Recently, the co-founder of the layer 2 blockchain Ethereum talked in a blog post about a way that blockchain companies can improve privacy in their client-to-client transactions.
In a blog post, Vitalik Buterin shared an extensive view of how “stealth addresses” could improve the overall safety of blockchain.
The Russian-Born Canadian argues that the new system may provide more privacy for user activities ranging from money and financial transactions to non-functional token transfers, allowing users to create “additional addresses” where they may conduct private transactions using a unique code.
By that methodology, the network generates unique addresses that are unrelated to the user’s public address.
Buterin’s idea came as a solution when regulators tightened their hands on transactions on a number of blockchain-based platforms, including Ethereum, the world’s most-used network.
Criticism of “Stealth Addresses”
Buterin’s idea is not widely welcomed by the entire crypto space. In theory, the original design of blockchain transactions is that they are public and can be viewed by anyone on the network.
This transparency is one of the key features of blockchain technology that allows for trustless transactions and decentralization.
If blockchain transactions were made private, it would likely decrease the transparency and accountability of the system.
This could make it more difficult for users to verify the authenticity of transactions and could potentially open the door to fraudulent activity.
Additionally, private transactions could also make it harder for regulators and law enforcement agencies to track illegal activities such as money laundering and terrorist financing. So it is safe to assume that local governments would not see the new idea with a lot of optimism.
How Polygon’s Zero-Knowledge Proof Can Also Improve Blockchain Privacy
Right now, privacy-enhancing features are being developed and implemented in some blockchain networks, such as zero-knowledge proofs, most famously in Polygon, the layer-2 blockchain built on top of Ethereum.
Zero-knowledge proofs (ZKPs) are a method of verifying information without revealing the actual content of personal data to the public. In the context of blockchain, ZKPs can be used to enhance privacy by allowing users to prove that a transaction is valid without revealing any details about the transaction itself. This can be done by allowing the prover to generate a proof that verifies certain properties of the transaction (such as the balance of the sender’s account) without revealing any other information.
By using ZKPs, blockchain networks can maintain the transparency and security of the system while also providing users with more privacy and control over their personal information. This could potentially increase adoption of blockchain technology in various industries that require privacy, such as finance and healthcare.
