What makes Monero special? - Crypto in Plain English - Episode 116 - by cryptohunt.it

What makes Monero special?

Welcome to the cryptohunt jam where we spend one minute a day to explain crypto. In plain english.

If you’ve listened to our explanation of what a blockchain is, and remember from last episode that every transaction and account balance on a blockchain are public, then you probably think: What about privacy then? I don’t have to tell my neighbor how much is in my real bank account either.

That’s where so-called privacy coins come in, and today’s episode is about Monero, a popular one.

Monero attempts to make that public record less useful for those trying to trace back the history of it. It has a few tricks up its sleeve to do that.

First, it uses a “stealth address” for each public transaction. Think of it similar to creating many temporary email addresses that all forward to your real inbox. If you never used the same temporary email twice, to the outsider it would be very hard to summarize what you actually sent and received.

Another clever mechanism is called “ring signature”. Imagine you had a bunch of friends, and you all send around a bunch of different amounts of money, carefully making sure that in the end everyone retained their exact wallet balance. Just by looking at all the transactions, you could never tell which ones were intentional, and which ones were just made to obfuscate things. Monero does this all the time, by design.

And it is actually quite effective at solving the anonymity issue this way. Because strictly speaking, all transactions are publicly visible because that’s how blockchains just work - but just can’t make much sense of them because of the way Monero obfuscates them. In fact, it is so effective that US tax authorities put out a bounty to whoever can crack the system.

But, of course privacy is not just for people who want to hide things, privacy is an expectation you have, just like your neighbor has no business knowing how much money you have. That’s why there are more of those privacy coins, and next time, let’s look at another example called ZCash!

Disclaimer: This podcast references our opinion and is for information purposes only. It is not intended to be investment advice. Do your own research and seek a duly licensed professional for investment advice.