Cryptocurrency is totally anonymous, right?
This is where stealth addresses can come in handy.
So, why isn’t crypto totally anonymous, and how can stealth addresses help you maintain your privacy?
Image Credit: Mica Stock/Shutterstock
Why Isn’t Crypto Anonymous?
A key lure of cryptocurrency is its increased anonymity and privacy over traditional currencies.
Rather, the sender and receiver wallet addresses within the transaction are displayed.
Image Credit:QuoteInspector
This isn’t a simple process, but it can be done given time.
Because of this, cryptocurrency is not entirely anonymous.
This is off-putting to many, especially those who value their privacy.
Image Credit:QuoteInspector
So, what are stealth addresses, how do they work, and should you use them?
What Are Crypto Stealth Addresses?
As previously discussed, crypto blockchains display the sender and receiver addresses within each transaction.
A typicalcrypto wallet addressconsists of a random combination of letters and numbers but is unique to one person only.
This makes it possible to track an address back to one individual.
Stealth addresses are still cryptocurrency wallet addresses but tackle the lack of total anonymity in several ways.
This feature was initially proposed by Peter Todd, a Bitcoin developer, in 2014.
Since then, numerous cryptocurrencies have adopted stealth addresses to protect the identity of users.
This prevents the recipient address from being monitored or tracked by malicious entities.
Let’s look at an example of stealth addresses to understand how they work.
Monero’s Stealth Addresses
Monero is a popular cryptocurrencythat uses stealth addresses.
Monero is a privacy coin, meaning it prioritizes anonymity among its users.
Additional Stealth Address Cryptos
Various other cryptocurrencies offer stealth addresses, such as ZCash and Verge.
When using ZCash, you could display your authentic crypto address on the blockchain or use a stealth address.
Verge’s stealth addresses (known as Dual-Key Stealth Addressing) can also be used to obfuscate transaction destinations.
What’s more, Ethereum founder Vitalik Buterin has also suggested using stealth addresses for ETH transactions.
Currently, Ethereum transactions displayed on the blockchain show the true recipient address, meaning this asset is pseudonymous.
The crypto space is already rife with criminals, and stealth addresses are a handy tool.
Privacy coins likeMonero are popular on the dark web, and it’s no surprise why.
Those conducting crimes online will do what they can to remain anonymous to evade legal repercussions.
With this level ofanonymity through privacy coins, conducting cybercrime without facing punishment becomes that much easier.
All in all, this kind of virtual asset gives malicious actors a fantastic laundering vector.
Of course, the exploitation of privacy features is nothing new in tech.
But the clear advantage privacy coins give malicious actors is also a concern.
