Governments worldwide seem to be waging a literal war on privacy in the past few years. Many individuals turn toward cryptos to maintain a bit of anonymity they have left. This is especially true for financials, where hiding your data can be a security concern.
Unfortunately, very few cryptocurrencies provide true anonymity. For instance, many mistake Bitcoin to be anonymous, where, in fact, transactions on its network can easily be traced back to their users.
For this reason, privacy coins like Monero are gaining a lot of traction and will continue to do so in the future. In this article, we analyze Monero and take a closer look at how this blockchain provides full privacy to its users. We will provide thorough information about its protocol and technology utilized to obfuscate transaction data.
Finally, we’ll look at the price action of the XMR coin to see whether converting BTC to XMR can be advantageous from an investment perspective. Let’s get started.
Monero Blockchain Technology
The Monero blockchain was forked from Bytecoin in 2014 to set a new standard in blockchain privacy. Since most blockchains have a transparent distributed ledger of transactions, this makes them pseudonymous by default. For example, anyone can get transaction data and investigate every user of the network on Bitcoin.
To prevent this, Monero uses multiple technologies that hide transaction data and let users keep their privacy.
The first pillar of Monero’s privacy is the concept of ring signatures. This technology allows the blockchain to use your key plus a number of other public keys and put them together. In this mix of different signers (of current and past transactions), it’s impossible to find out the original signer of the transaction.
Additionally, the network cannot tell which transactions are spent or unspent, thus ensuring fungibility.
Stealth addresses have a one-time use on the network. Senders create these one-time addresses for every transaction for each recipient. The receiver publishes a single address, while at the same time, remaining capable of receiving transactions on multiple addresses that only the receiving and sending parties can see. These stealth addresses serve as a tool to allow the two to determine where a payment was sent, while simultaneously hiding them from everyone else.
RingCT allows you to hide the transaction amounts in Monero transactions. In a nutshell, it is an improved version of ring signatures and were implemented in 2017.
They also rely on the concept of decoys to obfuscate transaction data. They act as a group signature using multiple participants that are in no way involved in the transaction. This effectively removes any possibility of linking transaction data to the original owner.
Unlike most blockchains that provide 2 keys, you get three keys on Monero. A private view, private spend, and public key. The private view and spend keys are used by the protocol to build the Monero address.
For example, you could use a watch wallet that uniquely uses the view key and shows the amount in your wallet. You can also share this view key to allow others to consult your Monero balance (for accounting purposes, for example).
Monero Investment Potential
The true value of Monero resides in its utility as a privacy coin. It doesn’t have a limited supply like Bitcoin. However, investors have kept it in the top cryptos by market cap, even though governments are trying to make it illegal.
XMR started as a relatively cheap cryptocurrency in 2014 and was even under $1 for the better part of 2015-2016. However, it has reached above $450 on multiple occasions (in 2018 and 2021), showing the incredible potential for making profits.
Digitalcoinprice.com, for example, predicts a price of $370 for 2025 and $800 for 2030. This is quite a decent growth, considering the high utility of Monero as a private payment currency.
On the other hand, Priceprediction.net expects a 4-figure growth for Monero and a price of $4000+ by the end of 2030, making it quite a good long-term investment.
Privacy seems to become a rare occasion in our lives. With increased KYC requirements from exchanges and AML laws that invade financial privacy, it seems there’s nothing stopping regulators to remove every bit of anonymity regarding our finances.
Coins like Monero are going to be essential for keeping your funds private and secure. The advanced technology used on its blockchain effectively obfuscates transaction data and amounts, providing the much-needed level of privacy in crypto.