Last Updated on January 23, 2023 by Bitfinsider

Vitalik Buterin, co-founder of the Ethereum blockchain, has suggested a stealth address system to increase transactional anonymity on the Ethereum blockchain. Vitalik Buterin noted in a research blog that privacy is “one of the major outstanding difficulties in the Ethereum ecosystem.”

The stealth address system is built on a technique that allows any Ethereum wallet to produce cryptographically disguised public addresses known as “stealth addresses” in order to accept cash privately and access them using a specific code known as a “spending key.”

According to Vitalik Buterin, stealth addresses provide the same level of anonymity as establishing a new address for each transaction. These suggested stealth addresses are a method of increasing Ethereum privacy by generating new, anonymous addresses for each transaction.

Each time a transaction is made, a new stealth address is generated, making it impossible for anybody to follow the transactions or discover who is sending and receiving assets. As a result, each user’s transactional history may be kept secret. Buterin also proposed employing ZK-SNARKs, which stand for zero-knowledge proofs, to improve system privacy and make it impossible to link stealth addresses.

Transactions on Ethereum are public by default, which might be a privacy risk. There are methods for achieving network transactional privacy, such as employing bitcoin mixers like Tornado Cash. Such procedures, however, may generate regulatory concerns. Tornado Cash was sanctioned by the United States Treasury Department’s Office of Foreign Assets Control (OFAC) for potentially illegal conduct.