Using a new ERC721 extension proposed by Ethereum researcher Anton Wahrstätter, users would be able to transfer NFTs with only the new owners being able to see who owns the NFTs.
The proposed extension would work by obscuring public blockchain transactions by generating one-time addresses for every transaction and utilizing zero-knowledge proofs.
Buterin suggested an alternate solution using so-called stealth addresses. “The reason why you don’t need Merkle trees or ZK-SNARK-level privacy is that each ERC721 is unique, so there’s no possibility of creating an “anonymity set” for an ERC721. Rather, you just want to hide the link to the sender and recipient’s highly visible public identity,” he posted.
NFTs sent using this method would appear to be owned by a random address with no public link to the new owner.
Privacy vs Transparency
The debate on privacy versus transparency in crypto is a longstanding one, and the proposal unsurprisingly received heated reactions across Twitter.
Samuel Cardillo, CTO of RTFKT, told The Defiant that he is not a fan of the ERC extension “because blockchain, in my eyes, is about transparency.” Cardillo doesn’t believe the extension should never be used, but that it depends on presented use cases. “I don’t want to see only bad [aspects] straight away,” he said.
Others were more optimistic about the future of the proposal. Cooper Kunz, CTO at web3 social token startup Calaxy, told The Defiant that he could see the extension being used for physical ticketing to prevent stalking. Currently, if a concert gives out an NFT ticket, anyone in the world can see the ticket on the blockchain. Kunz also believes the extension could be used for certifications and off-chain verifiable credentials.
In his proposal, Wahrstätter referenced the extension being used for private POAPs and non-transferrable NFTs known as soulbound tokens. Much like private NFT ticketing, this would allow tokenholders to shield the events they attend from the public.