A team of Hungary-based researchers reports that the Ethereum blockchain is less private than the Bitcoin blockchain. The team came to the conclusion after analyzing the Ethereum blockchain to determine how easy it is for the network to be de-anonymized.
The researchers point out that Ethereum’s account model makes it less private than bitcoin’s Unspent Transaction Output (UTXO) model due to wallet reuse.
Ethereum’s account based model is similar to certain models in traditional banking. Each account experiences direct value and information transfers with state transitions. UTXO is the abstraction of electronic money. Each UTXO represents a chain of digital signatures that allow for the transfer of ownership to a receiver’s public key.
According to the researchers,
“The account-based model reinforces address-reuse on the protocol level. This behavior practically makes the account-based cryptocurrencies inferior to UTXO-based currencies from a privacy point of view.”
The team of researchers suggests that there is still hope for improvements in the future. It states that several proposals have been made to enhance the network-level privacy for cryptocurrencies.
“Fortunately, several proposals had been made to enhance network-level privacy for cryptocurrencies”
A wallet and browser study was also a topic of the research. Online trackers and cookies have been pointed to as one of the reasons for the deanonymization of cryptocurrency users. The team states that more research could be carried out on Metamask, an Ethereum blockchain tool. The browser extension acts as a wallet. The research could reveal how it affects the privacy of Ethereum users.
Despite the possible privacy risks, the future looks more than bright for Ethereum. A new ETH 2.0 calculator promises users 279% earnings over ten years. According to reports, the calculator shows that with one ETH staked on Ethereum 2.0, nearly 300% in earnings could be made in ten years.