Without doubt, Monero is the world's most anonymous cryptocurrency.
Monero is one of the best privacy coins in the industry. Even though it is not as technically advanced and aesthetically charming as its alternatives, Monero's primary focus is on privacy. Thanks to its security and privacy features, Monero is the anonymity-oriented digital currency of choice.
Launched in 2014, Monero (XMR) is one of the leading privacy-oriented cryptocurrencies and the most popular anonymous currency. Why is privacy coin Monero so secure? And what features make it the winning privacy coin?
To deliver the highest level of privacy, privacy coin Monero employs sophisticated cryptographic methods, including enforced privacy, stealth addresses, confidential ring transactions, ring signatures, bulletproofs, separate transaction units, and IP obfuscation technology Kovri.
Enforced privacy
While most cryptocurrencies have transactions public by default, Monero enforces privacy for all transactions. With transactions private by default, no user can be accidentally or intentionally traceable.
Stealth addresses
Address re-use is one of the most common privacy concerns cryptocurrencies face. When you receive multiple payments into a single public address, anyone who knows this address can easily monitor its balance and transaction history. Even worse, due to the way how cryptocurrencies deal with change, different addresses in your wallet can be easily connected. Luckily, this is not the case with Monero.
For each Monero transaction, senders are required to generate a one-time address by using the receiver's public address. Therefore, even if you sent funds to the same public address twice, no one would ever be able to find it out. Additionally, no analysis executed on Monero's blockchain would ever disclose the exact destination address you use to receive funds.
Ring Confidential Transactions
To hide the amount that has been sent in a transaction, Monero implements Ring Confidential Transactions or short, RingCT. To obscure the transacted amount, Ring CTs use range proofs and cryptographic commitments, clearly explained in this video:
Ring Signatures
Ring Signatures are a method for mixing transactions. When sending Monero, the sender cryptographically signs their transaction input with ten other inputs. Simply said, when funds are sent, they are sent as a group of randomly picked transactions of the same amount. By giving the sender plausible deniability, no one would ever be able to determine which address sent a given transaction.
Bulletproofs
Bulletproofs is a relatively new feature introduced in October 2018. Thanks to Bulletproofs, transactions can be verified without knowing the sender, receiver, or amount.
Separate Transaction Units
When sending Monero, it will be delivered in several different transaction units. For example, when you send 21 XMR, they will be delivered as separate units of 10, 6, and 5 XMR, each sent to a unique stealth address.
Kovri
Monero's final privacy feature takes advantage of Kovri, an open-source technology for obfuscation of IP addresses. To learn more about Kovri, check out the official video:
Is Monero anonymous?
Europol, the European Union's Agency for Law Enforcement Cooperation, has confirmed that Monero transactions are anonymous.
During the Blockchain Alliance webinar, the Europol's strategic analyst Jerek Jakubcek has also confirmed that Monero transactions cannot be traced or recorded, preventing investigators from tracking the location of suspects.
Mr. Jakubcek stated that Monero's blockchain was the endpoint of several investigations. He added that the transactions were initially traced on the bitcoin blockchain. However, as soon as the funds moved from BTC to XMR, that was the point where the investigation ended.
They suspect that to avoid being monitored, crypto funds from Bitcoin might be converted into privacy coin Monero. Such a conversion seems to be a way how to make Bitcoin anonymous with Monero.
In a paper on Empirical analysis of traceability in the Monero blockchain, a team of researchers from Princeton, Carnegie Mellon, Boston University, MIT, and the University of Illinois pointed to several flaws that make it possible to obtain individual transactions.
While one of the issues was fixed in 2017, another still lingers. The flaw relates to how Monero hides the source of payment by combining the coin someone spends with other coins used as decoys.
The flaw can help to identify the sender, not the receiver, as Monero protects the receiver's address with the Stealth addresses method described above. However, if someone made a payment to a Monero exchange that knew their identity, and then later to an undercover cop activng as a dark web drug dealer, the second payment could be linked to the first, and consequently to their identity.
Conclusion
Even with the above flaws outlined in the paper, privacy coin Monero is by far the most anonymous digital currency. If you are serious about your security and privacy, then you should opt for Monero.
If you a regular bitcoin user who would like to use, send or spend bitcoin anonymously, then Whir is the service of your choice.
Would you like to send coins privately but don't have Monero? Use Whir. A tool for an average Joe who wants to protect their privacy. Send Bitcoin privately, without KYC, using a privacy-enabled CoinJoin transaction.
Disclaimer: This article does not serve as a piece of financial advice or encouragement and inducement for the usage of Bitcoin and other cryptocurrencies. Its primary role is informative, explanatory, and educational. The readers have to decide themselves whether to use or not to use these types of services.
Regardless of how you see the future of cryptocurrencies, one thing that needs to be urgently addressed is the freedom of Bitcoin, freedom from government and corporate control. Cryptocurrencies like Bitcoin, Ethereum, and others were born out of a desire to protect our online freedom and, beyond that, our financial freedom. These digital currencies promised a new era in which individuals could transact across borders without the oversight of traditional financial institutions. However, the desire for financial sovereignty is being thwarted by government attempts at regulatory oversight.
The tension between privacy and security has reached a critical point. Following the lead of the United States, the European Union (EU) has begun to crack down on crypto mixers and privacy coins for their ability to make cryptocurrency payments anonymous. This shift marks a significant step towards increased surveillance in the digital realm, raising concerns about the future of privacy in an over-monitored society.
Financial privacy is under increasing threat from stringent KYC and AML regulations. While these measures are intended to curb illicit activity, they also expose ordinary users to extensive surveillance and data collection, undermining their personal autonomy and security. As a result of these regulations, crypto mixers and privacy-focused wallets are being targeted, but what are the real consequences of losing financial privacy?
