LocalEthereum, an Ether (ETH) P2P marketplace has launched a new feature empowering users to re-use Ethereum addresses across multiple trades. This will help frequent traders to have less “clutter” in their wallets.
Previously, and still the default, users need to choose a brand new Ethereum address for every new trade. This means that each time receiving ether, it will go into a new wallet address This protects privacy because it makes it harder for partners and onlookers to view aggregate balances and activity.
However, it can cause a hassle when wanting to send ether out of the web wallet:
[perfectpullquote align=”full” bordertop=”false” cite=”LocalEtherum Team” link=”” color=”” class=”” size=””]”Because of the way Ethereum is designed, it’s not possible to send ether from multiple addresses in a single transaction. In cryptocurrencies like Bitcoin that use what are called UXTOs, users can create a single transaction to send amounts from many different addresses at once. Unfortunately, that ability is lost in Ethereum, which can cause headaches and privacy concerns for end-users. When transacting on localethereum, both parties can see each others’ Ethereum address for that trade.”[/perfectpullquote]
If Alice sells 1 ETH to Bob, then Bob can see the address from which the ETH came from, and Alice can see Bob’s receiving address.
If both parties used only one Ethereum address, Alice and Bob would be able to see each others’ complete Ethereum financial history — including their current ETH balance, past transactions, their token inventory, and which smart contracts they play with.
This is the crux of the problem: Many privacy-concerned users want to obfuscate this information. This is why localethereum chooses a brand new Ethereum address for each trade by default.
Note: If using an external wallet (e.g. MetaMask, imToken or another wallet app), this feature won’t apply. The upgrade is for users who managing the non-custodial web wallet.