Monero is a cryptocurrency that prioritizes privacy and fungibility by utilizing a blockchain with advanced privacy-enhancing technologies. It aims to obfuscate transactions to achieve anonymity and ensure that observers cannot decipher addresses trading Monero, transaction amounts, address balances, or transaction histories. Monero operates on a decentralized ledger, where all transaction details are obfuscated, in contrast to Bitcoin where transaction details are public and transparent.
How Monero Works:
- Privacy Features: Monero’s key features include ring signatures, ring confidential transactions (RingCTs), and Bulletproofs. Ring signatures group a sender’s outputs with other decoy outputs, while RingCTs encrypt transaction amounts. Bulletproofs provide a method to prove a transaction occurred without revealing its value.
- Stealth Addresses: Monero uses stealth addresses, which are addresses generated by users to receive funds but remain untraceable to network observers.
- Dandelion++ Protocol: Monero employs the Dandelion++ protocol to obscure the IP address of devices producing transactions, enhancing privacy.
- Proof-of-Work Algorithm: Monero validates transactions through a miner network running the RandomX proof-of-work algorithm, which issues new coins to miners and resists application-specific integrated circuit (ASIC) mining.
Detailed Technical Explanation of Monero’s Code:
- RandomX Algorithm: Monero uses the RandomX algorithm, an ASIC-resistant and CPU-friendly proof-of-work algorithm designed to prevent specialized mining hardware domination.
- Infinite Emission: Monero has an infinite emission model with two main emissions: the main curve and the tail curve. The main curve aims for around 18.132 million coins by a specific date, followed by a tail emission of 0.6 XMR per 2-minute block to ensure a sustainable incentive for mining.
- Dynamic Scalability: Monero ensures dynamic scalability by implementing a dynamic block size and a block reward penalty instead of setting a maximum block size.
Use Cases and Trading:
- Use Cases: Monero is used in various scenarios, including illicit activities like money laundering, darknet markets, ransomware, and cryptojacking. Its privacy features attract users desiring enhanced privacy measures not provided by other cryptocurrencies.
- Trading: Monero can be traded on various cryptocurrency exchanges. Its price fluctuates based on market demand and supply dynamics. Users can buy, sell, and exchange Monero like other cryptocurrencies, with its value determined by market forces.
In summary, Monero’s focus on privacy, advanced encryption techniques, and decentralized nature make it a popular choice for users seeking enhanced anonymity and fungibility in their cryptocurrency transactions.
| Definition | A cryptocurrency that uses blockchain with privacy-enhancing technologies to achieve anonymity and fungibility. |
| Abbreviation | XMR |
| Initial Release | 18 April 2014 |
| Privacy Features | Observers cannot decipher addresses, transaction amounts, address balances, or transaction histories. |
| Proof-of-Work Algorithm | RandomX, resistant to ASIC mining |
| Circulating Supply | ~18,367,316 (as of 6 December 2023) |
| Controversial Use | Used in illicit activities such as money laundering, darknet markets, and ransomware, prompting IRS interest. |