Jollier
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In this article, we will go over the main points of using Monero and analyze the most common user errors that lead to deanonymization of transactions.
First, you need to understand what Monero is. I think almost all of you are more or less familiar with this miracle of modern technology. I will not focus on trivial things and will try to be as brief and concise as possible.
Monero (XMR) is one of the most famous cryptocurrencies focused on the privacy and anonymity of users. Unlike Bitcoin, where all transactions are public and easily tracked, Monero offers a truly anonymous method of transferring and carrying out transactions. The project is actively used by those who value financial privacy and anonymity - from ordinary users to cybercriminals.
What is Monero?
Monero is a decentralized open-source cryptocurrency launched in 2014 as a fork of the Bytecoin project. It is based on the CryptoNote algorithm, which provides a high level of anonymity at the protocol level. Unlike most other blockchain projects, all transactions in Monero are private and untraceable by default.
Key Features of Monero.
1. Ring Signatures
Each transaction in Monero is signed not by one user, but by a group of possible participants, where the real sender is hidden among the "impurities" - other historical outputs. This makes it impossible to clearly determine which of them actually spent the coins.
2. Stealth Addresses
Even if you know the recipient's public address, you will not see it on the blockchain. Instead, a unique one-time address is generated that cannot be linked to the real recipient.
3. Hidden Amount (RingCT)
Since 2017, Monero has been using Ring Confidential Transactions technology, which hides the transfer amount. Despite this, the system can still mathematically verify the correctness of the transaction - whether new coins are being created and whether the balance is maintained.
Subtleties of work and myths
It is important to wait before spending coins.
If a user spends received XMR immediately after receiving, an observer can suspect which output was real based on the timestamps. It is recommended to wait at least 3-4 hours before spending funds - this allows the system to pick up more "natural" impurities and increase anonymity.
The balance is not displayed immediately
When you connect a Monero wallet, it must scan the entire blockchain to identify transactions addressed to you. This takes time, but ensures thatonly you know your funds — even wallet developers don’t have access to this data.
Tor and I2P for additional protection
Although Monero is already anonymous, to increase online privacy, users can run wallets or nodes through the anonymous Tor or I2P networks to hide IP addresses and the source of connections.
Mistakes when using Monero and how to decompromise privacy
1. Spending received coins immediately after receiving
Why it’s dangerous:
If you received XMR and spent it a couple of minutes later, then among all the “impurities” (inputs in the ring signature), only your output will be new. An analyst can guess that it is the real one.
Example:
Solution: wait at least 2-3 hours before spending fresh coins, or better yet at least 24 hours
2. Using a public IP or a regular RPC node
Why it's dangerous:
If you connect to a remote node, especially someone else's, it can log your requests : what outputs you scan, what your IP is, when you sync your wallet, and so on.
The real risk:
Solution:
3. Using Monero with a Centralized Exchange
Why it undermines privacy:
Example:
Solution:
4. Reusing the same wallet
What's wrong:
Monero uses one-time outputs, but if you accept money to the same main address, especially from exchanges, darknet, etc., you can establish a correlation.
Example:
Solution:
5. Compromised Wallets/Software
What can go wrong:
Solution:
1. AlphaBay & Hansa
2. Monero used in ransomware (eg Sodinokibi/REvil)
Conclusion: How to Use Monero Safely
If you think this is all far-fetched and unnecessary, I recommend watching the recording of the Chainanalysis employee conference. In their presentation, they showed how they were able to track a Colombian drug lord using a transaction on the Monero network.
First, you need to understand what Monero is. I think almost all of you are more or less familiar with this miracle of modern technology. I will not focus on trivial things and will try to be as brief and concise as possible.
Monero (XMR) is one of the most famous cryptocurrencies focused on the privacy and anonymity of users. Unlike Bitcoin, where all transactions are public and easily tracked, Monero offers a truly anonymous method of transferring and carrying out transactions. The project is actively used by those who value financial privacy and anonymity - from ordinary users to cybercriminals.
What is Monero?
Monero is a decentralized open-source cryptocurrency launched in 2014 as a fork of the Bytecoin project. It is based on the CryptoNote algorithm, which provides a high level of anonymity at the protocol level. Unlike most other blockchain projects, all transactions in Monero are private and untraceable by default.
Key Features of Monero.
1. Ring Signatures
Each transaction in Monero is signed not by one user, but by a group of possible participants, where the real sender is hidden among the "impurities" - other historical outputs. This makes it impossible to clearly determine which of them actually spent the coins.
2. Stealth Addresses
Even if you know the recipient's public address, you will not see it on the blockchain. Instead, a unique one-time address is generated that cannot be linked to the real recipient.
3. Hidden Amount (RingCT)
Since 2017, Monero has been using Ring Confidential Transactions technology, which hides the transfer amount. Despite this, the system can still mathematically verify the correctness of the transaction - whether new coins are being created and whether the balance is maintained.
Subtleties of work and myths
It is important to wait before spending coins.
If a user spends received XMR immediately after receiving, an observer can suspect which output was real based on the timestamps. It is recommended to wait at least 3-4 hours before spending funds - this allows the system to pick up more "natural" impurities and increase anonymity.
The balance is not displayed immediately
When you connect a Monero wallet, it must scan the entire blockchain to identify transactions addressed to you. This takes time, but ensures thatonly you know your funds — even wallet developers don’t have access to this data.
Tor and I2P for additional protection
Although Monero is already anonymous, to increase online privacy, users can run wallets or nodes through the anonymous Tor or I2P networks to hide IP addresses and the source of connections.
Mistakes when using Monero and how to decompromise privacy
1. Spending received coins immediately after receiving
Why it’s dangerous:
If you received XMR and spent it a couple of minutes later, then among all the “impurities” (inputs in the ring signature), only your output will be new. An analyst can guess that it is the real one.
Example:
- You received 5 XMR at 13:00 and paid for VPN at 13:03.
- In the blockchain you can see: one input is fresh, the rest are old.
- Conclusion: 5 XMR spent in 3 minutes is almost certainly you.
Solution: wait at least 2-3 hours before spending fresh coins, or better yet at least 24 hours
2. Using a public IP or a regular RPC node
Why it's dangerous:
If you connect to a remote node, especially someone else's, it can log your requests : what outputs you scan, what your IP is, when you sync your wallet, and so on.
The real risk:
- An attacker (or intelligence agency) launches a "friendly RPC node".
- You connect to it and scan the blockchain with your private view key.
- He notices that only one user is interested in a particular transaction/output.
- The node sees your IP address and "Voila!" - deanonymization, especially if you often connect to the same node.
Solution:
- Use your own full node or
- Connect to Monero via Tor/I2P, even if you're using someone else's node.
3. Using Monero with a Centralized Exchange
Why it undermines privacy:
- The exchange knows your account, your identity (if KYC), and can log the withdrawal address.
- Even if the address is hidden, the fact of who you withdrew and how much can be recorded.
- And if you then use the same coins to buy something on the darknet, the exchange can link these actions.
Example:
- You bought 10 XMR on the Binance exchange and withdrew it to your wallet.
- A couple of hours later I paid for hosting on the darknet.
- If the hosting company is compromised - or you reused the address/device - the connection is almost obvious.
Solution:
- Mix coins through temporary wallets.
- Wait at least a few hours or days before spending.
- Use additional levels of anonymity (VPN, Tor, Whonix, etc.).
4. Reusing the same wallet
What's wrong:
Monero uses one-time outputs, but if you accept money to the same main address, especially from exchanges, darknet, etc., you can establish a correlation.
Example:
- The same person gets XMR from Binance, then from the forum, then from the darknet.
- All payments are sent to the same public Monero address.
- Even if these are stealth addresses, the view key (or behavioral analysis) allows you to tie everything together.
Solution:
- Create separate wallets for each use case.
- Don't keep everything in one place.
5. Compromised Wallets/Software
What can go wrong:
- Downloaded "light Monero wallet" from the forum?
- It might have a backdoor.
- It may be sending your private key or addresses to a hidden telemetry API.
Solution:
- Download Monero wallets only from the official website.
- Check SHA256 hashes, PGP signatures.
1. AlphaBay & Hansa
- After the darknet sites were shut down, data was obtained on how users stored and spent XMR.
- It turned out that many were using the same devices, IPs, and repeating patterns, which helped link XMR transactions to BTC activity.
2. Monero used in ransomware (eg Sodinokibi/REvil)
- The extortionists switched to Monero, but sometimes demanded payment in XMR and BTC - for the convenience of the victim.
- Analysts compared the time of funds being deposited into an account and when they were spent, and this sometimes helped to link Monero addresses to BTC addresses.
Conclusion: How to Use Monero Safely
- Wait a while before spending XMR.
- Avoid centralized RPC nodes without Tor/I2P.
- Do not use the same wallet more than once.
- Isolate the environment: separate device, Tor, VPN, Whonix.
- Check each wallet before installation.
If you think this is all far-fetched and unnecessary, I recommend watching the recording of the Chainanalysis employee conference. In their presentation, they showed how they were able to track a Colombian drug lord using a transaction on the Monero network.
