Monero (xmr) : cryptocurrency fundamental analysis

What is Monero?

Monero is a secure, private, and untraceable currency.

What problems is Monero trying to solve?

Although bitcoin initially rose to prominence due to it’s supposed anonymity, several methods were developed later that are able to link bitcoin users to their wallet addresses. Monero focuses on the privacy aspect of cryptocurrencies.

How does it work?

Monero is an open source, decentralized and fungible cryptocurrency that is accessible to all. It maintains it’s privacy by obscuring the sender using ring signatures, hiding the recipient using stealth addresses such that public addresses are never stored on the blockchain, and the amount in the transaction using Ring Confidential transactions. A wallet keeps track of the outputs on the blockchain which are the users, and they are only identifiable by that wallet.

Stealth Addresses used to hide the recipient of a transaction. When Alice sends Monero to Bob, Alice’s wallet will use Bob’s public view key and public send key as well as random data to generate a unique one time public key for Bob’s new output. The output is created in such a way that Bob is able to locate the one-time public key by scanning the blockchain using his wallet’s private view key. Once the output is detected and retrieved by Bob he would be able to calculate a one time private key that corresponds with the one time public key and spend the relevant output with his private spend key. Therefore, Bob’s Wallet is never publically linked to the transaction.

Ring Signatures used to obscure the true sender. Alice sends Monero to Bob using a Ring value of 5. One of the inputs will come from Alice’s wallet which will be consumed in the transaction. Other 4 are randomly picked and are decoys. All 5 are plausibly the actual signer of the transaction. To the outside observer, including BOB, it’s not clear which input was truly signed by Alice’s one time spend key. Key image confirms that the Monero sent to bob has not been spent before. Origin therefore remains untraceable.

The ring is composed of the ACTUAL signer and non-signers. The actual signer is a one time spend key that corresponds with an output being sent from the sender’s wallet. To an outsider, all of the inputs look equally likely to be the output being spent in the transaction

Ring Confidential transactions to hide transaction amounts.