Vitalik Buterin, one of the Ethereum founders has suggested a way to improve the privacy of transactions made on Ethereum.
According to a blogpost from Buterin, a stealth address system will improve privacy, which remains one of the biggest challenges in the blockchain’s ecosystem. The new update is based on a tool that would enable any wallet from the blockchain to create public addresses called stealth addresses, which are hidden via cryptography. These addresses would be used to obtain funds privately and would require a spending key, a special code used for accessing those funds.
According to Buterin, stealth addresses provide privacy properties similar to a fresh address generated for each transaction. The suggested hidden addresses represent a method of increasing privacy on the blockchain by generating one-of-a-kind, incognito addresses each time a transaction is required.
When a user performs a transaction, a fresh stealth address can be generated to prevent anyone from tracking it or establishing who sent it or who received it. Stealth addresses would enable all users to keep their history of transactions private. Ethereum’s co-founder also proposed that ZK-SNARKs or proofs with zero knowledge be used to increase the system’s privacy and prevent links from being made to the stealth addresses.
Transactions are public on Ethereum by default, leading some users to have concerns about the blockchain’s privacy. Using Tornado Cash or other crypto mixers represents a way to increase privacy for transactions on Ethereum. However, regulators often don’t approve of these methods, as was made evident following Tornado Cash’s sanctions received from the US Treasury Department’s OFAC.