 
 Vitalik Buterin, the co-founder of Ethereum, is an active crypto community member who uses his unique perspective and ideas for innovative solutions. Vitalik’s new paper, “Blockchain Privacy and Regulatory Compliance: Towards a Practical Equilibrium,” co-authored by Jacob Illum, Matthias Nadler, Fabian Schar, and Ameen Soleimani, the team discusses Privacy Pools.
Privacy Pools is a novel smart contract that Vitalik Buterin proposes which has the potential to revolutionize the security and privacy of users while adhering to regulatory laws. Despite allowing users to move transactions privately, Privacy Pools will provide the aspect of security that was previously missing in mixers like Tornado Cash.
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Transparency in blockchain technology allows anyone to validate transactions, a feature designed to reduce risks. However, the aspect of openness proved to be a challenge regarding privacy.
Privacy Pools function on the fundamental idea that users should be able to publish zero-knowledge proofs and demonstrate the legitimacy of their funds without disclosing their entire transaction history. It is possible to achieve the goal through custom association sets that adhere to specific properties required by regulations or social consensus.
The concept of privacy pools is an ingenious approach that allows users to comply with the regulations while preserving their privacy. It is a significant leap in balancing financial privacy and regulatory compliance.
Privacy Pools emerged when other privacy-focused solutions like Tornado Cash faced challenges. Tornado Cash allowed users to make transfers and transactions without proving their identity and whitewashing the funds transferred.
Tornado Cash faced charges of involvement in the laundering of over $7 billion worth of cryptocurrency since 2019, where the user identity was protected, allowing bad actors to walk. Privacy Pools introduces an approach where users can prove their identity in association sets that will enable them to prove the funds’ origin.
Using the approach of Privacy Pools, Honest users can dissociate themselves from third party deposits they disagree with, making it difficult for dishonest users to make transactions or participate in such association sets.
Previously, Vitalik’s Multisig proposal came to fruition, with multiple companies offering multisig sign-in options to users. Considering Vitalik’s influence over the blockchain industry, will we can soon witness his new paper on Privacy Pools come into existence.
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