Mix NFT and anonymity? Vitalik Buterin unveils his new project

Towards anonymous NFTs – L’anonymity it is a fundamental value carried by the cryptocurrency ecosystem in its infancy. However, democratization has caught the attention of reluctant regulators total anonymity for users. Fortunately, developers continue to find ways to protect user privacy. A new solution ensuring the anonymity of NFT holders is currently theorized.

Towards the anonymity of NFT holders

On August 4th, the developer known as Nerulation has published the fruit of his work on the port of ERC-721 on solutions that take advantage of it zkSnarks.

The goal, in fact, is to allow a anonymous NFT management. In fact, ERC-721 is a standard token on Ethereum created for NFT. Through his work, Nerolation offers to archive NFT so-called “stealth” addresses. making it possible to anonymize the holding of an NFT.

Each ERC-721 token is stored on an invisible address. […] The hidden address is then placed in a merkle tree. The root of the merkle tree is held on the chain. Finally, the tokens are stored in an address derived from the user’s address in the merkle tree. “

Declaration of nerolation

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Vitalik Buterin’s solution

An approach that will have aroused the curiosity of the Ethereum co-founder, Vitalik Buterin. However, this offers a lighter version of this method. In his response, Vitalik simply suggests using invisible 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 each ERC7-21 is unique. Therefore it is not possible to create an “anonymity set” for an ERC7-21. Rather, it is hiding the link to the highly visible public identity of the sender and recipient. “

Vitalik Buterin

According to him, this method would “To send an ERC721 to ‘italik.eth’ that I can see, without anyone else seeing that vitalik.eth has received an ERC-721 “.

An approach even more easily achievable through the use of a smart contract portfolio. One variable remains to be clarified. How to finance the stealth address without exposing it to daylight?

“The remaining challenge is how to pay taxes. The best I’ve found is this: if you send someone an ERC7-21, they also send enough ETH to pay the commission 5-50 times to send it further. If you receive an ERC7-21 without enough ETH, you can send some ETH with Tornado Cash to continue the transfer chain. “

Vitalik Buterin

Anonymity in cryptocurrencies: the case of Tornado Cash

This proposal comes simultaneously with a surge in anonymity debates. Indeed, the anonymization tool Cash Tornado is recently in the sights of the American Treasury. The latter, in fact, 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 also established a blacklist of addresses that interacted with the Tornado Cash protocol and whose activities were potentially illegal. Later, the company Circle, the creator of the USDC stablecoin, decided to do so freezes $ 75,000 in USDC to the addresses belonging to Tornado Cash users.

Banteg Unveils $ 75,000 Frozen USDC From Circle – Source: Twitter

So many events they have has reopened the debate aroundanonymity and privacy. Indeed, as 0xNoe pointed out on Twitter, the amalgamation of desire for anonymity and illicit activity must be avoided.

The search for anonymity does not imply the use of illegal activities, according to Noé G
Noé G states that the search for anonymity does not imply the use of illegal activities – Source: Twitter

This attempt at widespread surveillance seems to have extended even to the gates of GitHub. In fact, the account of one of the co-founders of Cash Tornado was suspended from the platform.

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