Monero, the untraceable cryptocurrency

Monero is an untraceable cryptocurrency. Like Bitcoin, a blockchain stores the transactions. But, unlike Bitcoin, they are obfuscated with three expedients. For this reason, it is viral among cybercriminals.

The open-source project Monero was launched in 2014 by his leading developer Riccardo Spagni, arguing that “privacy and anonymity are the most important aspects of electronic cash”.

1) The ring signature

Indeed, to conceal the transactions’ data, Monero uses a ring signature: every transaction is inserted and grouped with other trades, not related. The transfer from user A to user B is mixed with other transfers from other users and moved along the list of transactions, obfuscating the movement’s details.

2) The Ring Confidential Transactions (Ring CT)

Moreover: in 2017, Monero introduced the Ring Confidential Transactions (Ring CT). It splits the operation’s total amount into different transactions: for example, a transfer of 100 XMR (Monero Monetary Unit) is recorded as three separate transactions of 19 XMR, 54 XMR, 27 XMR, so it is even more difficult tracking the movements.

3) Stealth Addresses

Moreover, it uses stealth addresses. They generate one-time addresses for each transaction, obscuring public blockchain details. They hide the recipients “so outside observers don’t know which addresses certain outputs (outputs are containers of money, similar to banknotes) are assigned to” (source: getmonero.org).
In September 2020, the US Internal Revenue Service’s (IRS) criminal investigation division posted a $625,000 bounty for contractors who could develop tools to help trace Monero. In 2021, the IRS had doubled their reward to $1.25 Million.