Privacy on the Ethereum blockchain remains a major challenge. Any transaction or information on a public blockchain is public to everyone, which means that a large amount of personal information can be accessed by anyone with enough knowledge to do so. Ethereum co-founder Vitalik Buterin has proposed a new system to improve confidentiality on the network: stealth or confidential addresses.
Stealth addresses are based on a mechanism that allows anyone to generate a generic public address to receive tokens and a spending key to access and recover funds. This offers the same level of privacy as if the individual were to generate a new address for each transaction, making tracing transaction history very difficult.
Currently, there are already solutions to achieve a high level of privacy, such as cryptocurrency mixers such as Tornado Cash. However, its use has been difficult due to problems the government sees in confidentiality. In August 2022, Tornado Cash was sanctioned by the US Office of Foreign Assets Control (OFAC), which has led Buterin to propose the implementation of stealth addresses natively on Ethereum or within wallets that allow interaction with the network.
The US Department of the Treasury prohibited the use of Tornado Cash since according to the authorities, this tool is only for the purpose of laundering funds. The authorities also accused this cryptocurrency mixer of witnessing large capital leaks, after being used by cybercriminals such as Lazarus Group.
In the press release, the Treasury states that Tornado Cash has failed to impose effective controls to prevent funds from being laundered for malicious cyber actors. As a result of the sanction, all operations in Tornado Cash from the US are blocked and those who intend to continue using the platform must obtain an OFAC license.
Vitalik blindly trusts his proposal
Buterin believes that privacy is necessary. This new functionality, in the words of the Ethereum co-founder, could provide a significant boost in terms of privacy for Ethereum users, but requires work on the wallet side to support it. It is important to mention that the implementation of this system could have an impact on other anonymity-oriented cryptocurrencies such as Monero or Zcash, and how it will be received by regulators will be something to watch closely."
Blockchain privacy remains a major challenge and Buterin's proposal is a step in the right direction to improve it. Stealth or sensitive addresses offer a solution to protect privacy on the Ethereum blockchain, but its implementation and its impact on the crypto sphere have yet to be evaluated.
A 2023 full of hope for Ethereum
According to Buterin, this system would allow users to generate a generic public address to receive tokens and a spending key to access and recover funds, which would increase the level of confidentiality in the network. Although this system presents some long-term problems, such as the difficulty to recover funds in case of loss, Vitalik believes that they can be solved in the future by using zero-knowledge proof.
This move could have a significant impact on the growth of Ethereum. By improving privacy on the blockchain, it can attract more users and developers who are looking for a higher level of security and privacy in their transactions.
It is clear that Vitalik has many plans for Ethereum this 2023 and this is also added to the list of wishes and development of the ecosystem.
Will he be able to implement what he wants or will they remain in simple promises?