After the recent hard fork upgrade of its protocol, Monero has seen its transaction fees shrink by approximately 97 percent, dropping from 60 cents to just 2 cents. Crypto analytics firm Coinmetrics shared a tweet confirming the drop in fees and their corresponding reduction in transaction size, falling from 18.5kb pre-fork to 3kb — an 80 percent change.
The upgrade, called “Monero 0.13.0 Beryllium Bullet,” implements "bulletproofs.” First introduced by researchers at Stanford, the cryptographic scheme shrinks the size and cost of transactions specifically for Confidential Transactions.
As stated above, Bulletproofs are a scaling complement to Monero’s Ring Confidential Transactions (RingCT), Monero's main privacy feature, which uses a combination of ring signatures and Confidential Transactions. Ring signatures are cryptographic digital signatures that protect a user's privacy in the input side of a transaction by making it nearly impossible to determine who the actual signer of a transaction is.
To achieve this privacy, each Monero transaction includes additional, extraneous coins (decoys) to mask the exact coin being signed, making it extremely difficult to parse the real coins being sent from the decoys. Before the upgrade, six decoys were added to each Monero transaction--now, ten will be featured in each.
Bolstering the privacy provided by ring signatures, Confidential Transactions let users hide the amount exchanged in a transaction by leveraging a cryptographic trick dubbed the Pedersen commitment.
While the RingCT format makes transactions more private, it also makes the system less scalable than other cryptocurrencies, notably Bitcoin. Bulletproof shrinks the size of the cryptographic proof, which cuts the transaction size drastically. While Monero can't get rid of old transaction data, which is currently above 20 gigabytes and growing — out of a total 60 gigabytes — the recent upgrade ensures the network now requires less storage space for transactions than it used to.