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What is Stealth Addresses Mechanism in Blockchain?

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  • What is Stealth Addresses Mechanism in Blockchain?

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    Cryptocurrencies, such as Bitcoin or Ethereum have been very popular recently and one of their defining features is their ability to conclude transactions anonymously. In a blockchain network, each transaction is identified by corresponding blockchain address that is derived from respective public keys. The addresses are unknown to the public; hence, allowing the privacy of transactions and users’ data. However, with enough transaction data and information, it is theoretically possible to link transactions to a person’s physical address. This undermines the benefits of blockchain technology. The good news is that a stealth addresses mechanism has the answer to this critical issue.

    Stealth addresses key management mechanism may be seen as a privacy-enhancing feature of blockchain that allows individuals and organizations to protect their real identity when receiving cryptocurrencies. The basic idea is to allow the sender of the cryptocurrency to create a one-time, random address on behalf of the sender for each individual transaction. As a random address is generated for each transaction, this mechanism makes it impossible to link different transactions made to the same recipient.
    The basic mechanism, known as Basic Stealth Address Protocol (BSAP) was first developed in 2011. It relied on Elliptic Curve Diffie Hellman (ECDH) protocol. The BSAP improved how blockchain transactions were conducted back in 2011 but it had certain inherent limitations, for example, it was still easier to establish a link of transactions between two parties. Since then, some other versions of stealth address protocol have been introduced that built upon previous versions and improved previous limitations. These protocols include Improved Stealth Address Protocol (ISAP) and Dual Key Stealth Address Protocol (DKSAP).

    Discussing how these protocols of stealth addresses work in detail could be very technical for someone who lacks in-depth knowledge of blockchain technology. However, if you are someone who either has the prerequisite knowledge of blockchain technology or you want to acquire this knowledge, then you must spend some time understanding this mechanism of stealth addresses as it has the ability to provide solution to one of the biggest historical problems in any financial system, i.e. security and privacy of data.

    It has been proven by now that a stealth address mechanism is a powerful tool that allows blockchain users to reasonably enhance the overall privacy and confidentiality of the blockchain system and their personal data. However, there is at least one disadvantage of this mechanism that deserves to be mentioned. The mechanism may allow undue cover to corrupt individuals. If a person is involved in malicious activity on a blockchain platform and he or she decides to apply stealth address for malicious activities then it becomes extremely difficult to track such a person. One privacy focused project that uses a stealth address and almost eradicate the advances of bad actors is DAPS Coin, a new privacy project that joins the likes of DASH and Monero in securing the transaction chain while also protecting the rights of users to their privacy in transactions. DAPS Coin takes the desire to protect users’ privacy a few steps forward by also offering other features that complement the use of stealth addresses that makes it nearly impossible for imposters to advance their ploy. You can read more at www.dapscoin.com.

    Overall, however, the weight of privacy benefits seems to outweigh any disadvantage that may be associated with the stealth address feature in crypto wallets.
    If you are interested in knowing more details about the concept of stealth addresses and its applications in the real world, you may want to visit the following Youtube links for a better understanding of this important concept.


    YouTube Links:

    https://www.youtube.com/watch?v=43K_z0sWtEU

    https://www.youtube.com/watch?v=bWst278J8NA

    https://www.youtube.com/watch?v=QXedDpy9Tnw
    Last edited by CloudOne; 26th September 2019, 10:06 AM.
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