Stealth Address

💡 The Plain-English Definition

A stealth address is a privacy technique where the sender generates a unique, one-time Bitcoin address for each payment using the recipient’s published public key — so the recipient can receive funds privately without publicly visible address reuse, but must scan the blockchain to find incoming payments.

🤔 But Why Though?

The fundamental privacy problem with reusing a Bitcoin address is that every payment to that address is permanently linked on the public blockchain — a complete public record. Stealth addresses were one of the earlier proposed solutions: instead of reusing a known address, the sender derives a fresh address mathematically from the recipient’s published “stealth address” public key, using their own random number to ensure uniqueness. The recipient, knowing their private key, can scan the blockchain and identify which UTXOs (Unspent Transaction Outputs — discrete chunks of Bitcoin) belong to them by checking whether each transaction output corresponds to a derivable address.

The original stealth address standard was BIP47 (also called PayNyms, implemented in Samourai Wallet and other wallets). BIP47 required an initial “notification transaction” — an on-chain payment to a notification address before any payments could be received — which had a privacy cost (it revealed the relationship between two parties) and an economic cost (an extra on-chain transaction fee). This friction limited BIP47’s widespread adoption. Silent payments (standardised as BIP352 in 2023) are the improved successor: they achieve the same privacy goal without requiring any notification transaction, because the sender derives the unique address directly from their transaction inputs rather than from a prior notification. Silent payments are now considered the preferred approach for the use cases stealth addresses were designed for.

🌍 The Real-World Analogy

A stealth address is like a mail forwarding service that gives you a different collection address for each sender. When someone wants to mail you something, the forwarding service tells them a unique collection address generated just for them. You pick up all your mail from the service, which knows to forward anything sent to any of your unique addresses. The challenge: you have to check the service to know if anything arrived (scanning the blockchain), whereas a direct address lets you monitor continuously with less effort.