Vitalik Buterin described this as a challenge that hidden addresses can solve to make peer-to-peer transactions, transfer of non-fungible tokens, and registration in the Ethereum Domain Name System (ENS) anonymous, protecting user data.
The recipient of cryptoassets can create and save a “spending key” which will then be used to create a hidden meta address. An address that can be registered with ENS is passed to the sender, who cryptographically computes a meta address to create a hidden address owned by the recipient. The sender can then transfer crypto assets to the recipient's hidden address, in addition to publishing a temporary key to verify that the hidden address belongs to the recipient.. As a result, a new hidden address is created for each transaction.
Buterin noted that along with the key hiding mechanism, it is necessary to use the Diffie-Hellman exchange protocol, which matches unique addresses with a public key.. This will mask the association between the hidden address and the user's meta address.. Ethereum co-founder mentioned zk-SNARK zero-knowledge proof technology that can also increase the privacy of transactions. However, he noted that in this case, even for one transaction, a large amount of additional gas may be required.
According to Buterin, the proposed concept of hidden addresses provides privacy different from that provided by the Tornado Cash cryptocurrency mixer. US Office of Foreign Assets Control (OFAC) sanctioned Tornado Cash may hide transfers of major fungible crypto assets, be it ETH or other ERC-20-based altcoins. However, it is difficult for a mixer to ensure the confidentiality of transactions with little-known ERC-20-based crypto assets, and this is true for NFT transfers, says Buterin.
“Today, basic hidden addresses can be implemented quite quickly, and they will greatly increase the privacy of Ethereum.. Of course, support will require some work on the part of the wallet.. However, I believe that wallets should develop a multi-address model,” says the ETH co-founder.
Recently, Vitalik Buterin spoke about the prospects for zk-STARK and suggested that in 10-20 years this technology will occupy the same important place as the blockchain. In addition, the Ethereum co-founder believes that the creation of inflation-resistant stablecoins and access to the Internet through Ethereum will be important achievements in the crypto industry.