Ethereum researcher Anton Wahrstätter comes up with a proposal for NFT stealth addresses that has caught the attention of Vitalik Buterin.
Anton Wahrstätter, an Ethereum researcher, has developed a novel proposition for creating a new ERC-721 extension that implements “NFT stealth addresses.” According to Wahrstätter, the stealth addresses aim to obscure public blockchain transactions involving NFTs.
Ethereum co-founder Vitalik Buterin’s idea of non-transferable Souldbound tokens was Wahrstätter’s inspiration for his proposal.
Diving Deeper into NFT Stealth Addresses
The ERC-721 is Ethereum’s current token standard for NFTs. Wahrstätter proposes using zk-SNARKS, a privacy-focused piece of cryptography, to implement the stealth addresses for ERC-721 tokens.
According to the proposal, part of the NFT stealth address will be inserted into a Merkle tree. Such would allow NFTs to be sent, stored, and burned without putting much of the transaction details out there to be seen on the public blockchain.
The stealth address is fundamentally a one-time address used for every transaction. On the other hand, the Merkle tree is a data structure primarily used to verify and synchronize data.
Buterin Notices NFT Stealth Addresses
Although Wahrstätter’s proposition is still in the idea stage, it has been enough to capture the attention of no less than Vitalik Buterin, one of Ethereum’s co-founders. Buterin described the idea as “a low-tech approach to add a significant amount of privacy to the NFT ecosystem.”
“So you would be able to [for example] send an NFT to vitalik.eth without anyone except me (the new owner) being able to see who the new owner is,” he tweeted on Monday.
Nevertheless, Buterin did have a few objections to Wahrstätter’s proposal. He argued that the concept of anonymous NFT transactions would probably be achieved “with much lighter-weight technology.”
When asked to comment on the proposal, Buterin said, “The reason why you don’t need Merkle trees or ZK-SNARK-level privacy is that each ERC-721 is unique, so there’s no possibility of creating an ‘anonymity set’ for an ERC-721.”
“Rather, you just want to hide the link to the sender and recipient’s highly visible public identity (so, you can send an ERC-721 to ‘vitalik.eth’ and I can see it, but no one else can see that vitalik.eth received an ERC-721; they will just see that someone received an ERC-721),” he added.
He also said that it presents a challenge: figuring out how fees will get paid.
“The best I can come up with is, if you send someone an ERC-721, also send along enough ETH to pay fees 5-50 times to send it further. If you get an ERC-721 without enough ETH, then you can tornado some ETH in to keep the transfer chain going,” he wrote.
“Tornadoing” ETH to Protect NFTs
The last part of Buterin’s comment about “[tornadoing] some ETH in to keep the transfer chain going” is a reference to Tornado Cash. It is a privacy tool specifically designed to conceal where Ethereum transactions are coming from by mixing users’ coins.
Tornado Cash entered the public’s radar on Monday after the United States Treasury Department sanctioned the mixing service by adding it to the Specially Designated Nationals (SDNs) list along with several Ethereum addresses. SDNs could be individuals or entities anywhere in the world blocked under various sanctions programs that the Office of Foreign Assets Control or OFAC administers.
Hence, the U.S. Treasury sanctioning Tornado Cash means American citizens are now banned from using it or transacting with the listed Ethereum addresses.
The move ignited some intense reactions from the general cryptocurrency community. Preston Van Loon, Ethereum’s core developer, said that Tornado Cash, just like any other tool, “can be used for bad and good.” The sanction also came in the midst of a more extensive debate around privacy and transparency in the cryptocurrency space.
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