Bitcoin Anonymity And Confidential Transactions

Anonymity and confidential transactions. disabling anonymous transactions. Cryptocurrency mixing as a CoinJoin-like anonymization method. Serverless peer-to-peer software. Vulnerabilities to statistical analysis. Soft fork upgrade with confidential transactions after Segregated Witness.

On the subject of wallet security and privacy, wallet was very innovative and has been around for a long time, kind of a pioneer in the architecture of client-side trustless way of doing their wallets. They also had a CoinJoin feature for multiple years. It was a simple checkbox: “Do you want your transaction to be anonymous?”

They disabled that. I was wondering if you had any insight on why they did that. It may be a technical reason that I am not aware of…

I have no insight or ability to comment. It is a private company and I have no association with them. Obviously, it would be disappointing because that was a feature that the lot of people found useful.

On the other hand, there is a big difference between the Bitcoin blockchain in 2013 to 2014,

where their wallet was the only option, versus the options we have today.

If you wanted to use CoinJoin, the easiest way was to do it with ShapeShift, swapping from Bitcoin to Dash, Monero, Zcash, and back to Bitcoin. Maybe a bit of Litecoin or Ether in there, for fun. Or some Ethereum Classic. Mix it all up.

When you are back in bitcoin, you have effectively coin-joined. You don’t really need to use it as an application. You can use it through cross-chain swaps.

That is part of what the ecosystem offers us now, many alternatives.

There are many peer-to-peer networks, what they call now dexes – decentralized exchanges.

The point is in peer-to-peer server-less software. It essentially does the same thing, in a broadly applicable way.

The main weakness with CoinJoin privacy and anonymization technologies is that you could perform statistical analysis on the transferred values, and correlate associations with that. That is what confidential transactions solves directly, which is really good.

Confidential transactions are software implementation of homomorphic encryption using ring signatures. First was implemented as testnet on the Elements alpha-version sidechain run by Blockstream. It was invention initiated by Gregory Maxwell and Pieter Wuille; and a bunch of other developers of course.

It was one of the upgrades proposed as a soft fork after Segregated Witness, to bring it straight into Bitcoin.

About the author

Satoshi Nakamoto

We developed bitcoin. This post is derivated from aantoop yt video with same headline under cc by license.

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