How does Monero's privacy work?

Introduction

Monero is a privacy-focused cryptocurrency designed so that transactions do not publicly reveal the sender, the recipient, or the amount transferred. Unlike transparent blockchains, Monero makes privacy the default for all users, not an optional feature.

This article explains conceptually how Monero’s privacy works at a high level. If you want a deeper technical breakdown of Monero’s internals, see How Monero works (details in plain English).

The three privacy problems Monero solves

On a public blockchain, a transaction normally reveals three things: who sent the funds, who received them, and how much was transferred. Monero addresses each of these directly.

• Sender privacy: Who actually authorized the transaction
• Recipient privacy: Who controls the receiving address
• Amount privacy: How much value moved

Sender privacy: ring signatures

Monero uses ring signatures to hide which output is being spent. When you spend Monero, your real output is grouped with decoy outputs from the blockchain. Observers can see that one of the outputs was spent, but not which one.

This provides plausible deniability: every transaction input looks similar to many others. Over time, this prevents reliable transaction graph analysis.

Recipient privacy: stealth addresses

To hide the recipient, Monero uses stealth addresses. The address published by the recipient is never written directly to the blockchain.

Instead, each transaction generates a one-time destination address. Only the recipient, using their private view key, can detect and spend outputs sent to them. External observers cannot link outputs to a known address.

Amount privacy: RingCT

Transaction amounts in Monero are hidden using Ring Confidential Transactions (RingCT). Amounts are cryptographically masked while still allowing the network to verify that no new coins were created.

This prevents balance tracking and stops observers from correlating transactions based on value patterns.

Network-layer privacy: Dandelion++

In addition to on-chain privacy, Monero improves transaction broadcast privacy using Dandelion++. This reduces the risk that an observer can link a transaction to the IP address that first broadcast it.

Transactions are initially relayed through a randomized path before being widely broadcast, making network-level surveillance more difficult.

Why Monero’s privacy is different

Monero’s key design choice is that privacy is mandatory. Because all transactions use the same privacy mechanisms, there is no “opt-in” subset that stands out.

This uniformity is critical: privacy systems work best when everyone uses them by default.

Common misconceptions

• “Monero transactions are completely invisible.”
  Transactions are visible on the blockchain, but sensitive details are cryptographically hidden.
• “Privacy is optional.”
  In Monero, privacy is always on and cannot be disabled.
• “Monero relies on trust.”
  Verification is still fully cryptographic and decentralized.