Ethereal creator Vitalik Buterin has proposed a new “stealth steering” system for Ethereum that would drastically improve and simplify the privacy workflow for ordinary users.

according to a blog to post posted by Buterin over the weekend and titled An incomplete guide to hidden addressesthe proposed system would bring the same privacy properties as generating new addresses for each transaction someone receives.

The only difference would be that this would happen without requiring any work for the receiver.

Privacy remains a big challenge on Ethereum

In the blog post, Buterin admitted that privacy, or the lack thereof, is a big issue for Ethereum users, saying:

“One of the biggest remaining challenges in the Ethereum ecosystem is privacy. By default, everything that goes into a public blockchain is public. […] In practice, using the entire Ethereum suite means making a significant part of your life public for anyone to see and analyze.”

He added that improving this situation for users is “widely recognized” as an important problem that developers should work on.

Secret spending keys and stealth meta addresses

Specifically, Buterin’s proposed system would work by having wallets generate so-called stealthy meta-addresses to receive funds using a secret “spend key” that only the receiving party of a transaction has access to. The stealth address is then shared with the sender, who must also post a piece of cryptographic data called an ephemeral public key on the chain so that the receiver understands that the address belongs to them.

To allow the generation of both the secret spending key and the stealthy public meta-address, Buterin proposed using a system known as Diffie–Hellman key exchange. According to Buterin, this system is a fundamental part of modern cryptography and would achieve exactly what is needed to implement stealth addresses on Ethereum.

The Ethereum founder went on to share a detailed illustration of the workflow with the new system:

Zero Knowledge Proofs

In conclusion, the Ethereum creator admitted that stealth addresses present “some long-term usability issues,” including issues related to so-called “social recovery” of lost keys. He said these concerns could simply be accepted for now, but made it clear that a more lasting solution would likely depend “very heavily” on zero knowledge (ZK) proofs.