Let us take a quick dive into the three major technologies that obfuscate information on the blockchain. In the simplest sense, ring signatures, RingCT, and stealth addresses protect the sender, receiver, and amount, respectively.
Think first about giving money to someone in real life. If you owe someone $5, you simply hand them a $5 bill. Pretty simple. With Monero, everything works the same way, except instead of a bill with a set denomination, you give them an output with a loaded amount on it. This output is now theirs to spend in whatever way they want.
To protect your privacy when sending money, Monero makes it appear as if several outputs were used to send money to someone, but only one of these is actually spent. This is a ring signature. You select several other “decoy” outputs that you do not control from other transactions and make it seem as if you are also spending those. Outside observers and receivers have no idea what money is actually used in the transaction.
In the early days of Monero, the values of these outputs were known (eg: 1 XMR). To hide this information, Monero now uses ring confidential transactions (RingCT). When sending money, you cryptographically commit to spending a certain value without others knowing what this value is.
Finally, instead of sending money directly to an address as is done with Bitcoin and most other cryptocurrencies, outputs are sent to one-time stealth addresses. Think of these as one-time safety deposit boxes. Only the receiver can open the box to see what is inside of it and spend it. Of course, many people will use this output as a decoy in their ring signatures.
