Monero is about privacy - nobody but you will see ever where you sent Monero from, how much you sent, or who you sent it to. But how is Monero able to do this?
With Bitcoin, Bitcoins are stored in your wallet that has a specific address. The purpose of the blockchain is to record the transactions between all the addresses on the network. These addresses have a receive address, like a mailing address, that is public, and a spending address, like a safe combination, that is private. But with Monero, they go a step further. They have a system similar to Amazon drop boxes. When you receive Monero, a secret amount is deposited to a random box. When you sent your public key, the depositor is able to create a new one-time lock that only you can open with your private key. So when the system is searching for your deposit, it is checking all the random boxes for one that opens with your key. Then, when this is confirmed, the system creates a new one-time key that opens the one-time lock. So, to remain private, the system creates a vast array of possible boxes that are empty and waiting to be filled. Instead of registering these boxes to individuals, the system creates a way that only the right combination will succeed. In addition, even though you might want to tell the depositor to go to a specific box to make the transaction faster, the system requires you to check multiple boxes along the way. This way, the system reports that you visited many boxes, but in reality, each transaction was for 0 Monero because it was an empty box or the combination did not work. This makes the trail much harder to trace.
The system also has a way to protect the depositor. When the depositor is trying to fill in a box, they deposit with a ring signature. Imagine they are going to drop off a check in the mail. They then recruit other people to drop off mail at the same time. But, their mail is just empty envelopes that have 0 Monero. Then when you look back at who dropped off the check, you get multiple people dropping off envelopes at a bunch of boxes at the same time and you don't know which is the real envelope and who dropped it off. In addition, before they dropped it off they verified that one of the envelopes was real, mixed it in, and spread them out.
Overall, Monero utilizes several additional layers to protect the identity and privacy of Monero users. These measures protect senders, receivers, and hodlers alike.
