Stealth Addresses and Confidential Transactions

Why Address Privacy Matters

Most blockchains are fully transparent. If someone knows your address, they can see every transaction you've ever made, your full balance, your trading patterns, and where you send money. Even using a fresh address for each transaction (a Bitcoin best practice) often doesn't help — chain analysis tools cluster addresses by behaviour. Privacy primitives exist to break this surveillance: stealth addresses hide the receiving address, confidential transactions hide the amounts, and shielded systems combine both.

Stealth Addresses

A stealth address scheme lets you publish a single 'meta-address' that anyone can derive a fresh, unique one-time address from for each transaction they send you. The sender computes the one-time address using your public meta-address and some random data; only you can scan the chain and find which addresses are yours. Observers see seemingly-random addresses receiving payments and can't link them to your meta-address or to each other.

Confidential Transactions

Confidential Transactions (CT) hide the amounts being transferred. Instead of a plaintext amount, the transaction commits to a Pedersen commitment of the amount, with a cryptographic proof that the inputs and outputs balance (no money created or destroyed) and that all amounts are non-negative. Observers see encrypted blobs; only the sender and receiver know the actual values.

• Default crypto address privacy: poor — everyone sees everything
• Stealth addresses: hide who the recipient is
• Confidential transactions: hide the amount
• Shielded systems (Zcash, Monero): combine both plus sender privacy