While the concept of hidden addresses seems complicated in theory, Buterin previously described it as a “low-tech approach” compared to other Ethereum privacy solutions.
Ethereum co-founder Vitalik Buterin shared a possible solution to what he called “Etherea’s biggest remaining problem” – privacy.
In a Jan. 20 blog post, Buterin acknowledged the need to come up with a privacy solution because any information that’s on a “public blockchain” is public by default.
He then mentioned the concept of “invisible addresses,” which he said could potentially anonymize peer-to-peer transactions, non-fungible token (NFT) transfers, and Ethereum Name Service (ENS) registration.
In a blog post, Buterin explained how to conduct transactions on the network between two anonymous parties.
First, a user who wants to receive funds creates and stores a “spending key” that is used to create a hidden meta address.
This address, which can be registered in the ENS, is passed to the sender and a cryptographic calculation is performed on the meta address, creating a hidden address for the recipient.
The sender can transfer funds to the recipient’s secret address as well as publish a temporary key to verify that the recipient’s secret address belongs to the recipient.
As a result, a new hidden address is created for each new transaction.
Vitalik Buterin A schematic representation of how a hidden address system might work. Source: Vitalik’s website
Buterin noted that a “key obfuscation mechanism” and “Diffie-Hellman key exchange” should be implemented to make the link between the hidden address and the user’s meta-address publicly available.
The Crypto AI platform delivers an average of 17 successful alerts every month in 2022.
The Ethereum co-founder added that ZK-SNARK — a cryptographic security technology with built-in privacy features — can transfer funds to pay transaction fees.
But Buterin stressed that this could lead to problems – at least in the short term – “and it costs a lot of gas, hundreds of thousands of extra gas just for one shipment”.
RELATED: Cryptocurrency privacy is at greater risk than ever – here’s why
Hidden addresses have long been touted as a solution to internet privacy problems and have been around since 2014. However, very few solutions have reached the market so far.
This is not the first time Buterin has discussed the idea of hidden addresses in Ethereum.
In August, he called hidden addresses a “low-tech approach” to anonymously transferring ownership of ERC-721 tokens, also known as NFTs.
The Ethereum co-founder explained that the proposed secret address concept provides privacy, unlike the current US Office of Foreign Assets Control (OFAC) sanctioned Tornado Cash:
“Tornado Cash can cover transfers of large fungible assets like ETH or major ERC20 […] but does a very poor job of protecting the privacy of opaque ERC20 transfers and fails to ensure the privacy of NFT transfers.”
Buterin gave some advice for Web3 projects developing a solution:
“Today, underlying hidden addresses can be implemented very quickly, greatly improving the practical privacy of Ethereum users.”
“They need to work a little bit on the wallet side to keep going.” “Accordingly, I believe wallets should start moving towards a more natural multicast model […] and for other privacy-related reasons,” he added.
Buterin suggested that secret addresses could pose “long-term usability issues,” such as search problems on social networks. However, he is sure that the problems can be solved in time:
“In the long term, these problems can be solved, but in the long term, the hidden address ecosystem seems to rely heavily on zero-knowledge proofs,” he explained.