Ring Signatures: Enhancing Transaction Privacy in Crypto

Ring Signature is a cryptographic digital signature that hides the identities of the two parties to a transaction.

What is Ring Signature?

Ring signatures are a cryptographic tool to help ensure user anonymity. This technology is used in privacy coins such as Monero, which makes it much harder for outsiders to figure out the sender and receiver in a transaction.

Suppose Christina wants to send 50 XMR to Nicky. She will be given a one-time key for the transaction. To ensure that her identity is not revealed, several people who have participated in past transactions will be randomly selected as decoys. This means that to a casual observer, any one of them could be implicated. In the future, Christina’s public key could be used as bait in other ring signatures.

Recently, several government agencies have raised concerns about Monero and similar digital assets, fearing that these altcoins could be used for tax evasion, money laundering or terrorist financing. Moreover, the U.S. has made a deliberate effort to hack Monero’s systems to ensure that the true author of the ring signature can be identified. The IRS has spent hundreds of thousands of dollars trying to find a workaround.