Bitcoin users can engage in transactions, without revealing their identities. Instead of using real-world identities as proofs by banks, Bitcoin makes use of addresses to make transactions possible between wallets. The problem is that transactions are stored in a public ledger. Although there is no need to reveal the real identity of a user to make Bitcoin transactions, it is now widely-known that the Bitcoin blockchain is being data-mined by blockchain-analysis companies, who can de-anonymize Bitcoin transactions with a high-degree of accuracy. Unlike Bitcoin, where there is a need to take extra steps to achieve anonymity, Monero has privacy turned on as a default setting. Untraceable transactions and anonymity are inbuilt into the protocol.
How exactly does Monero achieve privacy?
Monero makes use of three different privacy innovations; namely, ring signatures, Ring Confidential transactions, and stealth addresses.
Ring signatures are capable of hiding information about the sender, using a technique where a group of users sign the transaction. Next is the RingCT, or Ring Confidential Transactions, through which Alice can send Bob some Monero, and the only people that will ever know the amount sent will be Alice and Bob.
Lastly, Monero uses stealth addresses which adds privacy to the receiver of a transaction. A sender is required to initiate a speck key address on behalf of the receiver, then sends the Monero via this address. The receiver uses a 'view key' to display all the incoming transactions. This method ensures that while a transaction is being recorded on the blockchain, it is the sole authority of only the sender and the receiver to determine the actual destination of the payment.
Released in 2014, Monero has a lot to learn from Bitcoin, which has been playing in the market since 2009. The two are very different in terms of market cap, with the former securing the 9th position, compared to the latter. Bitcoin had a long time in building its current position, and it will not give it up so easily. On the other hand, Monero is trying to create an image of 'coin of choice,' for people looking out for privacy in crypto transactions.
It takes around 2-minutes for the average Monero block to be mined, and for transactions to be confirmed.
While Bitcoin has not been able to solve the problem of miner-centralization, due to the usage of ASIC chips, Monero makes use of algorithms that are ASIC resistant; which means that it can be mined, using standard CPUs and GPUs, thus keeping the mining decentralized.