Ethereum (ETH) May Soon Gain Privacy Features

It is certain that Ethereum (ETH) will have a year of notable achievement in 2023. The eminent altcoin is set to undergo a hard fork known as Shanghai, which will facilitate ETH staking and increase the liquidity of the digital currency. . In addition, the implementation of The Scourge phase, dealing with censorship within the Ethereum network, is also expected to take place this year.

Vitalik Buterin, co-founder of Ethereum, offered additional proposals to advance the smart contract platform. Among his suggestions is the implementation of a stealth address system, which aims to improve the privacy of transactions on the cryptocurrency network. Buterin noted that privacy is one of the main challenges facing the ETH blockchain, and this proposal is a solution to address it.

Learn what stealth address is

Stealth addresses are a method employed by some cryptocurrencies, such as Monero, to conceal the address of the recipient of a transaction. This allows users to make transfers anonymously, as the information is encrypted in a way that prevents traceability of the source or destination of the digital assets involved.

When performing a transaction with a stealth address, the sender generates a unique public address for that specific transaction. This ensures that even if an individual gains access to the public address used in the transaction, they will not be able to discern other transfers associated with that address or link it to other addresses.

The implementation of stealth addresses enables confidentiality through the use of signing keys and escrow keys, which allows the recipient of the transaction to decrypt and access the transferred digital assets. As a result, with this technology, any Ethereum wallet can generate a cryptographically obfuscated public address and receive funds confidentially. Accessing these funds would only require the use of a unique code, known as a spend key.

Another technology offered by Buterin to improve privacy on Ethereum is the use of ZK-SNARK. This technology allows parties to confirm the existence of specific information without disclosing the information itself. ZK-SNARKs are used to protect the privacy and security of transactions while maintaining the anonymity of parties involved in the transfer of digital assets.

Importance of privacy in the cryptocurrency market

Transactions made on the Ethereum network are public, meaning anyone with the wallet address can use Etherscan to view transactions sent and received by that address, as well as the current wallet balance. This transparency can raise privacy concerns because personal financial information is publicly available.

To protect the security and privacy of cryptocurrency investors, it is imperative that they can maintain the anonymity of their personal transactions and the amounts they wish to keep confidential. Like how one would protect the confidentiality of funds in his bank account, it is important to maintain the confidentiality of transactions and balances in a crypto wallet.

By incorporating anonymity features, Ethereum can offer its users the ability to keep their transactions and personal information private. Additionally, privacy can also prevent transaction-based discrimination, such as tracking who makes transfers with specific assets or with certain people.

Additionally, implementing privacy measures can also protect Ethereum users from fraud and cyberattacks, as criminals would have difficulty in identifying and accessing sensitive transactions and information.