Ethereum’s privacy has come under scrutiny after a researcher at the Ethereum Foundation revealed that the IP addresses of Ether (ETH) stakers are monitored as part of a broader set of metadata. In an interview on the crypto podcast Bankless, Justin Drake, an Ethereum Foundation researcher, stated that he learned this information “internally” — presumably at EF. Drake revealed that the metadata is used to track deposit addresses, withdrawal addresses, fee recipients, and IP addresses. Drake’s comments appeared to have taken Bankless host Ryan Sean Adams by surprise. “So it’s a fairly Sybil resistant dataset of your most involved Ethereum citizens?” Adams asked. “Exactly,” Drake responded.
The conversation was initiated when Drake predicted that “special airdrops” may become available for solo stakers. The conversation caused a stir on Crypto Twitter, with many expressing concerns about Ethereum’s privacy. One Twitter user referred to Ether as the “real surveillance coin,” while another mocked Drake by sarcastically rehashing him: “We can stop censorship by censoring those we don’t like.” Another described the situation as “central governance to a T.”
To resolve the privacy concerns, one Twitter user suggested Ethereum users take on-chain privacy responsibilities into their own hands by installing a Linux operating system, using a Virtual Private Network (VPN), and storing cryptoassets on a hardware wallet such as Ledger.
This isn’t the first privacy-related statement to have caused a stir in the crypto community. ConsenSys, the team behind Ethereum wallet Metamask, began collecting IP addresses in November. The policy amendment was made to ensure that the firm could comply with Know Your Customer (KYC) and Anti-Money Laundering (AML) where necessary.
The news has raised questions about the potential violation of user privacy rights. As a decentralized network, Ethereum is expected to offer a level of anonymity to its users. However, the revelation that IP addresses are being monitored has sparked concern that user privacy may be compromised.
Ethereum is a blockchain technology that is focused on enabling the creation of decentralized applications (dApps) and smart contracts. The Ethereum network consists of nodes that run Ethereum software and users who interact with the network through Ethereum wallets. Ethereum software enables users to store and transact Ether, the network’s native cryptocurrency, and other tokens. The Ethereum network is powered by a consensus mechanism called proof-of-stake (PoS). The PoS mechanism requires users to hold a certain amount of Ether as collateral or “stake” in order to validate transactions on the network.
Ethereum’s PoS mechanism is designed to be more sustainable and less energy-intensive than the proof-of-work (PoW) mechanism used by Bitcoin. However, PoS also requires users to disclose their IP addresses, which are used to track their activity on the network. While this information is essential for maintaining the security and integrity of the network, it also raises concerns about user privacy.
The Ethereum Foundation, which oversees the development of the Ethereum network, has acknowledged the need for privacy on the network. In a blog post, the Foundation stated that “privacy is one of the most critical issues facing the blockchain community.” The blog post goes on to state that the Foundation is committed to addressing privacy concerns on the network by exploring new technological solutions.
In conclusion, the revelation that the IP addresses of Ethereum stakers are being monitored has sparked concerns about the privacy of Ethereum users. While the monitoring of IP addresses is necessary for maintaining the security and integrity of the network, it also raises concerns about user privacy. The Ethereum Foundation has acknowledged the need for privacy on the network and is exploring new technological solutions to address these concerns. In the meantime, users can take on-chain privacy responsibilities into their own hands by using VPNs and hardware wallets.
