Updated March 2026 · By arnoldnakamura · 683 trades, 454 partners, 100% feedback
Bitcoin is transparent. Every transaction shows sender, receiver, and amount on a public ledger. Monero takes the opposite approach: privacy is the default for every transaction.
This isn't a single trick. Monero combines four distinct cryptographic technologies, each hiding a different piece of information:
When you spend Monero, your wallet doesn't just broadcast "arnoldnakamura sent 1 XMR." Instead, it creates a ring signature that mixes your real transaction input with decoy inputs pulled from the blockchain.
Since August 2024, Monero uses a ring size of 16 — meaning 1 real input + 15 decoys. An observer sees 16 possible senders but cannot determine which one actually authorized the transaction.
The decoys are selected using a sophisticated algorithm that mimics realistic spending patterns (the "gamma distribution"), so statistical analysis can't easily distinguish real inputs from decoys.
You publish one Monero address, but every payment you receive goes to a unique one-time address on the blockchain. This stealth address is derived from the sender's random data + your public key using Diffie-Hellman key exchange.
Only you (with your private view key) can scan the blockchain and determine that a particular output belongs to you. No outside observer can link two payments to the same wallet.
This is why Monero wallets need to "sync" — they're scanning every new transaction to check if any stealth addresses match your keys.
Ring Confidential Transactions (RingCT) hide the amount of every transaction using Pedersen commitments. The network can verify that inputs equal outputs (preventing inflation) without ever seeing the actual numbers.
The math relies on the homomorphic property of elliptic curve commitments: Commit(a) + Commit(b) = Commit(a + b). Miners verify the equation balances without knowing a or b.
Since 2022, Monero uses Bulletproofs+ — a zero-knowledge range proof that verifies amounts are positive (preventing someone from creating coins out of thin air) while keeping the proof compact (~0.7 KB per output).
Without Dandelion++, when you broadcast a transaction, your node sends it to all connected peers simultaneously. A surveillance node connected to many peers could correlate timing to identify the originating IP.
Dandelion++ splits propagation into two phases:
For additional IP protection, you can run Monero over Tor or I2P. The Monero daemon has native support for both.
FCMP++ (Full-Chain Membership Proofs) is the biggest privacy upgrade since RingCT. Instead of mixing your input with 15 decoys, FCMP++ proves your input belongs to the entire set of all Monero outputs — without revealing which one.
This eliminates the ring size limitation entirely. With ring size 16, a sophisticated attacker with auxiliary information might narrow down the real input. With FCMP++, the anonymity set is every output that has ever existed on the blockchain — currently 100+ million outputs.
The upgrade uses Curve Trees — a novel cryptographic construction that enables efficient membership proofs over the full UTXO set. Transaction sizes remain practical (~2.5 KB, slightly larger than current).
When you send Monero, here's what happens step by step:
The result: a transaction where nobody — not miners, not blockchain analysts, not governments — can determine who sent what to whom.
| What's Hidden? | Bitcoin | Monero |
|---|---|---|
| Sender identity | Visible (address on chain) | Hidden (ring signatures) |
| Receiver identity | Visible (address on chain) | Hidden (stealth addresses) |
| Transaction amount | Visible (plain text) | Hidden (RingCT) |
| IP address | Exposed to peers | Obscured (Dandelion++) |
| Balance | Visible (sum UTXOs) | Hidden (encrypted) |
| Transaction graph | Fully traceable | Ambiguous (decoys) |
| Privacy opt-in | Optional (rarely used) | Mandatory (always on) |
Monero uses RandomX, a proof-of-work algorithm designed to be efficient on consumer CPUs and resist ASIC/GPU optimization. This keeps mining accessible to regular people and prevents hardware centralization.
RandomX executes random programs in a virtual machine, leveraging CPU features (branch prediction, cache, out-of-order execution) that are hard to replicate in custom hardware. The result: your laptop can meaningfully contribute to Monero mining, which isn't true for Bitcoin or Ethereum (pre-merge).
| Property | Value |
|---|---|
| Block time | ~2 minutes |
| Ring size | 16 (1 real + 15 decoys) |
| Emission | Tail emission: 0.6 XMR/block forever |
| Max supply | No hard cap (tail emission creates ~0.86%/year inflation, decreasing) |
| Mining algorithm | RandomX (CPU-optimized) |
| Transaction size | ~1.5 KB (with Bulletproofs+) |
| Average fee | ~$0.001 per transaction |
| Confirmation time | ~2 min (1 block), 20 min (10 blocks for exchanges) |
| Protocol | CryptoNote (heavily modified) |
| Dynamic block size | Adjusts automatically based on demand |
Zcash has shielded transactions. Bitcoin has CoinJoin. So why does Monero's approach work better?
This is why Monero is the only cryptocurrency widely accepted on privacy-sensitive platforms. Optional privacy is an oxymoron — the mere act of choosing privacy makes you stand out.
No. These companies have probabilistic heuristics that can sometimes narrow down the real input in a ring (especially for transactions before ring size 16). They cannot decrypt stealth addresses, amounts, or break the cryptography. With FCMP++, even the ring heuristics become irrelevant. See: Can Monero Be Traced?
Privacy is a human right, recognized by GDPR, the UN Declaration of Human Rights (Article 12), and basic financial dignity. Cash is private. Monero extends the same property to digital payments. See: Monero vs Cash
Monero's supply IS auditable — through cryptographic verification. Every node independently verifies that RingCT proofs balance (inputs = outputs + fee). If someone created coins from nothing, the proof would fail and the network would reject the transaction. It's not visible to the human eye, but it's mathematically verifiable by every node.
Now that you know how it works — set up a wallet, buy XMR without KYC, or trade with arnoldnakamura (Cash by Mail EU-wide, Face-to-Face SW Germany).
Telegram: @arnoldnakamura