Bitcoin was created as a non-government-controlled alternative to national currencies. However, some crypto enthusiasts think that, because of its pseudonymous character, it lacks the required privacy measures to adequately protect its users. Since Bitcoin is a public blockchain, it provides less anonymity than a fiat currency in several ways.
To address this concern, privacy coins emerged to prominence. Anonymity and untraceability are two elements of privacy coins. Anonymity conceals the identity behind a transaction, and untraceability makes it nearly hard for third parties to research the history of transactions using methods like blockchain analysis.
In today’s crypto market, there are so many privacy-focused currencies that deciding which ones would best suit our needs has become difficult. But when thinking about privacy coins, the first one that would possibly come to your mind is Monero.
Monero (XMR) was one of the first cryptocurrencies to use encryption to provide significant improvements in privacy and utility over existing alternatives. In this article, we will get to know more about this privacy coin and the other features it offers to its users. To start trading with a variety of cryptocurrencies, visit the BitiQ App.
Monero was created by a team of seven developers, five of whom chose anonymity. Bytecoin, a privacy-focused and decentralized cryptocurrency created in 2012, may be traced back to XMR’s beginnings. Monero was created two years later after a member of the Bitcointalk forum forked BCN’s codebase.
What Makes Monero a Private Coin/Cryptocurrency?
Just like the other cryptocurrencies, Monero is a decentralized cryptocurrency, which means it is not controlled by a central body. Every Monero user has complete control over how they spend their cryptocurrency. Every transaction in Monero hides the sender, recipient, and amount. This is made feasible by a combination of technologies and procedures, which are listed below:
- Stealth Addresses
- Ring Signatures
Users can use Stealth Addresses to publish a single address that generates multiple one-time accounts for each transaction. The owner may then identify their arriving cash by scanning the blockchain using a secret “view key,” which their wallet can use to find any transactions involving that key. This allows the receiver to accept money from a variety of various addresses that cannot be traced to them.
A ring signature is a kind of digital signature used in cryptography to secure the data on Monero users’ signatures when they try a transaction. A Monero ring signature is formed by combining the real signer with non-signers to make a ring. This ring’s real signers and non-signers are both regarded as equal and legitimate.
Users benefit from a new technique of performing ring signatures using RingCT or Ring Confidential Transactions. Ring CT conceals the amount of money exchanged between users in blockchain transactions. RingCT, in effect, allows transactions to have many inputs and outputs while maintaining anonymity and preventing duplicate spending.
What Kind of Investors Does XMR Attract?
XMR may attract anybody who seeks to push the limits of cryptography in cryptocurrencies, making room for money systems that allow people all over the world to save and pay without fear of being oppressed.
Monero is also unique among major cryptocurrencies in that its supply is not fixed. Unlike Bitcoin, Monero is programmed to create new XMR continuously. However, investors and traders should keep in mind that the XMR money supply will continue to expand, making it less appropriate for saving.
Are privacy coins like Monero legal to use? Well, individual jurisdictions determine if privacy coins are lawful. To combat money laundering, the South Korean government has made it illegal to trade private coins on the country’s crypto exchanges. Meanwhile, the US government is taking a different approach to anonymous cryptocurrencies, attempting to build tools to lift the veil on private network transactions.
This guide’s content is not aimed to offer financial, investing, trading, or other types of advice, and it is not intended to reflect such advice. Prior to making a financial decision, it is always a good idea to understand more about cryptocurrencies. The cryptocurrency markets are quite volatile. Trading may not be a good choice for certain people. Anyone thinking about investing should see a licensed financial advisor for financial or professional guidance.