Privacy and anonymity of transactions are a much-debated issue in the blockchain space. Vitalik Buterin, co-founder of Ethereum (ETH), is working on a new solution that can anonymise transactions in order to improve network privacy.

The system has been called minimal mixer and the aim is to transfer a certain amount of ETHs from one wallet to another without the transaction being visible on-chain.

“We need a first step toward more privacy”.

these are Buterin’s words.

In a post on HackMD Buterin revealed some details about his idea. A normal transaction is visible thanks to any block explorer: ETHs move from one wallet to another. If a user wants to perform an anonymous transaction, he/she must perform it from a larger number of starting wallets.

Ethereum: Buterin proposes the minimal mixer

The system would be based on the creation of two smart contracts: the mixer and relayer registry. With these contracts, users would have the ability to make private transactions (using the anonymity set) or not.

As Buterin explained, the system is still far from perfect as transactions could still reveal the true links between a person and the displaced ETHs. However, the larger the anonymity set, the more difficult it is to keep track of transactions.

Buterin told CoinDesk:

“Anonymity set is cryptography speak for ‘set of users that this thing could have come from.’ For example if I sent you 1 ETH and you can’t tell who exactly it was from but you can tell that it came from (myself, Alice, Bob or Charlie), then the anonymity set has size 4. The bigger the anonymity set the more privacy you have”.

Buterin then explained that the introduction of this mixer would not require changes to the Ethereum protocol. A first implementation could be tested soon. The idea proposed by Vitalik Buterin is interesting because, as he specified, it is very simple to implement.

This solution would clearly require users to pay a higher amount of fees (GAS).

Eric Conner, product researcher at the Gnosis startup, commented on the proposal as follows:

“This proposal for Ethereum provides us with a solid solution to increase privacy. The goal is to make a solution that can be easily integrated into current wallets”.

This solution may not be very well received by the authorities. Interpol recently closed down BestMixer, an excellent token mixer, because it was considered illegal.