Monero
Monero (XMR) is an open-sourcecryptocurrency created in April 2014 that focuses on privacy and decentralization that runs on Windows, macOS, Linux, Android, iOS, and FreeBSD. Monero uses a public ledger to record transactions while new units are created through a process called mining. Monero aims to improve on existing cryptocurrency design by obscuring sender, recipient and amount of every transaction made as well as making the mining process more egalitarian.[1]
The focus on privacy has attracted illicit use by people interested in evading law enforcement.[2][3] The egalitarian mining process made it viable to distribute the mining effort opening new funding avenues for both legitimate online publishers and malicious hackers who covertly embed mining code into websites and apps.[4]
Architecture
Unlike many cryptocurrencies that are derivatives of Bitcoin, Monero is based on theCryptoNight proof-of-work hash algorithm, which comes from the CryptoNote protocol.[5]It possesses significant algorithmic differences relating to blockchainobfuscation.[6][7] By providing a high level of privacy, Monero is fungible, meaning that every unit of the currency can be substituted by another unit. This makes Monero different from public-ledger cryptocurrencies likeBitcoin, where addresses with coins previously associated with undesired activity can be blacklisted and have their coins refused by other users.[1]
In particular, the ring signatures mix the spender's input with a group of others, making it exponentially more difficult to establish a link between each subsequent transaction.[3][8] Also, the "stealth addresses" generated for each transaction make it impossible to discover the actual destination address of a transaction by anyone else other than the sender and the receiver. Finally, the "ring confidential transactions" mechanism hides the transferred amount.[3]
History
The underlying CryptoNote protocol that Monero is based on was originally launched by pseudonymous author Nicolas van Saberhagen in October 2013.[3]
Monero was originally launched by a Bitcointalk forum user only known as "thankful_for_today" under the nameBitMonero which is a compound of Bit (as inBitcoin) and Monero (literally meaning "coin" in Esperanto).[3] Five days later, the currency's supporters opted for the name to be shortened to Monero.[6]
In September 2014, Monero was attacked when an unknown party exploited a flaw inCryptoNote that permitted the creation of two subchains that refused to recognize the validity of transactions on each other. CryptoNote later released a patch for the flaw, which Monero implemented.[10]
Monero experienced rapid growth in market capitalization and transaction volume during the year 2016, partly due to adoption in 2016 by major darknet market AlphaBay,[3] which was closed in July 2017 by law enforcement.[11]
On January 10, 2017, the privacy of Monero transactions were further strengthened by the adoption of Bitcoin Core developer Gregory Maxwell's algorithm Confidential Transactions, hiding the amounts being transacted, in combination with an improved version of Ring Signatures.[12]
Transaction linkability
In April 2017 research highlighted three major threats to Monero user's privacy. The first relies on leveraging the ring signature size of zero, and ability to see the output amounts.[13]The second, described as "Leveraging Output Merging", involves tracking transactions where two outputs belong to the same user,[13] such as when a user is sending the funds to himself ("churning"). Finally the third threat, "Temporal Analysis", shows that predicting the right output in a ring signature is easier than previously thought.[13]
Monero development team addressed the first concern in early 2017 with introduction of Ring Confidential Transactions (ringCT)[14] as well as mandating a minimum size of ring signatures in the March 2016 protocol upgrade. Monero developers also noted that Monero Research Labs, their academic and research arm, already noted and outlined the deficiency in two public research papers in 2014 and 2015.[14]
Client software
A user needs client software, a so-calledwallet, to interact with the Monero network. The Monero Project produces the reference implementation of a Monero wallet and there are also third party implementations of Monero clients exist such as Monerujo[15] and Cakewallet[16] which also make it possible to use Monero on Android and iOS. Finally, a web wallet allows users to interact with the network entirely through the browser using a third party website.
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