Monero wallet

Monero relies on PoW consensus with a few optimizations focused on maintaining decentralization. The consensus algorithm deployed in the network is the CryptoNight algorithm, which is designed to support CPUs and GPUs, but not specialized hardware like ASICs. The Monero community has selected to be open in adapting the consensus algorithm to attempts by mining firms to build specialized hardware capable of mining on the network.

Monero also has a dynamic block size, meaning that the size of blocks in the blockchain is not fixed and they adjust based on network requirements.

Monero has a consistently decreasing block reward that creates a tail emission whose consequences are a perpetually decreasing rate of annual inflation to its supply.

Transactions on Monero are automatically private, meaning that the privacy technology employed works in the background and is not optional when sending or receiving XMR — the native Monero coin.

At the blockchain layer, there are primarily 3 areas that need to be addressed to achieve anonymity and fungibility: Transaction Origin, Transaction Destination and Transaction Amounts

Monero’s main privacy implementations address all 3 areas, and their recent integration of bulletproofs — a form of zero-knowledge proof — supplements the network’s privacy and efficiency further.

Transaction origins and destinations are masked in Monero by a combination of stealth addresses and Ring CTs. Stealth addresses are unique, one-time addresses created by the sender for a transaction on behalf of the recipient, providing unlinkability of addresses. RingCTs are an optimized form of ring signatures which muddle the key used to sign a transaction among a group of users — making it computationally infeasible to discern the actual signer of a transaction.

RingCTs even enable the masking of transaction amounts with reasonable efficiency. To improve the efficiency and privacy assertions of Monero transactions bulletproofs were implemented into the protocol in 2018, which have helped to reduce the large transaction sizes in Monero by up to 80 percent.

Confidential transactions are, on average, larger than standard cryptographic transactions (i.e., in Bitcoin) due to the commitments required to mask transaction details. While very new, bulletproofs in Monero are widely observed as a significant boost for the network.

The Monero Research Lab has published numerous academic papers on financial privacy and technology and plays an important role in the network’s future trajectory.

When you first buy coin, you’re issued with two keys: public and private.

• A public key serves as an address that can be shared with other parties to perform transactions.
• A private key represents a randomly generated number that signs transactions and protects your assets from malicious attacks. If it gets compromised or lost, you won’t be able to access your cold wallet to spend, withdraw, or transfer your cryptos.

To safeguard and keep track of your keys, you can use online or offline wallets. Online wallets, also known as hot wallets, store private keys on systems or devices that are connected to the internet. Hot wallets are easy and convenient to use, however, they come with several drawbacks. Besides being susceptible to attacks and a honeypot for hackers, with hot wallets, the custody of private keys is often entrusted to a third party such as a crypto exchange, which means you never have full control over your funds. The safer choice are specialized hardware wallets that store private keys offline. Stealing private keys from a hardware wallet would require physical access to the wallet and corresponding PIN or the recovery phrase. What’s more, with hardware wallet, you don’t need to rely on third party custodians.

Ledger Nano is the industry-leading hardware wallet. With more than five million customers, Ledger Nano wallets have several layers of security that protect private keys, and hence your assets:

• Your private keys are stored on secure element chips.
• A PIN code and a 24-word recovery phrase are required to access the wallet.
• Ledger Nano hardware wallets have been built using highly durable materials for protection against physical damage.

With full isolation between private keys and your computer/mobile, Ledger Nano cold wallets keep your keys secure and give you complete control over your cryptocurrencies.