Ring signatures are a technically complicated technology but are extremely promising and help to achieve token anonymization and to identify applications. Essentially, a ring signature is something that proves that the signer has a private key corresponding to one of a specific set of public keys, but does not reveal which one it is. It is composed of the actual signer, who is then combined with the nonsigner to form a ring. The actual signer and nonsigner in this ring are both considered to be equal and valid. The actual signer is a one-time use key thing that corresponds with an output being sent from the sender's wallet. The nonsigners are outputs from past transactions that are drawn from the blockchain. These past transaction outputs function as a decoy in the ring signature transaction by forming part of the input of a transaction. All the inputs appear equally as likely to be the output being spent in a transaction from outside the ring.

For example, if Dan wishes to send one Monero to Melissa with a ring size value of five, one of the five inputs will be pulled from Dan's wallet, which will then be added to the ring signature transaction. The other four inputs are past transaction outputs that are pulled from the blockchain. These four inputs are decoys and, when fused with the input from Dan's wallet, form a group of five possible signers, making a ring of those five. A third party would not be able to determine which input was actually signed by Dan's one-time use key. However, with the use of a key image, the network is able to verify that the asset or coin being transferred to Melissa has not been spent before. Monero is the best example that uses the ring signature mechanism.