a fork from Bytecoin, is a secure, private and untraceable currency based on the Cryptonote protocol. Monero uses ring signatures, ring trusted transactions (RCT), and stealth addresses to disguise protocol-level transactions. Monero is also very popular in the gambling industry as you can read at http://Monerogambler.com.
- Founded: 14 April 2014
- Coins in circulation: Initially 18.4 million coins (after which there will be a fixed production of 0.3 XMR per minute to compensate for lost coins each year).
- Algorithm: Proof of Work (PoW) with CryptoNight
- Block Reward: Stepless
- Block time: 120 seconds
- Difficulty: Retargets on each block
Weaknesses of Bitcoin the Monero tries to solve
One of Bitcoin’s biggest problems is the lack of flexibility in implementing new features. Implementing new features at Bitcoin requires an almost complete network update. Also problematic are fixed obstacles and natural elements of the design (e.g. block frequency, maximum amount of money and number of confirmations required). The traceability of transaction amounts and sender/receiver is automatically visible to the public at Bitcoin, unless specific steps are taken by the user.
The Proof of Work algorithm (PoW) has also violated the original Satoshi vision of “One-CPU-One-Vote” with the advent of GPU and Application Specific Integrated Circuit (ASIC) hardware. This allows miners to gain majority control (51%+) over Bitcoin’s network and force changes (such as a hard fork to keep the network running). Irregular output of new Bitcoins refers to the construct where Bitcoin rewards are halved every 4 years. The original intention was to produce a limited output with exponential decay.
Monero Technological Base
The main technology behind Monero provides a balance for users who can completely control their own keys and work privately with proven security mechanisms. And the possibility to further develop the network (e.g. variable block size, integration of Kovri).
How does a normal (not completely anonymous) crypto transaction work?
The default setting for Bitcoin transactions is fully transparent to all if no steps are taken to disguise identity and transactions (e.g. over a VPN and Bitcoin mixer). This means that your IP address can be connected to your device (i.e. your personal identity) if you really put it on it and have the appropriate resources.
Protect the sender of a transaction with ring signatures
Ring signatures (see above) are digital signatures where multiple signers sign a transaction. The sender generates a unique spend key, and the recipient is the only party that can recognize and spend the money based on that key.
Monero Ring Signature Transaction
Key images (cryptographic keys) are derived from each output and prevent duplicate output. This is because there is one key image in the block chain for each output (output).
Ring Confidential Transactions (RCT) hide the amount sent
The sender can disclose just enough information to the miners to confirm the transaction without publicly disclosing the total amount (known as a “commit”). This allows the transaction to be validated as authentic without compromising the privacy of the user.
Stealth addresses make the recipient anonymous
A stealth address, also known as a one-time public key, prevents the recipient’s money from being linked to his wallet. This address can be verified by a third party to prove that the transaction has taken place (if the sender shares his public view key).