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A stealth address is unique one time address , that’s created for making transactions , to make it difficult to trace transactions to the individuals that made them. This concept was introduced into blockchain technology to enhance privacy , allowing users to make transactions without revealing their public keys.
Stealth address attack is a type of attack that makes use of the privacy features of the stealth address. For example an attacker can generate a stealth address , then make an illegal transaction, which will be very difficult or impossible to trace.
This attack has a very significant effect on the blockchain networks , as it affects security, transparency and trustworthiness of this network. Also the attack can also affect the trust that people have in blockchain networks especially for those that are marketed as being secure and transparent.
- LOSS OF TRANSACTION TRACEABILITY:
One of the effect of stealth address attack on blockchain network is the loss of transaction traceability. Normally in blockchain transactions are recorded on ledgers, and this ledgers are traceable , making the system secure transparent and trustworthy. But with the introduction of stealth address, that creates a one time password, it has become nearly impossible to trace transactions.
When an attacker uses this stealth address attack, he can carry out illegal transactions, without anyone one finding out who has done it, because of the lack of traceability. For example some can engage in money laundering or any illicit activity, using stealth addresses. As a result it would be very difficult for law enforcement to trace where this activity is coming from .
This lack traceability makes it impossible to upload the principles of blockchain, where accountability and transparency help to prevent illicit activity and ensure security.
Loss of traceability also makes it difficult for legitimate users to verify their transactions. For instance if stealth addresses are used in making a transaction, it will be very difficult to reconstruct a transaction history.
- INCREASED POTENTIAL FOR MONEY LAUNDERING AND ILLEGAL ACTIVITIES:
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Stealth addresses attack increase the potential for money laundering and illegal activities, because it enable criminals to create untraceable addresses for transactions. As a result they can carry out illicit activities like money laundering, with being detected. This specifically pose a challenge for law enforcement, and financial institutions that rely on transaction data to fish our criminals and prevent money laundering.
People alway criticize blockchain network for aiding illegal activities, but with the introduction stealth addresses that it has gotten worse, because criminals now commit crimes and go undetected. Stealth addresses now attract bad people to the blockchain network especially for illegal activities like drug trafficking, arm dealing etc
With the introduction of stealth address in blockchain chain network, there is an increase in potential for illegal activities. This can make the government to tighten the regulations around blockchain technology.
- COMPROMISED REGULATORY COMPLIANCE:
Stealth address attack comprises regulatory compliance. Regulators around the world are trying to make sure that cryptocurrencies and blockchain network, comply with laws related to financial transparency, anti money laundering etc. But with use of stealth address this compliance have been compromised, as it now difficult to track transactions and identify the individuals behind them.
Also the use of stealth addresses could lead to clamp down of blockchain networks by regulators. This could also make government to ban privacy enhancing technology in cryptocurrency transactions.
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In conclusion, Stealth address attacks has a great effect on the blockchain network. It undermines the core principles of the blockchain network, it undermines the reputation of the blockchain, and it also makes it easy for crimes to be committed on the network.