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Vitalik Buterin Uncovers the “Missing Link” for Creating Transaction Privacy on Ethereum

Vitalik Buterin Uncovers the

Ethereum co-founder Vitalik Buterin recently published a guideline for bringing privacy to Ethereum network transactions. 

The 23-year-old billionaire broke down the idea of stealth addresses in a detailed blog post that was tweeted on Friday, adding that Ethereum is working to develop the idea as a solution to the “last remaining challenge” for the blockchain.

Because public blockchains are transparent, all transactions are easily viewable and traceable by default. “Anything that goes onto a public blockchain is public… and as such,” using the entire Ethereum suite entails making a significant portion of your life public for anyone to see and analyse.

Explaining the Stealth Address System

A stealth address, according to Vitalik, is one generated by either party in a transaction but controlled by only one party. To conceal transactions from public scrutiny, a stealth address will rely on the creation of a secret key comprised of elements from both party addresses. 

According to Vitalik, the central idea is to have the transaction registered on the blockchain while the receiver’s knowledge is completely unknown, using a method similar to OTPs that generate a unique validation code for a user with each transaction. 

The stealth address system will be a significant improvement over the methods used by Tornado Cash, which uses a mixing smart contract to mash multiple transactions together, making tracing difficult. 

Vitalik proposes either cost-intensive Zero Knowledge Proofs, also known as ZK-Snarks or the use of “specialised transaction aggregators” to solve the problem of settling transaction fees, which automatically make the identity and destination of transactions public privacy and regulations

As brilliant as the concept of masking identities and hiding recipients appears to be, experience has shown that it may pose a challenge to regulatory compliance. Last year, key Tornado Cash programmers became targets of government agencies due to the platform’s mechanism, which is thought to encourage bad actors to flee. 

Since switching to proof-of-stake, many analysts have expressed concern about the network’s potential to centralise and become vulnerable to control.

 It remains to be seen how Vitalik will address these issues while advocating for blockchain privacy. ETH has gained over $100 in the last three days and is now worth $1638. The top-tier token gained 0.76% intraday and is still on a roll following the breath of fresh air that has swept across the crypto market.

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