Not many users will be aware of stealth address unless they have completely read everything about bitcoin or they have used Monero or other cryptonote coins. As I have used Monero once, I knew how a stealth address works. Let me try to explain this in simple terms.

A stealth address is a type of bitcoin address which is generated by the receiver to receive his funds anonymously. A stealth address generated is used to have a transaction only between the sender and the receiver where the sender cannot view the earlier transactions which were made to the address. A stealth address can be used only once and only for one transaction. The sender sends the coins to the stealth address in the sense that it can only be derived by the receiver using his private keys. Monero uses stealth address technology for its transactions. Basically a stealth address works on the mechanism of Elliptic-Curve Diffie-Hellman algorithm.

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How does a stealth address work?

For instance, let us consider Bob is the receiver of bitcoin and Alice is the sender. Bob has a private key (X) and a public key (Y) and Alice has a private key (A) and a public key (B). The public key of both sender and receiver are known to each other.

Now, Bob creates a secret channel say C, where

C= X*B (privkey of Bob * pubkey of Alice)

and Alice creates a secret channel similar to Bob, where

C= A*Y (privkey of Alice * pubkey of Bob)

When Alice pays the funds she hashes the secret channel C and then adds pubkey of Bob and creates a public key or address D where

D= Y + H(C)

This pubkey which is used by Alice to pay the bitcoin is called as Stealth Address. Bob can spend the coins by the private keys he has and also Bob's wallet need to check the OP_RETURN (B) quite often in order to discover the right address and its balances.

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Stealth address are very rarely used by Bitcoin network or people due to the disadvantages associated with it. A stealth address can be generated using Dark Wallet.