Ethereum creator Vitalik Buterin has chimed in on a suggestion to create a privacy-focused non-fungible token (NFT) technology that will let users create an NFT that cannot easily be tracked.
While the proposal itself is very technical, the basic idea is for an NFT that can generate a “stealth address,” which he said was a “low-tech approach to add a significant amount of privacy to the NFT ecosystem.”
Idea: stealth addresses for ERC721s.
A low-tech approach to add a significant amount of privacy to the NFT ecosystem.
So you would be able to eg. send an NFT to vitalik.eth without anyone except me (the new owner) being able to see who the new owner is.https://t.co/UdqK6NAYjn
— vitalik.eth (@VitalikButerin) August 8, 2022
Using this technology, Buterin said, “you would be able to e.g. send an NFT to vitalik.eth without anyone except me (the new owner) being able to see who the new owner is.”
No one else, he said, would even be able to see that the NFT had been sent to his Ethereum Name Service address — basically a Web3 blockchain address for a crypto wallet — but rather that someone had received it.
One challenge with the privacy-focused idea is how to pay fees. Buterin said that all he could come up with was overpaying estimated fees “5-50 times.”
The timing of his comment, in the early morning hours of Aug. 8, was interesting, and displayed a potential problem with stealth NFTs.
In the comments he linked to, Buterin suggest using the Tornado Cash mixing service to send the fees — hours before the Treasury Department announced sanctions on the DeFi service, alleging it was being used heavily by North Korean hackers to launder stolen crypto to fund the rogue state’s nuclear program.
Mixing services and privacy coins have come under increasing political and legal pressure as opponents claim they are used heavily by criminals and make it far easier for them to launder money.
Instagram Increases Flow
Meta-owned social network Instagram announced this week that it was expanding the ability of NFT owners to display their digital artwork and collectibles to “100 countries in Africa, Asia-Pacific, the Middle East, and the Americas,” as well as adding the ability to connect with the Coinbase Wallet and Dapper Wallet, and supporting the ability to post digital collectibles minted on the Flow blockchain.
With 1 billion users, Instagram is triple the size of Twitter, which was the first major social media company to embrace the use of NFTs. Instagram, however, will display them a lot larger than Twitter, which focused its use of NFTs on user’s thumbnail-size portraits.
Meta described the Instagram move as a way of supporting creators’ ability to take more control of their work, build relationships with fans, and monetize their creations.
“With the incredible opportunity of blockchain technology, they can now leverage new tools to earn income, and fans can support their favorite creators by purchasing digital collectibles — art, images and videos, music or trading cards — as non-fungible tokens (NFTs).”
Spreading the Wealth
Certainly, people are buying. Blockchain data firm Nansen said this week that its analysis shows that $2.7 billion was spent minting new NFTs on Ethereum in the first half of the year.
NFTs are among the biggest prizes Ethereum killer blockchains seek to pry away from the No. 2 blockchain, which has the vast majority of NFT business.
Flow, the No. 27 blockchain by market capitalization, is in that position largely because Instagram added support for NFTs minted on its blockchain. The blockchain’s native FLOW token spiked more than 40% on Aug. 4, when the announcement was made, and has maintained those gains.
What’s behind that is not just Flow gaining a huge new market for its NFTs, but the need for NFT developers and buyers to get off Ethereum, which brings very high fees to the creation and purchase of NFTs.
For all PYMNTS Crypto coverage, subscribe to the daily Crypto Newsletter.