Monero is a privacy-focused digital payment network designed to make transactions completely untraceable. Its native cryptocurrency, XMR, is used for all transactions and is fully fungible—meaning every unit has the same value and cannot be “tainted” by past activity.

Monero is built on the principle that privacy and confidentiality should be enabled by default. Unlike Bitcoin’s public ledger, Monero hides:

• • The sender
  • The recipient
  • The transaction amount

The project is open-source and maintained by a global community of developers, many of whom remain anonymous.

From a technical standpoint, Monero uses a Proof-of-Work (PoW) consensus mechanism. Its mining algorithm, RandomX, is specifically designed to resist optimization, allowing ordinary users to mine using CPUs or GPUs and helping prevent mining centralization.

How Does Monero Remain Untraceable?

Monero relies on three core cryptographic technologies to guarantee anonymity in every transaction:

Ring Signatures

Ring Signatures obscure the identity of the transaction sender. When a transaction is created, the sender’s real address is mixed with several decoy addresses randomly selected from the blockchain.

Only one address in the group actually signs the transaction, but it is computationally impossible to determine which one it is. To prevent double-spending, a key image is included without revealing the sender’s identity.

Ring Signatures require no prior setup and are irreversible, meaning they cannot be unraveled later.

RingCT (Confidential Transactions)

Introduced in 2017 and now mandatory, Ring Confidential Transactions (RingCT) hide the amounts involved in Monero transactions. Each transaction uses a Pedersen commitment to link funds to the recipient without revealing the actual amount, along with a range proof (a type of zero-knowledge proof) that confirms the amount is valid without disclosing its value. Together, these mechanisms ensure that transaction amounts, senders, and recipients remain fully confidential.

Stealth Addresses

Stealth Addresses prevent transactions from being linked to a recipient. For every transaction, the sender generates a one-time address using the recipient’s public view key and public spend key. Funds are sent to this unique address, and only the recipient can detect and access them.

The Chainalysis Incident (2024)

In 2024, a deleted video published by Chainalysis suggested that some Monero transactions could be traced. The method reportedly involved running malicious nodes to capture IP addresses and correlate them with transaction timing.

Importantly, this approach targeted network-level weaknesses, not cryptographic flaws in Monero itself.

The Role of Human Error

Across nearly all known cases of Monero de-anonymization, the common factor is user error, not protocol failure. Poor operational security—such as reuse of addresses, unsafe conversions, or careless online behavior—can undermine even the strongest privacy tools.

Monero provides powerful anonymity, but users must follow strict security practices to maintain it.

To mitigate these risks, Member States must implement effective regulation and supervision of cryptocurrency markets, ensuring greater transparency and stronger safeguards against misuse.