With the invention of Bitcoin in early 2009, the online currency revolution began. It had everything we needed, including cutting-edge technology, peer-to-peer payments, and transaction secrecy. No authority, organization, or government-regulated or restricted this decentralized digital money or its transactions.
Many users are still happy to buy, send, and utilize Bitcoin. Many Bitcoin enthusiasts’ dreams were shattered when they discovered that Bitcoin is pseudo-anonymous, rather than anonymous. Fortunately, it won’t last long. Soon after, Monero jumped on board, forever altering the world of private coins.
What is the main problem of Bitcoin?
Forwarding Bitcoins from the sender’s wallet to the receiver’s wallet is how Bitcoin transactions are completed. The sender’s address, the receiver’s address, the transacted value, and the timestamp are all included in each transaction. This data is all saved on the blockchain and is accessible to everybody.
The tools for tracking Bitcoin transactions grew in popularity as Bitcoin grew in popularity. Users who want to check the status of their transactions will benefit from these features.
Governments, on the other hand, began to invest in the creation of advanced blockchain analysis tools to trace, monitor, and control digital currencies once they discovered their power.
Security of Monero vs. Bitcoin
In the same manner that governments discovered a means to uncover the identities behind the wallets, hackers discovered a way to do the same.
Because of the traceability of Bitcoins, you could be a target for hackers, especially if your Bitcoin wallet balance is large enough to interest the bad guys.
Furthermore, if a Bitcoin was used for illegal purposes and later landed up in your wallet, you may now be the owner of a “contaminated” Bitcoin. This Bitcoin may be rejected by crypto exchanges, lose its value, or become unusable in the worst-case scenario.
Additionally, because you are the current owner of the contaminated Bitcoin, blockchain analysis companies that detect criminal transactions might reveal your name to authorities.
Is Monero more secure than Bitcoin in terms of privacy?
Monero’s key selling point is its anonymity. Monero is a fork of Bytecoin, which was the first private, untraceable cryptocurrency launched in 2012. Bytecoin’s value dropped after consumers found that 80 percent of all available coins had previously been pre-mined.
Seven of its creators, however, joined a new group to develop Bitmonero, which was ultimately renamed Monero. Monero, or XMR for short, was quietly launched by an anonymous developer on a message board.
David Latapie and Riccardo Spagni are two well-known Monero developers nowadays. The identities of the remaining developers are unknown.
Anonymity in Monero vs. Bitcoin
Bitcoin is not anonymous, despite popular belief. The fact that you’re hiding behind the wallet’s address doesn’t imply no one can see you. Despite the absence of personal data in the transaction, Bitcoin transactions are less transparent than bank transactions.
Monero, on the other hand, is completely private. Monero does this by utilizing a variety of privacy features such as Ring Signatures, Ring Confidential transactions, and Stealth Addresses. Let’s have a look at the most important ones.
- Ring Signatures
Ring Signature is a method of concealing the sender’s identity by having a number of people sign the transaction at the same time. The identity of the real sender is secured, and no one from the group of signers can be linked to a specific input or output in that transaction.
Real people, Bots, and Mixins can all be part of a ring of signing parties. Mixins are shadows of previous Monero transactions that are automatically added to help disguise the identity of the transaction’s real senders. Once you’ve finished your transaction, it can also become a Mixin, which will assist protect future transactions.
- Ring Confidential Transactions
Ring Confidential Transactions is a technology that has been added to further secure Monero’s anonymity. The major purpose of this protocol is to keep the amount of the transaction hidden. Even if the transaction is public in the blockchain, unless you are the sender or receiver of the transaction, knowing the amount is impossible.
- Stealth Addresses and Stealth Keys
Stealth Keys, sometimes known as “spend keys,” are used to increase anonymity. Stealth Keys protect the receiver, whereas Ring Signatures protect the sender. The sender must create a Stealth Key, also known as a one-time Stealth Address, and use it to deliver the coin. The receiver then examines the incoming transaction using a private view key.
Monero has a slew of other features that contribute to its anonymity. We recommend reading our article on Monero privacy to understand more about them.
Comparison of Monero vs Bitcoin
Buying something with a Bitcoin is similar to shopping with a credit card. Even though your name will not appear on the receipt, the number, the amount, and the type of card will. Authorities will have the tools to monitor your expenditure if they so want.
Instead, using Monero for transactions is similar to using a hidden joint fund. There’s no way of knowing who performed the transaction or tracing it back to your identity because so many people have access to it.
Privacy vs. Monero vs. Bitcoin
Around the world, governments are increasing their control over Bitcoin transactions.
Companies like Chainalysis, Ciphertrace, and Crystal Blockchain are thriving in the Bitcoin tracking space. One of the numerous triumphs of such companies is Chainalysis’s role in the Silk Road scandal, which garnered a lot of attention.
Monero, on the other hand, defies official restrictions. During Greece’s recent financial crisis, the government restricted citizens’ withdrawals to a maximum of 60 Euros per day. Cryptocurrency came in handy in this situation since the authorities couldn’t track spending. Monero was one of the most popular options during this time due to its anonymity.
Differences between Monero and Bitcoin
The Bitcoin network and its blockchain have a number of challenges when it comes to upgrading the service. First and foremost, Bitcoin has a fixed block size that cannot be increased, limiting the capacity, speed, and cost of each transaction.
Changes in Bitcoin operations, known as a fork, must be done to increase the network’s transaction capability. A hard fork is a significant shift in the way a network operates and the protocols it uses. After that, the old protocol is considered invalid. They are considered split if both old and new versions are operational. The splitting of the Bitcoin blockchain resulted in the creation of several coins. Many Bitcoin hard forks in the past have shown to be harmful and dangerous to the network, limiting its ability to change and improve.
Monero, on the other hand, has a flexible block size, which allows it to adapt to the needs of the network. It is also easy to upgrade its protocols, which is done on a regular basis. Every six months, Monero releases an update, and all users are required to upgrade to the latest version.
One of Bitcoin’s biggest problems is that its mining is becoming increasingly centralized.
Cryptocurrencies are processed on standard technology like GPUs and CPUs. With the development of ASICs, or Application Specific Integrated Circuits, the entire mining process became more productive.
ASICs are semiconductors that are specifically designed to mine coins. They are so effective, especially in Bitcoin mining, that avoiding them is becoming unprofitable and useless.
Even worse, ASICs are developed by a small number of businesses. They get more mining power when they introduce more specialized processors. ASIC chips can throw other miners out of business if they can obtain more than 50% of the blockchain’s hashing power.
Furthermore, having such control over the blockchain allows for a so-called 51% attack, in which hackers seize control of the blockchain’s protocols and use their ability to commit fraud and modify transactions. Monero has consistently found a way around this trend by developing ASIC-resistant algorithms that allow for generic processing.
When it comes to avoiding ASICs, the tough issue is that there is no end game. To maintain its decentralized mining status, the network continues to invest and hard fork the system.
Bitcoin vs. Monero privacy
Without a doubt, Monero wins the privacy duel between Bitcoin and Monero. This isn’t to imply that Bitcoin isn’t on its way out. The Monero team, on the other hand, did an excellent job of developing an anonymous coin as well as a scalable network with decentralized mining. It has evolved into a fantastic choice for consumers who value their privacy and the secrecy of their transactions.