Erik Weijers, 15 days ago

Vitalik proposes stealth addresses on Ethereum

Contrary to uninformed popular belief, most crypto transactions are not secret and private, but instead transparent. To solve for this, all kinds of on-chain privacy tools are being developed. Ethereum co-founder Vitalik Buterin just proposed a new one: stealth addresses for Ethereum. 

What is the problem with privacy and Ethereum? Vitalik:

"In practice, using the entire suite of Ethereum applications involves making a significant portion of your life public for anyone to see and analyze." 

Indeed, once someone can tie your Ether wallet address to you, they can see your transaction history. Imagine your financial history tied to your publicly visible Twitter account. Not very attractive. Enter stealth addresses: they act as a proxy for your wallet address. Use cases are countless. Some examples that come to mind are donations or even an everyday use case like salary payouts in crypto. 

Current privacy solutions

As mentioned, stealth addresses are by no means the first solution. But there are some limitations to prior solutions. 

Firstly, most solutions have focused on mixing or 'tumbling' your own coins. People use tumblers for 'self-transfers': giving your own coins a fresh start that is not visibly tied to the past. That's only a fraction of use cases. 

Secondly, most current privacy solutions narrowed down their scope to ETH or Ethereum-based coins: things like NFT's and ENS names can't be mixed/tumbled.

As if using a fresh address for each transaction

Stealth addresses are generated to transact in a private way. To access these private transactions, one must use a special key called the "spending key.” This key allows a user to generate a stealth meta-address (SMA), which is a public address anyone can see. It's like a master address used to create unlimited stealth addresses. 

Without going into the complex technical details, the bottom line is that stealth addresses give users the same privacy properties as if they generated a fresh address for each transaction. Of course, for stealth addresses to become a success, the user interface would need to be seamless: the user shouldn't be aware of the cryptographic shenanigans under the hood. The only thing the user cares about is that transactions are private and easy to conduct.

Conclusion

Vitalik Buterin again proves that he keeps putting in the fundamental and cutting-edge conceptual work to drive the Ethereum space forward to more applicable to everyday use cases. Also, he keeps coming up with names that stick! His previous invention also had a nice ring to it: 'soulbound tokens', the NFT's that can't be traded and which are a solution to problems with online identity.

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