Here’s How Monero Keeps Your Transactions Safe and Secure
As of November 2021, there are more than 14,000 altcoins in the cryptocurrency market. More than a few of these are categorized as privacy or security coins, which are a type of altcoin that employs technologies to keep transactions secure, private, and anonymous.
Perhaps the most popular of these privacy coins is Monero (XMR), a cryptocurrency that was released in 2014. The coinage was built and operated around the concept of privacy, so much so that the United States Internal Revenue Service (IRS) has offered a bounty to anyone who can develop technologies that can trace transactions carried out using Monero.
It’s fairly easy to get your hands on this privacy coin if you want to use XMR for investing or completing transactions. To get started, you need to have capital, a wallet, and access to an exchange. You can easily get a free Monero wallet for storing your XMR, and many cryptocurrency exchanges recognize the coinage since it’s quite popular among consumers.
But before you dive deep into this privacy currency, it’s important to do your due diligence as an investor and take a good look at its history and how it’s grown over the years.
The History of Monero
In general, cryptocurrency is still a fairly new concept. Bitcoin, the first cryptocurrency, was launched in 2009, and plenty of altcoins were also released soon after. The protocol that became the backbone of Monero was first released in 2013 in a white paper authored by a person or group that assumed the pseudonym Nicolas van Saberhagen.
Since its inception, the protocol has highlighted the need for a currency that prioritizes privacy and anonymity. Then, Monero was launched in 2014. The currency took its name after the Esperanto word for coin. Today, the coinage has the third-largest community of developers after Bitcoin (BTC) and Ethereum (ETH).
The 3 Technologies Behind Monero’s Privacy and Security
Transactions that make use of cryptocurrencies are recorded on the blockchain, which is a public ledger that exists across a network. The details of the transaction, including its origin, destination, and the amount exchanged are noted and strung together, forming a chain of data blocks.
When you’re transacting using bitcoin, these details are transparent and available to the public. However, transacting using Monero obfuscates these details through the use of 3 different technologies. The cryptocurrency enables its users to avoid censorship or interference from governments, financial institutions, or other establishments that might attempt to prevent or influence them on how to use their assets.
Cryptocurrency transactions record their point of origin, but ring signatures make it more difficult for outsiders to see exactly who is initiating the deal. This technology mixes the sender’s address with other addresses, and it doesn’t reveal which member signed the transaction.
Generating a ring signature is done by combining the sender’s account keys with public keys on the blockchain. This results in a complex signature that hides the identity of the sender, thus making it impossible to determine exactly who initiated the transaction.
People who transact using cryptocurrencies must have an address for each transaction. However, the Monero system automatically and randomly generates one-time addresses for each and every transaction made through the network. This action hides the identity of the participant who will be on the receiving end of the deal.
Ring Confidential Transactions
Finally, there’s ring confidential transactions, which is designed to hide exactly how much Monero is being exchanged in a deal. This functionality was introduced in 2017, after the implementation of ring signatures and stealth addresses to hide the sender and receiver.
In addition to these technologies, Monero is also designed to be truly fungible, which is a quality that enables one unit to be mutually substituted for each other. Gold bars that have the same level of purity and weight, for example, are completely indistinguishable from each other and are therefore fungible. On the other hand, USD 1 bills have serial numbers that can distinguish one unit from another, so this asset is not truly fungible.
Monero is fungible because there’s no way to link XMR transactions together or trace the history of a particular coin. This makes it impossible to single out an XMR unit or ban it without banning the currency as a whole.
Investing in Monero
Monero’s dedication to anonymity and privacy makes it a perfect tool for carrying out transactions that would otherwise be too complicated if done through the use of centralized financial establishments like banks. The ease and convenience brought about by using this privacy currency have made it popular among many people, including those who want to transact privately and those who want to invest in the coin and watch its value grow over time. So far, it’s proving to be a good investment. Between August 2020 and 2021, for example, the cryptocurrency’s value grew by 231%.
If you think this currency is a perfect addition to your asset portfolio, then you can easily acquire it as long as you have a wallet and access to a cryptocurrency exchange. Who knows, you might even be able to maximize the privacy and security afforded by this coin.