So How Do We Anonymise Our Transactions? Stealth Addresses in Blockchain

Towards a GDPR era

Due to privacy concerns, we increasingly live in a world where we need to anonymise our transactions. Along with this we need a world which is more trustworthy, and where we properly digitally sign transactions. But how can we create an infrastructure for our transactions, so that someone can receive payments, but without revealing their identity?

Core Blockchain is not so private

The first version of Blockchain just setup a running system where one address could send another address some funds. Basically a sender (a payor) added a transaction of “Pay this address some bitcoins”, and then signed it with the private key of the payor. The recipient (the payee) then had the private key associated with the address that had been paid, and could then sign for it to be paid to someone else (by signing with the private key of the payor).

These addresses are pseudo anonymous, as the system need to determine if an address has enough cryptocurrency in its account to make the payment. The problem with this, though, is that we can easily map an address to a person if we know their public address, and determine all their interactions and payments. While this is acceptable for publicly defined donations, it…