When the AlphaBay darknet market announced they would integrate Ethereum, a lot of people were caught by surprise. Ethereum has no anonymous payment solution. It makes little sense to integrate such a payment solution if it can’t provide anonymity. However, a decentralized Ether Mixer is currently in development. It may not be a perfect solution, but now is a good time to see what this project has to offer.

The Decentralized Ether Mixer Smart Contract

It is evident the Ethereum ecosystem could benefit from anonymous payment solutions. Although not everyone wants to use this currency for nefarious purposes, some people like to have some additional privacy at any given time. Unfortunately, that is rather difficult to achieve in the Ethereum ecosystem right now. This situation may come to change soon, though, thanks to the Decentralized Ether Mixer smart contract.

To put this concept into perspective, the goal is to make Ethereum mixing as decentralized as possible. In the world of Bitcoin, mixing services are run by one or multiple operators. Using such a service means the sender has to fully trust the mixer operator not to steal their funds. While this is usually not much of a problem, it still creates some trust issues along the way. Using a decentralized approach makes a lot more sense for mixing services, but it is also more difficult to integrate.

The team working on this concept is making use of a smart contract to provide decentralized Ethereum mixing services. More specifically, the contract lets multiple parties deposit funds and withdraw the same amount through the use of different anonymous addresses. This sounds great on paper, although one could argue there is no need to use a smart contract for such features by any means. Then again, the fact a smart contract can be used for mixing services is quite impressive.

Unfortunately, it appears there are some drawbacks associated with this feature in its current development. All of the anonymous addresses used to receive funds from the mixing contract needed to contain a small ETH balance already. This is a bit of a drawback, as it means there needs to be a link to these anonymous addresses already.  Then again, one could send mining rewards or faucet payouts to these addresses, which still retains a certain degree of privacy.

In the current iteration, it appears anyone looking to receive funds to an anonymous address will need to deposit 1 ETH through the smart contract. This is done to ensure the user controls the private key associated with this anonymous address in question. If there are more anonymous addresses than individual 1 ETH deposits made, the contract will not execute. If this is not the case, however, the anonymous addresses can withdraw their claim and registration deposit accordingly.

It is important to keep in mind the decentralized Ether mixer smart contract is merely a proof of concept right now. It is not ready for mainstream usage by any means, but the source code can be viewed on GitHub by the people interested in this concept. It is not unlikely we will see such a decentralized mixing solution become a part of the Ethereum ecosystem in the future. Whether or not that will be in the form of a smart contract, remains to be seen.

Source: The Merkle.