Privacy tools have always been heralded as a key to financial freedom in the cryptocurrency industry. In the Ethereum ecosystem, discussions on the subject have mainly revolved around ETH transfers and conventional ERC20 tokens to preserve privacy.
In an attempt to improve the state of privacy on the web, its co-founder Vitalik Buterin has proposed a system of stealth addresses.
“Last remaining challenge for Ethereum”
The concept of Stealth addresses using elliptic curve cryptography was first introduced in the Bitcoin context by BTC lead developer Peter Todd in 2014 to hide transaction details. in the last blog Post, Buterin acknowledged that privacy is “one of the biggest remaining challenges in the Ethereum ecosystem,” while also highlighting the need for a privacy solution because “anything that goes on a public blockchain is public.”
Hidden addresses, on the other hand, can help in this regard. Buterin noted that such a mechanism will allow the Ethereum wallet to generate hidden addresses to receive funds privately and access them using a special code called a “spend key.”
Proposed stealth addresses can be generated by either party, but can only be controlled by one of them. The user receiving the assets generates the stealth address and secretly holds a spend key, which will then be used to generate a stealth meta-address that can be passed to the sender.
This allows the sender to perform a calculation on this meta address to initiate a stealth address belonging to the receiver. The sender can send any assets they want to send to this address, while the receiver will have full control. Along with the transfer, the sender posts some additional cryptographic data on the chain that confirms that the stealth address belongs to the receiver.
Buterin claimed that stealth addresses provide the same privacy properties as a user generating a new address for each transaction.
stealth steering vs. Tornado Cash
Various methods have been employed in recent years to obfuscate transactional details. This includes Tornado Cash, which was recently sanctioned by OFAC. Buterin, for his part, said the proposed stealth address concept provides a different kind of privacy than the popular Ethereum-based coin mixer. He explained,
“Tornado Cash can hide transfers of major fungible assets like ETH or major ERC20 (although it’s more useful for sending yourself privately), but it’s very weak at adding privacy to obscure ERC20 transfers, and can’t add privacy to NFT transfers. absolutely.”
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