Privacy is one of the issues that many people are concerned about, especially on public blockchains such as Ethereum and Litecoin.

In Vitalik Buterin’s recent blog post, he outlined how Stealth Address can help increase user privacy on Ethereum using Zero-Knowledge Proofs (ZKP) algorithms and techniques. So what is a stealth address? How does it work? .

Why Stealth Address?

Ethereum is a public blockchain. Therefore, privacy is one of the biggest concerns of this ecosystem.

In the past, many projects allowed users to send and receive tokens anonymously, especially Tornado Cash. The project allows breaking the on-chain link to make transactions anonymous. However, Tornado Cash can only help hide ETH or ERC20 token transactions, and cannot hide other transactions such as NFT, PFP NFT...

So what is the privacy solution on the Ethereum blockchain? How to avoid prying eyes and analysis of users' behavior and lives? Especially in crypto transactions, ENS domains, POAP, NFTs, Soulbound tokens, etc.?

To answer this question, Ethereum founder Vitalik Buterin researched and developed Stealth Address.

How Stealth Address works

Suppose Hieu sends Linh an asset (can be an NFT, token). When receiving the property, Linh does not want the whole world to know that she is the recipient. Therefore, Linh or Hieu will create an encrypted "address" that contains how to send the asset to Linh, aka Stealth Address. How to proceed is as follows:

  • A generates a spend key and uses it to create a stealth meta address.

  • A sends this Stealth Meta-Address to B.

  • B calculates the Stealth Meta-Address and generates a Stealth Address belonging to A.

  • B generates encrypted data on the chain to help A know that this address belongs to her.

  • B sends any assets to this stealth address. A has full control over the property at the above address.

Another interpretation is that Stealth Address provides the same privacy as A, generating a new address for each transaction without requiring any interaction from A.

This is done by applying encryption tricks using 2 algorithms.

  • The first algorithm uses B's secret (ephemeral key) and A's public (Stealth Meta-Address).

  • The second algorithm uses A's secret (spending key) and B's public (ephemeral public key).

The Diffie-Hellman key exchange method is a successful method in modern cryptography, which successfully implements the above two algorithms.

In order to ensure that only A has the right to use the attributes in the Stealth Address, a third algorithm was developed. This algorithm allows:

  • A combines the two shared secrets from the above example with his original spending key.

  • B combines the two shared secrets from the above example with A's Stealth Meta-Address.

Therefore, B can only generate a Stealth Address, and A can generate a spending key for this Stealth Address. This makes it unnecessary to create a public association between A's stealth address and the stealth meta address (or between one stealth address and another stealth address).

How to pay transaction gas fees?

After receiving an asset or NFT from a Stealth Address, how can I withdraw the asset to my main wallet when the ETH in the Stealth Address is 0? And Linh can’t send ETH from her main wallet because it will create a public on-chain link!

In this case, the aggregator can be Linh’s savior. The aggregator allows Linh to buy a set of “tickets” to pay for the transaction fees. These “tickets” are encrypted using the Chaumian blinding scheme.

The Future of Stealth Address

Social recovery wallets are usually wallets that operate using multiple signatures (multisig) and have private keys shared between organizations, friends or devices. In the event of key loss, the user can recover his account at any time.

However, recovering an account also means changing private keys. Users will have to go through the difficult steps of changing their Stealth Address verification logic, which is costly and has low privacy.

The same is true for multi-chain layer 2 wallets. If a user has an account with Optimism, Arbitrum, Starknet, Scroll, Polygon, etc., changing the private key becomes relatively complicated.

Therefore, recovering a Stealth Address is very complex and expensive. Zero-knowledge Proofs (ZKP) technology can help users in this situation.

ZKP allows multiple accounts, even across multiple Layer 2 protocols, to be controlled by a value on the base chain or multiple Layer 2s. Changing that value is enough to change the ownership of all user accounts without exposing the links between accounts.

in conclusion

Stealth Address can be deployed fairly quickly and is one of the driving forces behind the growth of privacy on Ethereum. However, they still make it difficult to recover accounts. In the long run, Stealth Address can develop into a real ecosystem that relies heavily on Zero-knowledge Proofs technology.

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