Vitalik Buterin, co-founder of Ethereum, recognizes the privacy issue in the most active smart contracting platform. He is proposing one. Stealth Address System as a possible solution.
Vitalik Buterin’s idea is radically different from what Tornado Cash, a crypto mixer, and similar platforms offer. Instead of being in control of the sender, it will be the receiver in charge. This is extremely important because, in normal settings, the asset receiver wants to keep the transaction, financial or otherwise, private and out of the public eye.
By default, transactions in Ethereum and other public blockchains are traceable. This feature is available to all users, albeit with basic levels of encryption that hide the identities of senders and receivers.
Ethereum price on January 23 | Source: ETHUSDT on KuCoin, Trading View
Vitalik Buterin talks about stealth addresses.
To combat openness in Ethereum and maintain the privacy of asset recipients, stealth addresses will be created by the sender or receiver. However, the recipient will be in charge. At any point in the transfer cycle, the receiver will be free to generate a spending key that it can use to generate a “stealth meta-address”.
This address is then sent to the sender, who performs a small calculation and creates a stealth address that belongs to the recipient. If the receiver sends assets to this address, he will always be in charge.
Additional cryptographic data will be published on-chain to verify that the recipient controls the stealth address. A key-blinding mechanism is added to break the public link between sending and receiving addresses due to additional cryptographic data sent on-chain.
Vitalik also proposes the integration of ZK-SNARKs to further promote privacy when using stealth addresses. Combining ZK SNARKs will increase the difficulty of linking transactions, which is an advantage for receiving addresses seeking more privacy.
Different from Tornado Cash
Vitalik explains in his research blog that the Stealth Address System provides a different kind of privacy than TornadoCash offers. The co-founders note that TornadoCash is only suitable for individuals who want to send assets to their own address. Although Tornado Cash is widely popular and used by thousands of people to demystify ETH and ERC-20 transactions, it does not detect receiving assets that comply with the ERC-721 standard, particularly NFTs. could hide
As early as August 2022, the United States Treasury Department banned US citizens from using Mixer. Brian Nelson, Under Secretary of the Treasury for Terrorism and Financial Intelligence; said The creators of TornadoCash failed to add adequate controls to prevent the tool from being used for money laundering.
The Treasury alleges that North Korean hackers and other agents used the tool to launder billions of dollars since 2019.
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