Monero continues to be the leading cryptocurrency for users and investors who prioritize privacy. But how secure is Monero, really? Back in September 2020, the U.S. Internal Revenue Service (IRS) placed a $625,000 bounty for anyone capable of tracing Monero or similar privacy-centric coins, as well as Lightning and Layer 2 protocols. By the end of 2021, no one has been able to claim the reward. This alone demonstrates Monero’s exceptional privacy model—but let’s break down the technologies that make this privacy possible.
Ring Confidential Transactions (RingCT)
According to the book Mastering Monero, RingCT is a cryptographic method that hides the amount of XMR transferred in any transaction. Unlike most cryptocurrencies where amounts are visible on the blockchain, Monero’s RingCT ensures values remain hidden. It allows senders to prove they have sufficient balance through cryptographic commitments and range proofs, without publicly exposing the transferred amount.
The commitment binds the amount with specific cryptographic data, which is used by the network to validate the transaction privately. The range proof confirms that the hidden amount is positive and within a valid range—without ever revealing the actual figure.
Stealth Addresses
To safeguard the privacy of the recipient, Monero generates a one-time stealth address for each transaction. This disposable address is not linked to the actual wallet of the recipient, preventing traceability. While the sender uses the recipient’s public address and adds randomized data, a unique address is formed for that specific transaction. Even repeated transfers to the same person will create distinct addresses on the blockchain, keeping wallet activity anonymous.
Ring Signatures
While stealth addresses protect the receiver, ring signatures shield the sender. In most cryptocurrencies, a transaction’s validity is confirmed by matching the message and the sender’s digital signature derived from their private key. In Monero, ring signatures blend the sender’s signature with several decoys—forming a group or “ring.” The transaction remains verifiable, but it’s mathematically impossible to pinpoint which participant signed it, maintaining full anonymity.
These three technologies—RingCT, Stealth Addresses, and Ring Signatures—work together to ensure Monero transactions are fully private. No transaction amount, sender, or recipient is traceable through the blockchain.
However, while Monero’s blockchain is secure, your IP address could still expose you. IPs can be used to track physical location or even tie transactions back to individuals. To mitigate this, using a VPN (Virtual Private Network) or Tor (The Onion Router) is essential. VPNs encrypt your internet connection and route your traffic through private servers, making it invisible to ISPs and other prying eyes. Tor offers a decentralized, open-source network that anonymizes your traffic by routing it through several relays.
Monero developers have been working on Kovri, a tool that integrates similar IP-masking techniques directly into Monero’s architecture. Though Kovri is still not fully integrated, until it is, VPNs and Tor remain your best options for privacy on the network level.
Privacy is a fundamental right, and preserving it in the digital age is essential. Whether it’s avoiding surveillance, protecting personal financial information, or preventing targeted advertising and fraud, privacy tools and private currencies are more relevant than ever. Monero offers powerful protection through its technology, but a secure wallet is also vital.
XMRWallet is a free, open-source Monero wallet that requires no downloads or registration. You stay in full control of your funds and private keys, enabling fast, secure, and anonymous transactions. Use XMRWallet to extend Monero’s privacy promises into every aspect of your XMR experience.
