Monero is secure, untraceable, electronic cash. It is open-source, decentralized, and freely accessible to all. In this video, we will focus on ring signatures. In our last video, we illustrated how Monero stealth addresses prevent outputs from being associated with a recipient’s public address. This is accomplished by the use of one-time destination public keys. One-time public keys are only spendable by the recipient, and only the recipient is able to detect their designated output on the blockchain. Since all outputs are unlinkable, the privacy of the recipient is ensured. On the input side of the transaction, the sender’s privacy is protected with the use of ring signatures. A ring signature is a type of digital signature in which a group of possible signers are fused together to produce a distinctive signature that authorizes a transaction. This is analogous to the signing of a check from a joint bank account, but with the actual signer remaining unknown. The digital signature is made up of the actual signer combined with non-signers to form a “ring,” where all members are equal and valid. The actual signer is a one-time spend key that corresponds with an output being spent from the sender’s wallet. The non-signers are past transaction outputs pulled from the blockchain, which act as decoys. These outputs together make up the inputs of a transaction. To a third party, all of the inputs appear equally likely to be the output being spent in the transaction. This feature helps the sender hide the origin of the transaction, by making all inputs indistinguishable from each other. You may now be asking yourself, “if there is no way for a third party to verify which output is being spent, what would prevent someone from spending the same output twice?” This potential issue is addressed by the use of “key images.” A key image is a cryptographic key derived from an output being spent and is made part of every ring signature transaction. There can exist only one key image for each output on the blockchain, yet due to its cryptographic properties, it is not possible to determine which output created which key image. A list of all used key images are maintained in the blockchain, enabling miners to verify that no outputs are spent twice. Let’s go through an example to see how all this works. Alice wants to send Monero to Bob with a “ringsize” value of five. One of the five inputs will come from Alice’s wallet, which will be consumed in the transaction. The other four inputs are arbitrarily picked from the blockchain, and are used as decoys. This forms a group of five possible signers, where all ring members are plausibly the actual signer of the transaction. To an outside observer, including to Bob himself, it’s not clear which input was truly signed by Alice’s one-time spend key. However, with the key image, the network is able to securely confirm that the Monero being transferred to Bob has not been spent before. As you can see, by using ring signatures, Monero protects the privacy of the sender by obscuring the source of inputs, and in doing so, ensures that the origin of any monero remains untraceable. To increase the privacy of both parties, Ring Confidential Transactions, commonly referred to as RingCT, were implemented to hide transaction amounts. RingCT brings some improvement to the ring signature protocol. We’ll talk more about RingCT in our next video. If you are interested in what makes Monero the leading privacy-centric cryptocurrency, please check out the other videos or visit getmonero.org.