Vitalik Buterin, creator of Ethereum
Vitalik Buterin proposed a system of “stealth addresses” to increase transactional privacy on Ethereum, which would allow users to generate encrypted and obfuscated public addresses to receive funds privately.
On his blog, the creator and co-founder of Ethereum wrote that privacy is “one of the biggest challenges remaining in the Ethereum ecosystem” as the standard is that “everything on a public blockchain is public.”
The stealth addresses system is based on a mechanism that would allow any Ethereum wallet to generate encrypted public addresses to receive funds privately and access them using a special code, called a “spending key,” or “spending key”. ” in English.
Buterin explained that these addresses give the same privacy properties as someone generating a new address for every transaction. That is, each time someone makes a transaction, they can generate a new hidden address so that it is difficult for anyone else to trace the transactions or determine who is sending and receiving assets. This means that each user’s transactional history can remain private.
This is the same system used by Monero, for example, and was explained in detail in the publication “How is Monero able to provide privacy and freedom?” We can, of course, consider that the stealth addresses in Ethereum will not be implemented in the same way, as the currencies work in different ways, but the concept remains the same.
Buterin also suggested using ZK-SNARKs, short for zero-knowledge protocols, to increase system privacy and make it more difficult for these addresses to connect.
There are ways to achieve transactional privacy on the network, such as the use of scramblers. However, these methods may raise some regulatory issues, as was the case with Tornado Cash last year.
On Ethereum, transactions are public by default, which can pose a privacy concern. In practice, as Buterin described it, “Utilizing the full suite of Ethereum applications involves making a significant part of your life public for anyone to see and analyze.”