Monero (XMR)

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Whereas each Bitcoin in circulation has its own serial number, meaning that cryptocurrency usage can be monitored, XMR is completely fungible. By default, details about senders, recipients and the amount of crypto being transferred are obscured — and Monero advocates says this offers an upper hand over rival privacy coins such as Zcash, which are “selectively transparent.”

Obfuscation is achieved through the use of ring signatures. Here, past transaction outputs are picked from the blockchain and act as decoys, meaning that outside observers can’t tell who signed it. If Ian was sending 200 XMR to Susan, this amount could also be split into random chunks to add a further level of difficulty.

To ensure that transactions cannot be linked to one another, stealth addresses are created for every single transaction that are only used once.
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In my previous articles I’ve explained how Monero today is completely traceable via a process known as key image analysis. ...
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Monero’s developers are currently working on a new type of proof, Full Chain Membership Proofs, that will get rid of rings. Theoretically, this should at least mitigate key image analysis because there will no longer be decoys. If you have read my previous articles, however, you should know that the real vulnerability aren’t rings, but key images and TXOs.

By introducing FCMP++ and eliminating rings, it is believed that at least future transactions will be private (FCMP++ does not add privacy to past transactions). Contrary to RingCT which proves that the specific input, to which the key image tied to the ring of TXOs belongs, is indeed part of the ring, FCMP is a proof of inclusion. In other words, it proves that the key image included in a specific transaction does indeed belong to one of the existing TXOs. This kind of new proof however doesn’t come without trade-offs. In the next paragraph I will explain how FCMP++ not only doesn’t fix Monero, but actually breaks it completely by making it unusable and increasing further the reliance on public nodes. Public nodes compromise privacy because they collect offchain metadata about transactions.
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