Monero sticks to the original roots of what crypto is supposed to be about. If you aren’t familiar with these roots here’s a quick history lesson Most people consider bitcoin to be the first cryptocurrency.
It was knowingly created by Satoshi Nakamoto who might be a person or a group of people nobody really knows.
Some of the key principles are :
Bitcoin and other cryptocurrencies have in common is that they require no central authority so there isn’t a central bank or government that can control crypto and
The crypto cannot be arbitrarily created or counterfeited which is a huge difference compared to the fiat currency that so many countries use like dollars or euros which can be created at any time whenever the government wishes for whatever reason.
For example about one-fourth of all the us currency that is in circulation today was just created in the last year 2020.
From the multiple stimulus packages that the government created which will likely cause some inflation cryptocurrencies are essentially decentralised peer-to-peer networks that cannot be subverted by banks or government.
Now one common misconception about bitcoin is that is private and this couldn’t be any further from the truth.
In fact: Bitcoin is less private than using a credit card because every single transaction is public you can just look on the block-chain and see every transaction that has ever been made.
You can see which wallets have exchanged money when they exchanged it and how much bitcoin was in the transaction now at first this wasn’t such a big problem because it’s not like you can actually see people’s names and addresses on the block-chain all you can see is their wallet address which is just different letters and numbers like a34bf32… etc.
If you manage to keep your wallet address a secret nobody is going to know that it actually belongs to you.
Most of the bitcoins in use were either mined or bought directly from miners who didn’t require any id to sell you bitcoins exchanges changed everything especially when governments started strictly enforcing know your customer rules on them so in order to sign up with an exchange you have to identify yourself some even require you to send in a selfie with your id so any crypto that you purchase from an exchange is going to have all of your personal information tied to it which can then be subpoenaed by law enforcement if they suspect any illegal activity.
How does Monero handle these attempts to centralised crypto?
Well it doesn’t expose who sends how much to whom transactions are untraceable and unlikable so you can’t be sure where any particular monero originated from
Now this is obviously very useful for criminal activity but it has some practical applications as well for law abiding citizens since bitcoin balances are public.
You might become a target if people find out that you have a lot of bitcoin monero also has better frangibility as they are all the same whereas a bitcoin could be traced to some illegal activity which means that most people aren’t going to want to buy it because if you bought a bitcoin that was used for something illegal.
You might end up attracting the attention of law enforcement so because of this newly created bitcoins are typically more value than a ‘dirty’ bitcoin. There’s also the issue of track spending so with a bitcoin wallet you’re always going to have that same wallet address and if you make all of your transactions using it whether you’re buying stuff at a store or you’re buying stuff from amazon using that bitcoin wallet they can track all of your transactions they can use that to make some guesses about your spending habits.
A lot of people obviously don’t like that this is the same reason why? a lot of people choose to use cash instead of a credit card so that all of their transactions can’t be centralised and looked at to try and find things out about that person.
How does monero implement all of these privacy features?
First the sender’s identity is obfuscated by ring signatures so when a person signs a monero transaction their signature is combined with past signatures that are on the monaro block-chain which make it impossible to determine exactly who sent the transaction.
In Monero stealth address which isn’t actually your true wallet id but rather it is a wallet that only you can access with your real wallet id to collect the funds in fact whenever you open up your monero wallet it scans the blockchain for these stealth addresses to see how much you can spend which ones it actually has access to to see how much you can spend so now you understand the privacy features of monero.
It’s also worth talking about how it is mined because this is another advantage that i think monero has over other coins like bitcoin or Ethereum.