Vitalik Buterin Proposes The Concept Of Silo Address, To Animize Crypto Transactions

Vitalik Buterin, propose a new concept in blockchain transformation. (photo: twitter @sanhaoxs1)

JAKARTA - Ethereum co-founder Vitalik Buterin has shared a possible solution for what he describes as the remaining biggest challenge foEthereum, privacy.

In a blog post on January 20, Buterin acknowledged the need to generate privacy solutions because by default, all information that goes into the "public blockchain" is also public.

He then came to the concept of stealth address, which according to him has the potential to anonymize peer-to-peer transactions, transfer of nonfungible tokens (NFT), and Ethereum Name Service registration (ENS), protecting users.

In his blog post, Buterin explained how on-chain transactions can be carried out between two parties with anonymity.

First, users who want to receive assets will generate and store "expension keys" which are then used to generate stealth methamphetamine addresses.

This address, which can be registered at ENS, is then forwarded to the sender who can perform cryptographic calculations on the meta address to generate the stealth address, which belongs to the recipient.

The sender can then transfer the asset to the recipient's stealth address in addition to issuing a temporary key to confirm that the stealth address belongs to the recipient.

The effect of this is a new stealth address generated for every new transaction.

An incomplete guide to stealth addresses:https://t.co/21Q18BrD30

— vitalik.eth (@VitalikButerin) January 20, 2023

Buterin noted that the "Diffie-Hellman key exchange" in addition to the "key cover mechanism" needs to be implemented to ensure that the link between the stealth address and the user's meta address can be seen publicly.

Ethereum co-founders added that ZK-SNARKs, cryptographic resistant technology with built-in privacy features, can transfer funds to pay transaction fees.

But But Buterin stressed that this could pose a problem in itself, at least in the short term, stating 'this consumes a lot of fuel, an additional hundreds of thousands of fuel for just one transfer.'

The stealth address has long been touted as a solution to address on-chain privacy concerns, which have been working on since early 2014. But so far very few solutions have been brought to market.

It's also not the first time Buterin has discussed the concept of a stealth address in Ethereum.

In August 2022, he dubbed the stealth address a "low-tech approach" to anonymously transfer ownership of the ERC-721 token, otherwise known as NFT.

The co-founder of Ethereum explained that the proposed stealth address concept offers different privacy from the Tornado Cash, which is now approved by the US Office of Foreign Asset Control (OFAC).

"Tornado Cash can hide major exchangeable asset transfers like ETH or large ERC20, but is very weak in adding privacy to unclear ERC20 transfers, and cannot add privacy at all to NFT transfers," Buterin said, as quoted by Cointelegraph.

Buterin offers some advice for Web3 projects that are developing solutions.

The basic stealth address can be implemented quite quickly today, and could be a significant impetus to the privacy of practical users on Ethereum, Buterin said.

They do need some work on the wallet side to support them. That said, it was my view that the wallet should start moving towards a more original multi-alignment model for other privacy-related reasons as well," he added.

Buterin suggested that stealth addresses could cause "long-term usability problems," such as social recovery issues. However, he believes the problem can be handled properly in due course.

In the long term, this problem can be solved, but the ecosystem of stealth addresses in the long term looks like one that would rely heavily on evidence without knowledge," he explained.