Stealth addresses are a way for a payer and a payee to have a private exchange of funds.
Vertcoin is the first cryptocurrency to develop a new form of security, a higher level of privacy: the Stealth Address, also referred to as the SX address. A stealth address functions differently than a standard Vertcoin address. What exactly makes it different?
First, some background information:
Vertcoin, as well as many other cryptocurrencies, has a public ledger known as the blockchain. Every Vertcoin transaction since the creation of the currency (and its blockchain), is stored in the blockchain. The blockchain is freely available and visible to everyone. You can access a blockchain explorer here.
When a transaction is made between Vertcoin users, its viability is checked against identical copies of the blockchain saved on users’ systems across the Vertcoin network. In other words, any computers currently connected/synchronized with the blockchain work as a means of verification for this transaction. If the transaction checked on one system matches that on a number of other systems, it is confirmed. After the transaction is confirmed by the network, the user can trust his/her coins have been passed from a wallet to another. The whole process usually takes only a few moments. It is the transparency of this process that makes Vertcoin secure against manipulation. On the other hand, this openness lacks some of the basic privacy that we take for granted in traditional banking and finance. Since all transactions can be viewed by anyone, the full history of any wallet address can be easily determined. This means that if you are able to determine who an address belongs to in the real world, you have unrestricted access to view all their transactions, balances, trading partners and spending habits related to that same address.
The high level of transparency could be undesirable for a number of reasons. Someone with a record of all your Vertcoin transactions would be able to collect quite a bit of information about your life. For businesses or individuals amassing a large balance there is the possibility of becoming a target for an attack if someone manages to unmask your real world identity.
In general, a standard cryptocyrrency wallet address does not maintain the level of privacy many individuals desire.
Vertcoin solves the problem of transactional privacy by using the stealth address technology developed by the Vertcoin development team.
A traditional bank account is based on a private ledger in which the transaction history is only known to the account holder and the bank. In such a system the account holder can widely distribute his/her account number and receive any number of payments without exposing the account history to the payers or casual observers. This is essentially what is accomplished with stealth addresses, without sacrificing the decentralization of the currency.
A stealth address works in the following way: The address is first generated using your Vertcoin wallet. Next you make it public to the payers (on your company’s website, for example). Once public, each payer can use the stealth address to generate a standard but unique Vertcoin address only known to him. Finally, the payers conduct the transactions using their individually generated addresses, and you import them in your wallet with the corresponding stealth address. This way each such Vertcoin address and transaction is only identifiable by you and the payer who generated that exact address. The outsiders are left outside.
Vertcoin’s stealth address technology allows a business to use one consistent address for all their payments, without the risk of someone watching their transactions with malicious intent.
Vertcoin is the first cryptographic currency to develop the stealth address technology and implement it within the blockchain. This is considered to be the best solution for securing users’ privacy in a decentralized public ledger. All previous attempts to address the issue of privacy have relied on third parties like banks. Vertcoin’s stealth addresses bring an increased level of privacy and security for both businesses and consumers.