Towards anonymous NFTs – L’anonymity is a fundamental value carried by the cryptocurrency ecosystem in its infancy. However, democratization has caught the eye of reluctant regulators total anonymity for users. Fortunately, developers continue to come up with solutions to protect user privacy. A new solution ensuring the anonymity of NFT holders is currently theorized.
Towards anonymity of NFT holders
On August 4, the developer known as Nerolation has published the fruit of his work on the porting of ERC-721 on solutions that take advantage of zkSnarks.
In fact, the objective is to allow a anonymous NFT management. Indeed, ERC-721 is a token standard on Ethereum created for NFTs. Through its work, Nerolation offers to store NFTs on so-called “stealth” addresses making it possible to anonymize the holding of an NFT.
“ Each ERC-721 token is stored on a stealth address. […] The hidden address is then inserted into a merkle tree. The root of the merkle tree is held on the chain. Finally, the tokens are stored at an address which is derived from the user’s address in the merkle tree. »
Nerolation Statement
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Vitalik Buterin’s solution
An approach that will have aroused the curiosity of the co-founder of Ethereum, Vitalik Buterin. However, this offers a lighter version of this method. In his answer, Vitalik proposes to simply use stealth addresses, without having to publish information in the Merkle tree.
“The reason you don’t need Merkle trees or ZK-SNARK level secrecy is because every ERC7-21 is unique. So there is no possibility to create an ‘anonymity set’ for an ERC7-21. Rather, it is to hide the link to the highly visible public identity of the sender and receiver. »
Vitalik Buterin
According to him, this method would “to send an ERC721 to ‘italik.eth’ that I can see, without anyone else being able to see that vitalik.eth received an ERC-721”.
An approach that is even more easily achieved through the use of a smart contract wallet. One variable remains to be elucidated. How to finance the furtive address without exposing it to the light of day?
“The remaining challenge is how to pay the fees. The best I could find is this: if you send an ERC7-21 to someone, also send enough ETH to pay the fee 5-50 times to send it further. If you receive an ERC7-21 without enough ETH, then you can send some ETH with Tornado Cash to keep the transfer chain going. »
Vitalik Buterin
Anonymity in cryptos: the case of Tornado Cash
This proposal comes at the same time as an upsurge in debates about anonymity. Indeed, the anonymization tool Tornado Cash is recently in the sights of the US Treasury. In fact, the latter accuses the Tornado Cash service of having allowed the whitening over 7 billion dollarss. Money belonging in particular to the North Korean hacker group Lazarus.
It has also established a blacklist of addresses that have interacted with the Tornado Cash protocol and whose activities were potentially illicit. Subsequently, the company Circle, the originator of the USDC stablecoin, decided to freeze $75,000 in USDC to addresses belonging to Tornado Cash users.
So many events that have revived the debate around theanonymity and privacy. Indeed, as 0xNoe pointed out on Twitter, we must avoid the amalgam between the desire for anonymity and illicit activities.
This attempt at widespread surveillance even seems to have extended to the gates of GitHub. Indeed, the account of one of the co-founders of Tornado Cash was suspended by the platform.
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