Ethereum Could Introduce “Stealth” Addresses
Vitalik Buterin recently proposed a "stealth address system" to improve the privacy of transactions on the Ethereum blockchain.
In a blog post, Buterin wrote that privacy is “one of the biggest remaining challenges in the Ethereum ecosystem.”
The stealth address system is based on a mechanism that would allow any wallet in Ethereum to generate cryptographically obfuscated public addresses to receive funds privately and access them using a special code called a spending key.
Ethereum’s co-founder pointed out that stealth addresses give the same privacy properties as someone who generates a new address for each transaction. These addresses are a way to increase privacy in Ethereum by creating unique, anonymous addresses for each transaction.
Each time someone performs a transaction, they can generate a new hidden address so that it is difficult to track transactions or determine who is sending and receiving assets. This means that each user’s transaction history can remain private. Buterin also suggested using ZK-SNARKs, short for “zero-knowledge proofs” to increase the privacy of the system and make it harder to link hidden addresses.
In Ethereum, transactions are public by default, which can raise privacy concerns. There are ways to achieve transaction privacy on the web, such as using cryptocurrency mixers like Tornado Cash. However, such methods may raise regulatory issues. This was seen with Tornado Cash, which was sanctioned by the US Treasury Department’s Office of Foreign Assets Control (OFAC) for potentially illegal activities.