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Vitalik Buterin, Ethereum co-founder, published a privacy roadmap to increase security for the Ethereum ecosystem. Responding to calls from community members to address privacy concerns involving crypto mixers, transparency, and regulation, Buterin outlined a brief plan to tackle the problem of balancing privacy with decentralization. 

Tornado Cash, the Ethereum mixing service, was sanctioned by the U.S. government in 2022. Tornado mixes different transactions together to disguise a token’s history. The U.S. government contended that the mixer facilitated money laundering and stamped down on anyone connected to the network. For that matter, many Ethereum developers steered clear of Tornado to protect themselves from the government. Moreover, ethereum validators and block builders limited their use of Tornado, making the blockchain slower. 

In his roadmap, Buterin relied heavily on zero-knowledge proofs (ZKP) to solve the privacy problem. ZKP uses cryptographic algorithms to verify transactions without uncovering the underlying data. Algorithms that enhance privacy, especially at the lower layers (e.g., L1), are being sought after, providing security for both customers and businesses. 

Buterin’s roadmap includes four main areas of privacy: on-chain privacy, partial anonymization of applications, safeguarding privacy of ‘reads’ to the blockchain, and network-level anonymity. He suggests this could be achieved by introducing privacy functions to wallets, including a user-friendly interface and security features activated by default. He further indicates that modularity could be used to enhance privacy, such as with the ‘one address per application model’, where an address links to itself rather than to other addresses in the network. 

The roadmap includes a plan to simplify operations, with FOCIL and EIP-7701 standards, so that unnecessary metadata is reduced to a bare minimum, disallowing censors from filtering out content. Eavesdropping will be reduced by incorporating the short term TEE based Remote Protocol Calls (RPC), until Private Information Retrieval becomes more viable. Eavesdropping will be reduced by using multiple RPC, so that sensitive data is not exposed on the network. By lowering the attack space, Buterin aims to increase the security of blockchain users. Private transactions, moreover, will be made more secure and cost-effective by using proof aggregation protocols. Private wallets should have added features to keep private keys safe and should keep user data private to avoid data leakage. And links between applications should remain concealed so that RPC nodes, by accident or on purpose, cannot access metadata. 

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Pascal Caversaccio, an Ethereum security researcher, pointed out that trustless technology opens the door to surveillance and a lack of privacy. A graph could be mined from the Ethereum metadata to detect the flow of money through the blockchain and view an individual’s balance.

EIP-7701 simplifies security protocols by increasing their modularity, restructuring them so they don’t need relays or public broadcasters. RPC nodes could be used to eavesdrop on a user’s transaction. Security, therefore, can be enhanced by using programming techniques such as modularity to decrease the amount of data roaming around on the blockchain. Buterin seems to propose a programming approach to improving anonymity, with the added benefit of improving speed and efficiency. Ethereum has a very modular structure, and this strategy could fit in with the overall direction and expertise of the Ethereum community. 

Blockchain transactions have had increased scrutiny regarding privacy concerns. Ethereum has always stressed the importance of transparency, being an open-source project. But now, transparency is proving to be a double-edged sword, with increased accountability on one side and the dangers of censorship on the other side. Many enterprises prefer Ethereum because it has a strong development team. But various sectors like healthcare and finance require more secure transactions to preserve the privacy of their customers.