Stealth Addresses

Stealth addresses are a privacy-enhancing technology that allows a sender to create a unique, one-time destination address for every transaction. Instead of sending funds to a recipient's permanent public address, the sender generates a new address derived from the recipient's public key.

The recipient can then scan the blockchain to identify and claim the funds sent to these stealth addresses using their private key. This ensures that no single public address is linked to the recipient's identity on the blockchain, effectively preventing observers from aggregating a user's transaction history.

From a protocol design standpoint, stealth addresses operate without requiring interaction between the sender and receiver at the time of the transaction. This makes them a highly efficient tool for maintaining financial privacy while allowing for public verification of the blockchain.

They are a critical component of privacy-centric financial systems, as they prevent the formation of clear transaction clusters. By decoupling the recipient's identity from their transaction history, stealth addresses significantly improve the fungibility of digital assets.