What is a Stealth Address in Crypto?
In cryptocurrency, a stealth address is a one-time wallet address that is generated when performing a transaction. This is used in an attempt to conceal the identity of the persons sending and receiving the transactions.
Contrary to popular belief, not all cryptocurrency transactions are anonymous. Most of them, including Bitcoin transactions, can be traced and used to identify specific patterns. If your name, email, or home address is somehow connected to your wallet address, then the transaction can be directly tied to you. Stealth addresses act as a proxy for your wallet address, making tracing it on the blockchain difficult or impossible.
A Deeper Look at Stealth Addresses
In the early days of Bitcoin, many people thought that it was completely anonymous since it appeared that wallet addresses were completely random and not linked to real-world identities. However, people soon realized that with some detective work, sending and receiving patterns can be monitored and could possibly serve to uncover the identities of wallet owners. As such, Bitcoin and other cryptocurrencies like it are known as pseudonymous and not 100% completely anonymous.
To combat this, stealth addresses were developed. These one-time addresses are generated every time you perform a transaction. This way, you can send and receive funds without ever revealing your personal wallet address. And since the addresses are different for each transaction, no transaction pattern can be made nor can anyone link the address to an identity.
One of the first cryptocurrencies to popularize the use of stealth addresses is Monero. In addition to stealth addresses, Monero also uses Ring Signatures, and Ring Confidential Transactions (RingCT) to protect the identity of its users.
← Back to Dictionary
