In the world of Bitcoin, anonymity can be tricky. This is because Bitcoin, by design, is pseudonymous not anonymous. What that means is that there’s an alias involved hiding the user’s real identity. Transactions are recorded on a public ledger, potentially exposing where your coins came from and where they’re going. This article explores some tools that aim to enhance Bitcoin privacy: Coinjoin, Wasabi Wallet, and Samourai Wallet.
What is a Coinjoin?
Coinjoins are a method used to improve the privacy of Bitcoin transactions. Bitcoin addresses are pseudonyms as they don’t directly reveal the user’s identity. However, all the transactions for a particular address are recorded on a public ledger called the blockchain, which allows anyone to see the movement of funds. This can be a privacy concern for some users. Coinjoins work by combining transactions from multiple users into a single transaction making it difficult to track a user’s transaction.
The final transaction output makes it difficult to track which specific coins came from which user. This enhances privacy because it obscures the origin and destination of the funds.
Here are some additional things to know about coinjoins:
- Not completely anonymous: Coinjoins are not a perfect privacy solution. While they make it much harder to trace transactions, some advanced analysis could potentially reveal information about the source and destination of funds.it’s not foolproof. Sophisticated analysis and surveillance can still potentially deanonymize transactions
- Requires trust in some services: Some coinjoin services are centralized, which means users have to trust the operator of the service not to steal their coins.
- Not illegal (generally): Coinjoins have regulations limiting its usage. Although not illegal, Bitcoin regulations are location based. It’s important to be aware of the laws in your locality.
What is Wasabi Wallet
Wasabi is a software-based,open-source, non-custodial Bitcoin wallet with a strong focus on privacy. Its key features include but are not limited to the following:
- Desktop wallet: It’s a zero-knowledge software that runs on your computer, giving you more control over your Bitcoins.
- Non-custodial: This means you hold the private keys to your Bitcoins, not Wasabi. This gives you greater control and security over your funds.
- Privacy focus: Wasabi prioritizes user privacy. It accomplishes this through features like:
- CoinJoin: This anonymizes transactions by mixing them with others, making it difficult to track where the coins come from or go. It uses wabisabi for more efficient coinjoins.
- Tor integration: This allows you to connect to the Wasabi network anonymously through the Tor network, masking your IP address.
- Open-source: The Wasabi code is publicly available, which allows for independent security audits and fosters trust.
What is Samourai
Samourai wallet is a non-custodial Bitcoin wallet with privacy at its forefront. It has a variety of similarities and some differences with Wasabi wallet. Some of these includes:
Similarities:
Non-custodial: Like Wasabi, Samourai Wallet gives you control of your private keys thus fostering privacy and an added security over your Bitcoin.
Privacy: Both wallets offer features like coinjoin to make transactions anonymous.
Differences:
Platforms: Whilst Samourai Wallet is currently Android based Wasabi is a desktop application.
Focus: While both prioritize privacy, Samourai might cater to more advanced users who value extensive privacy controls and a higher level of technical complexity.
There is limited privacy in Indonesia where every fiat transaction is tracked
Conclusion
The battle for privacy is long and arduous. Coinjoin is a valuable tool for anonymizing transactions, but it’s faced by regulations from governments. Wallets like Wasabi and Samourai provide an additional layer with features that tend to enhance privacy, but also face restrictions from governments. For instance, zkSNACKs, the developer behind the Wasabi Wallet, is set to shut down their CoinJoin service due to increasing pressure from US regulators.
In the future, due to the rapidly evolving nature of tech more sophisticated tools may be released. However, regulatory bodies are likely to continue their scrutiny, seeking a balance between user privacy and preventing illegal activities. Ultimately, the decision on utilizing these tools falls on users. However, if you would like to learn more about how to use bitcoin, you can read our article here.
