Check out how stealth addresses can help Ethereum improve its network and become even more attractive
It is certain that Ethereum (ETH) will experience a year of notable achievements in 2023. The prominent altcoin is projected to undergo a hard fork known as Shanghai, which will facilitate staking of ETH and increase liquidity for the digital currency. Furthermore, the implementation of The Scourge phase, addressing censorship within Ethereum’s network, is also expected to occur this year.
Vitalik Buterin, co-founder of Ethereum, has put forth additional proposals for advancements to the smart contract platform. Among his suggestions is the implementation of a stealth address system, which aims to enhance transactional privacy on the cryptocurrency network. Buterin has noted that privacy is one of the key challenges facing the ETH blockchain, and this proposal is one solution to address it.
Learn what stealth address is
Stealth addresses are a method employed by certain cryptocurrencies, such as Monero, to conceal the recipient address of a transaction. This enables users to conduct anonymous transfers, as the information is encrypted in a way that precludes the traceability of the source or destination of the digital assets involved.
When conducting a transaction with a stealth address, the sender generates a singular public address for that specific transaction. This ensures that even if an individual gains access to the public address utilized in the transaction, he or she will not be able to discern any other transfers associated with that address or link it to other addresses.
The implementation of stealth addresses enables privacy through the utilization of signature keys and deposit keys, which enables the recipient of the transaction to decrypt and access the digital assets being transferred. As a result, with this technology, any Ethereum wallet can generate a cryptographically obscured public address and receive funds confidentially. Accessing these funds would only require the use of a unique code, known as a spending key.
Another technology proposed by Buterin to enhance privacy on Ethereum is the utilization of ZK-SNARKs. This technology allows parties to confirm the existence of specific information without disclosing the information itself. ZK-SNARKs are employed to safeguard the privacy and security of transactions while maintaining the anonymity of the parties involved in the transfer of digital assets.
Importance of privacy on cryptocurrency market
The transactions performed on the Ethereum network are public, meaning that any individual with the wallet address can utilize Etherscan to view the transactions sent and received by that address, as well as the wallet’s current balance. This transparency may raise concerns about privacy, as personal financial information is accessible to the public.
To safeguard the security and privacy of cryptocurrency investors, it is imperative that they can maintain the anonymity of their personal transactions, and the amounts that they wish to keep private. Like how one would protect the privacy of the funds in their bank account, it is important to maintain the confidentiality of transactions and balances within a crypto wallet.
By incorporating anonymity features, Ethereum can provide its users with the ability to keep their transactions and personal information confidential. Additionally, privacy can also prevent discrimination based on transactions, such as the tracking of individuals who make transfers with specific assets or with certain individuals.
Furthermore, the implementation of privacy measures can also protect Ethereum users from fraud and cyber-attacks, as criminals would face difficulty in identifying and accessing sensitive transactions and information.