What is RingCT and how does it make Monero private?

Question

I hear that RingCT will make Monero more private than Bitcoin. Is there truth to this?

Answer 1

Yes, that is true, but that is not the only thing. The main privacy enhancing features of Monero are:

Ring signatures: make transactions harder to trace by obscuring the output of the true sender in a set of n other outputs on the blockchain, indistinguishable with respect to their amounts, which are all the same (currently), or all hidden (under ringCT, see below). This is already working, with minimum n = 2 enforced on the protocol level, and soon to be raised to 4;

Stealth addresses: obscure the destination of funds (already working);

RingCT: hides transaction amounts as well. This feature is already implemented on the testnet, and will be deployed on the mainnet on January 2017.

Kovri: will be a reimplementation of the I2P protocol which will allow nodes to connect to each other and broadcast transactions without revealing their IP addresses. Currently in the making, and is expected to be ready in about 1 year. (In the mean time, the individual user can protect their IP address using TORSOCKS, although this solution doesn't work for the network as a whole, since nodes behind Tor cannot be found by other nodes but only find them.)

Answer 2

Monero is already more private than Bitcoin. At the present state:

1. You can't tell from where the monero came, thanks to ring signatures.
2. You can't tell to where the monero went, thanks to stealth addresses.

However, on the blockchain, you can see the amounts of monero being moved and RingCT will only close that last gap, making something already private, even more private. It comes with a few other benefits, like reducing transaction sizes.