Indeed, Ethereum transactions are transparent, and the entire transaction history, along with current ETH and ERC20 token balances, is visible to anyone monitoring the Ethereum blockchain. The privacy of an Ethereum address lies in the lack of direct connection to a person's real-world identity.
- To enhance privacy on Ethereum, users can adopt certain practices, such as using multiple wallets for different purposes:
- Long-term storage wallet: A rarely-used wallet specifically for long-term storage that does not transact with entities collecting data.
- Exchange interaction wallet: A wallet dedicated to transactions with centralized exchanges and other data-collecting entities.
Peer-to-peer transaction wallet: A wallet specifically for transacting with individuals.
By segregating wallet usage based on clear use cases, users can compartmentalize their activities, reducing the likelihood of associations being made between different aspects of their financial transactions. While this doesn't provide absolute anonymity, it adds a layer of privacy to Ethereum transactions.