Blockchains 101: Monero

3 min readDec 20, 2020

Focusing on Privacy

Introduction

Launched in 2014 without pre-mine, Monero (Ticker: XMR) is a popular privacy-focused cryptocurrency relying on the process of mining (Proof of Work).

Monero is secure, private, untraceable and fungible.

Description

Monero is initially a Fork (chain split) of Bytecoin (launched in 2012), itself a fork of Bitcoin but with privacy-focused enhancements brought by the Cryptonote technology.

The Ring-CT functionality has been introduced on Monero in January 2017 and is made mandatory for all transactions happening on the network. Since the introduction of Ring-CT, Monero is no longer considered as a fork of Bytecoin as having its own and specific source code.

The privacy improvements allow to hide the addresses of the sender and receiver of transactions from being visible to third parties in the public Ledger (Blockchain), making XMR anonymous. It is not the case of most cryptocurrencies, including Bitcoin that are pseudonymous.

The Ring-CT signature scheme works by combining the sender’s keys with random public keys of other senders, creating a new and unique signature and making it computationally impossible to make sure which of the senders’ keys is the actual one.

Ring-CT also hide the transaction’s amount.

Because there is no traceability and transaction history of the Monero coins, XMR is also Fungible.

Mining (Proof of Work):

New XMR are generated by the process of Mining (PoW) by downloading and running the software on a computer. Monero is ASIC-resistant and can be mined using Graphic Cards (GPUs).

Unlike Bitcoin for which the block reward is cut in half every 4 years, Monero’s block reward decreases progressively overtime (currently ~1.6 XMR / block).

The Total supply of Monero is not fixed (No Hard Cap), instead, when the block reward will reach 0.3 XMR/block, it will stabilize and continue at this rate.

Monero blocktime (confirmation time) is of 2min (against 10 minutes for Bitcoin).

Cracking Monero

Several Governmental agencies, especially in the USA, have promised bounties to specialized forensic firms for cracking Monero’s privacy and allowing to track transactions and users through its Ledger (blockchain), allegedly to fight against Money Laundering.

In August 2020, the firm Ciphertrace announced having found a method to track Monero’s transactions.