Monero ELI5 (Explain like I'm five) - a super simple explanation of how Monero works

Monero is digital cash. It is a secure, untraceable and resilient digital currency.

People store and spend Monero using a Monero wallet. A wallet shows you a receiving address that you can share so other people can pay you.

When someone pays your address, the blockchain does not record your public address directly. Instead, Monero uses stealth addresses (one-time destinations) so observers cannot easily tell which payments belong to you. When you spend, Monero uses ring signatures to make it hard to determine which coins you actually spent, and RingCT to hide transaction amounts. In plain terms: outsiders can’t reliably learn the sender, the recipient, or the amount.

This is different from Bitcoin, where addresses and amounts are typically visible on a public ledger. Monero’s privacy helps reduce routine “financial surveillance” (for example: letting strangers, competitors, or random websites trivially map your transactions). It also supports fungibility: because transaction history is not transparently traceable, it is harder for third parties to treat some coins as “clean” and others as “tainted” based on past activity.

Monero has no central point of authority. A distributed network of computers keeps a shared record (the blockchain) and checks that new transactions follow the rules.

The computers that add new blocks are called miners. Monero uses proof-of-work, and its current mining algorithm is RandomX, which is designed to run well on general-purpose CPUs to help keep mining more accessible. Miners are rewarded for securing the network, and Monero’s block reward does not drop to zero due to tail emission.

If you want to go deeper than this ELI5, start with How does Monero’s privacy work? and then read A low-level explanation of how Monero works (plain English). For terminology, see the Monero glossary.