When the US government approved Ethereum-based mixed cryptocurrency service tornado cash in 2022, it sparked debate within the crypto community that continues three years from now.
Tornado allowed users to transfer ciphers anonymously. The government argued that the service would promote money laundering and encourage some Ethereum validators and block builders to take steps to avoid engaging with tornado-related transactions, making the service slower and more expensive.
Advocates argued that compliance with sanctions amounted to censorship. President Donald Trump supported Cypherpunks and lifted Tornado’s cash sanctions this March, but for some Ethereum developers, the situation underscored the flaws within the network that still exist today.
“A publicly available transaction graph allows anyone to trace the flow of funds between accounts, making the balance visible to all participants in the network and undermines financial privacy.” “The transparency of the Ethereum Network promotes reliability, but also opens the door to potential surveillance, targeting, and exploitation.”
Perhaps encouraged by the recent tornado cash development, Ethereum developers and researchers have begun to discuss once again the ideas for making the Ethereum network private at its core.
“Privacy should not be an optional feature that users must consciously enable. It must be the default state of the network,” said Caversacio, who outlined his vision for a privacy-oriented Ethereum roadmap in the post. “The Ethereum architecture should be designed to ensure that users are private by default, not an exception.”
Caversaccio’s post, he identified several potential interventions (some new, some old ones). One idea is to encrypt Ethereum’s public Mempool. Here, the transaction is sent before it is recorded forever. The other is to make Ethereum transactions confidential through zero-knowledge encryption, new transaction formats, and other methods.
“Today, Ethereum operates on a partial opt-in privacy model. Users often need to take intentional steps to hide their financial activities at the expense of usability, accessibility and even effectiveness,” writes Caversacio. “This paradigm must shift. Technology that provides privacy must be deeply integrated at the protocol level, ensuring transactions, smart contracts and network interactions are inherently secret.”
In response to Caversaccio’s post, Ethereum co-founder Vitalik Buterin left a much shorter comment of himself on the network’s main developer forum on his own privacy-oriented Ethereum roadmap.
Buterin has proposed focusing on the privacy of on-chain payments, anonymizing on-chain activity within the application, anonymous communications over the network, and privatizing on-chain readings.
To achieve all this, Buterin has listed various steps, including integrating specific third-party privacy features into the core network.
One of the more substantive interventions proposed by Buterin involves moving the network into a “one address per application” model. This is a departure from today’s systems where a single application can use dozens of wallets for a variety of functions. “This is a big step and comes with a very useful sacrifice, but IMO is a bullet we should bite because it is the most practical way to remove public links between all activities across different applications,” writes Buterin.
According to Buterin, private transactions could become Ethereum’s default if all of his suggestions are implemented.
The privacy debate takes place a few weeks before Pectra, the next major upgrade for Ethereum, which has not focused much on privacy. Ethereum developers are currently planning to upgrade their network to Fusaka. Any changes contained in that hard fork have not yet been set to stone.
Read more: Vitalik Buterin is disappointed with the embrace of blockchain “casino”
