‘Public DeFi, Private Wallet’: Vitalik Buterin’s $1 Million ETH Transfer Ignites Privacy Debate

Ethereum’s founder, Vitalik Buterin, made the headlines on Monday after his latest on-chain move. Buterin’s $1 million in ETH transfer to privacy protocol Railgun caught the community’s attention and reignited the debate about using privacy tools.

Vitalik Transfers 400 ETH To Privacy Protocol

On Monday, online reports revealed that Vitalik Buterin transferred over $1 million to Railgun again. The project is an Ethereum Virtual Machine (EVM) privacy protocol that uses Zero-Knowledge (ZK) cryptography to allow the private use of DeFi and smart contracts.

According to on-chain analytics firm SpotOnChain, Buterin sent 400 ETH, worth around $1.054 million, to the privacy protocol earlier today. Before the transaction, he made a test transfer of 0.0998 ETH, worth $2,629.

His latest transfer to Railgun was one of several times when he used the privacy tool. Per the report,  Buterin has sent 662 ETH, $1.91 million, to the protocol in the last 10 months.

Earlier this year, Buterin made a 100 ETH transfer to Railgun that sparked an online debate. Some community members questioned the reasons behind the transfer and criticized his desire for a private address.

However, many users supported Buterin’s use of privacy tools as his every on-chain move is scrutinized and speculated on. At the time, he addressed the criticism by stating, “Privacy is normal,” and explaining that Railgun is an effective tool for safeguarding users’ privacy.

Moreover, he highlighted that the project uses the Privacy Pools protocol, which he has researched throughout the years, which “makes it much harder for bad actors to join the pool without compromising users’ privacy.”

Railgun Addresses Misconceptions

Buterin’s most recent transfer reignited the privacy debate, with some wondering why Railgun “is ok” while Tornado Cash “is bad.” To address this, Railgun’s contributor and MetaMask’s seed phrase recovery team CEO, Bill, clarified some misconceptions about the privacy protocol.

As explained on X, Railgun should not be called a mixer as it isn’t one. Instead, it is “an address system that gives privacy” and works like other wallets where a private key controls tokens.

Bill explained Railgun’s privacy comes from using the private address instead of the mixing of tokens:

Privacy comes from using this address, not mixing or moving tokens. Here, Vitalik is merely sending tokens from his public address into his private address. He doesn’t need to pull tokens out to get privacy, he can leave them in his private address forever or do other on-chain stuff like swaps with them, we, as avid wallet watchers would be none the wiser.

As a result, he considers that referring to the protocol as a “privacy system” would be more accurate. Another community member questioned the purpose of a privacy system, debating that the “whole point of crypto” is to see it “live on the blockchain when it posts.”

Bill addressed this by explaining that all Railgun transactions are valid Ethereum transactions based on the network rules. The difference is that these have identifiable information hidden.

He called the process “public DeFi but private wallet,” emphasizing that when people use a smart contract with Railgun, they can “still see what’s going on in the contract,” but their actions are private.