Stealth addresses using nostr

In the realm of secure communication and transactions, the exchange of keys between parties is a cornerstone for privacy and security. Alice and Bob, two participants in this scenario, utilize their private and public keys to create a shared secret that ensures their communication remains confidential. Alice holds a private key denoted as a, from which her public key A is derived by multiplying it with a generator point G. Conversely, Bob has his private key b, used to generate his public key B through the same method.

The creation of a shared secret S is pivotal in their secure communication. This secret is computed by either party using their private key and the other's public key, resulting in a value that can be represented in multiple equivalent forms (aB = abG = baG). This shared secret forms the basis for further cryptographic operations, enhancing the security of their exchanges.

Stealth keys play a significant role in maintaining privacy in transactions or communications. The stealth public key P is calculated by adding Bob's public key B to the hash of the shared secret concatenated with a counter value i and a unique identifier "stealth", all multiplied by the generator point G. The corresponding stealth private key p involves adding Bob's private key b to the hash of the shared secret, the counter, and the identifier, modulo n. These stealth keys enable secure and private exchanges without revealing the actual public or private keys of the involved parties.

To facilitate the use of stealth keys, a notification mechanism is employed, typically using an encrypted direct message (DM) that adheres to the NIP-17 standard. This notification contains Alice’s public key A and a counter value i, enabling Bob to reconstruct the stealth public key P on his end. This process allows Bob to monitor transactions or messages targeted at him without exposing his real identity or compromising on security. Through these mechanisms, Alice and Bob can maintain the confidentiality and integrity of their communications, ensuring that only they can access the information exchanged.