Vitalik Buterin acknowledges new NFT ownership privacy proposal by researcher

The 'Prince of Crypto' Vitalik Buterin had a few things to say about a novel concept on the privacy of NFT transactions proposed by an Ethereum network researcher.

The researcher, Anton Wahrstätter, proposed an ERC-721 extension that would use "stealth" addresses to hide public blockchain transactions involving NFTs. ERC-721 is the common token standard used for NFTs on the Ethereum network.

For his stealth addresses, Wahrstätter suggested using Zero-Knowledge Succinct Non-Interactive Arguments of Knowledge (ZK-SNARKs) – a piece of privacy-focused code. 

Wahrstätter explained that the stealth addresses act as single-use addresses for each transaction. The address is then added to a Merkle tree, a data structure that securely encodes blockchain data. The process enables the transfer, storage, and burning of NFTs while leaving little evidence on the public blockchain.

The idea caught the attention of Ethereum co-founder, Buterin, who tried to simplify it in a tweet, saying, "So you would be able to, e.g., send an NFT to vitalik.eth without anyone except me (the new owner) being able to see who the new owner is."

Buterin commended the proposal as 'a low-tech approach to add a significant amount of privacy to the NFT ecosystem.' However, he argued that the same solution could be reached 'with much lighter-weight technology.'

He said Merkle trees and ZK-SNARKs are unnecessary, suggesting hiding the link to the sender and recipient's highly visible public identity instead.

Buterin also brought up a challenge that his own suggestion faced: transaction fees. 

'The best I can come up with is, if you send someone an ERC721, also send along enough ETH to pay fees 5-50 times to send it further. If you get an ERC721 without enough ETH, then you can tornado some ETH in to keep the transfer chain going. That said, maybe there is a better generic solution that involves specialised searchers or block builders somehow,' he said.

The term 'Tornado' mentioned in Buterin’s comment refers to TornadoCash, a tool used to keep Ethereum transactions untraceable by mixing multiple users’ coins.

Photo: Forbes