Ethereum to Integrate ERC-5564 in Push for Privacy

The Ethereum ($ETH) network is set to welcome a stealth address feature that allows users’ wallets to stay hidden. To achieve this, the ecosystem will integrate ERC-5564 to ensure that a user’s real wallet and transaction history are private. This development was shared by Ethereum developer Pandit Dhamdhere on X.

How stealth meta-addresses guarantee privacy

Notably, ERC-5564 was an Ethereum EIP co-authored by founder Vitalik Buterin. The ERC-5564 is proposed to add privacy to users’ wallets and ensure they receive payments anonymously when the sender uses the "stealth one-time address."

The goal is to protect the user's identity and prevent others from knowing how much was received, who paid it or possibly tracking spending patterns. This is a move toward guaranteeing privacy for users of the Ethereum ecosystem.

Dhamdhere says to enjoy this feature, instead of providing a real wallet address to people, a user can simply give a special public "meta-address." Whenever someone sends money, the funds are directed into a new, random-looking address, which only the user recognizes. The privacy protection is that nobody can link the special public meta-address to the user.

Additionally, only the user is able to recognize and spend from it. Outsiders see just a random-looking address and not the real user’s identity.

Dhamdhere highlighted two key systems that make it a powerful push for privacy. The user is able to detect incoming payments using the "viewing key" and spend the money with the "spending key."

He explained that this feature allows the user to delegate responsibilities. For instance, an app or service could scan for payments on the user’s behalf, and this is without compromising control of the funds to a third party.

Ethereum gas fee, spam risk remain key challenges

As wonderful as the privacy feature sounds, Dhamdhere also identified some challenges and potential risks associated with it.

A notable one is that any money arriving at a brand-new stealth address will have issues, as there is no Ethereum for gas fees to move the funds. This bottleneck could easily be fixed, though, if the sender includes $ETH for gas.

A major risk, as concerns hackers, is that anyone could post fake announcements to make wallets engage in extra scanning work. This will likely be fixed using filters for known spammers.

As Dhamdhere emphasized, the goal of this privacy feature is to ensure that donations, payments or salaries received stay "anonymous" on the transparent Ethereum ledger. This will be achieved without the need for mixers or complex solutions.