Understanding anonymity: the inner workings of Monero, the trace-free digital currency
Monero, a cryptocurrency known for its strict focus on privacy and anonymity, was created in 2014 by an anonymous team. The origins of the Monero blockchain date back to 2012 with the publication of the CryptoNote report by developer Nicolas Saberhagen, whose identity remains unknown.
The Monero blockchain network emerged as a fork of Bytecoin, focusing on privacy and untraceability. It was funded through donations from its community and became the first cryptocurrency based on the CryptoNote protocol.
One of the key features that set Monero apart is the use of hidden addresses for each transaction. This allows the sender to create a unique public address on behalf of the recipient, making operations impossible to trace. Ring signatures, another unique aspect of Monero, make it impossible to determine which specific key was used to sign a particular transaction.
For security in transactions, Monero uses a Spend Key and a View Key. The Spend Key is necessary to perform operations that involve the use of funds in the account, while the View Key allows a trusted third party to access the details of an incoming transaction, but not those of an outgoing transaction.
Beyond its functionality as a means of exchange for goods and services online, XMR can also be valuable for investors who anticipate an increase in the demand for privacy in future operations. However, the anonymity and untraceability of each operation on the Monero network or with its XMR cryptocurrency can be a Sword of Damocles hanging over the blockchain, potentially used for illegal activities such as money laundering, terrorist financing, trafficking, and sexual exploitation of people or drug trafficking.
Riccardo Spagni led the Monero project until December 2019, when he publicly left it. Spagni started his journey in the world of cryptocurrencies in 2011 as a Bitcoin miner and later co-founded Tari, a Monero-centered merged chain designed to enhance non-fungible tokens (NFTs).
Despite the concerns about its potential use in illegal activities, Monero's main appeal and what sustains its value as a digital asset lies in its emphasis on privacy and anonymity. Unlike the Bitcoin network, which allows transactions to be anonymous but all movements can be traced, Monero operations are truly untraceable. This makes it an attractive option for those seeking to protect their financial privacy.
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