A cryptographic digital signature that obfuscates the identities of two parties within a transaction.
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What Is a Ring Signature?
Ring signatures are a cryptographic tool that helps to deliver anonymity to users. This technology is used by privacy coins, such as Monero, making it difficult for outsiders to identify the sender and recipient in a transaction.
Let’s imagine that Tracy wants to send 50 XMR to Nicky. She would be given a one-time spend key. To ensure that her identity can be withheld, a number of people involved in past transactions would be selected at random in order to serve as decoys. This means that, to a casual observer, any one of them could be involved. In the future, Tracy’s public key may serve as a decoy in other ring signatures.
Over recent years, several government agencies have expressed concern about Monero and similar digital assets amid concerns that these altcoins could be used for tax evasion and money laundering or to finance terrorism.
Indeed, the US has made a concerted effort to crack Monero’s systems to ensure that the true participant in a ring signature can be identified. The IRS has spent hundreds of thousands of dollars to find a workaround.
Does Bitcoin Use Ring Signatures?
Yes, Bitcoin uses ring signatures to protect user privacy. They work by allowing a transaction to be signed by multiple people, making it virtually impossible to determine the transaction’s actual signer.
Users who want to send a transaction create a digital signature using their private key. This signature is then combined with the public keys of other users in a process called “ringing”. The result is a single signature that doesn’t reveal which participants signed the transaction.
The transaction is then broadcast to the Bitcoin network, where it is verified by miners. The miners check the validity of the signature and the amount of Bitcoin being sent. The transaction is added to the blockchain if the signature is valid and the amount is correct.
By using ring signatures, Bitcoin ensures that the identity of the sender of a transaction is kept private. This allows users to make transactions without fear of having their identity revealed.
Does Ethereum Use Ring Signatures?
Ethereum also uses ring signatures to protect the privacy of its users. Ethereum transactions are signed using a similar process as Bitcoin. A user creates a digital signature using their private key and then combines it with the public keys of other users in a ring. The result is a single signature that is then broadcast to the Ethereum network. Validators check the validity of the signature and the amount of ether being sent before adding the transaction to the blockchain. By using ring signatures, Ethereum ensures that the sender of a transaction is kept anonymous. This helps protect users from unwanted attention and keeps their identity safe.
Does Monero Use Ring Signatures?
Monero utilizes ring signatures as a means of obscuring the true originator of a transaction. It uses a concept known as “Ring Confidential Transactions” (RingCT), which further obfuscates the amount and destination of a transaction. This process works by encrypting the amounts and destinations of a transaction using a combination of public keys and then mixing the output of multiple transactions to further hide the true originator of the transaction.
Ring Signatures and RingCT are two of the key components of Monero’s privacy and anonymity model.