CRYPTO NEWS AGREGATOR
Wed, Jun 24, 2020 11:00 AM

Improving Anonymization: Privacy Technologies in Crypto

Anonymous CJ with a newspaper

Users of crypto are worried that the information about their assets is quite transparent, just like Monero project manager Riccardo Spagni said in his Twitter account: “What if I simply don’t want the cashier in the grocery store to know my account balance and spending habits?”

Here is a brief overview of how this problem can be solved, the advantages and disadvantages of the methods.

CoinJoin

CoinJoin is a Bitcoin exchange anonymization innovation presented in 2013 by Bitcoin Core and Blockstream engineer Gregory Maxwell. 

Bitcoin doesn't offer total obscurity. On the off chance that somebody breaks down the public blockchain, exchanges will be related with a particular individual. 

Bitcoin exchanges comprise of data sources (sending locations) and yields (getting addresses). At the point when a client needs to orchestrate an exchange, he chooses the unspent approaching exchange adjusts (UTXO) as sources of info, assigns the yields, and signs the information sources. Every passage is marked self-rulingly, and clients can set different ways out. 

A similarity of the CoinJoin model is a circumstance when a gathering of individuals consolidates their money into one sum, places it in a wallet, and goes to the store. All individuals from the gathering can ensure that nobody spends more than they ought to, nonetheless, during the time spent making buys, they don't really utilize the banknotes they put into a typical wallet. 

On account of CoinJoin, a few gatherings mutually make an exchange; each side gives doors and ideal ways out. At the point when all sources of info are related, the investigator can't say precisely to which client either yield has a place.

However:

  • CoinJoin does not provide complete anonymity: senders and recipients are displayed on the blockchain;
  • Also, transactions can be identified through the CoinJoin Sudoku analysis instrument. You can deal with this problem by using only certain amounts for transaction output values (0.1 BTS, 1 BTS, 10 BTS, etc.), but this creates additional difficulties and limitations;
  • To form a transaction, it is necessary to create groups and establish interaction between participants.

To improve CoinJoin the developers proposed several extensions and improvements to the protocol: JoinMarket, CoinShuffle, and Chaumian CoinJoin technologies.

Two wallets support CoinJoin technology – the mobile version of Samourai Wallet with its associated Whirlpool technology and the desktop version Wasabi Wallet.

On April 5, 2020, on Satoshi Nakamoto’s alleged birthday, the Bitcoin community first celebrated CoinJoin Day. In honor of this day, the Wasabi developers introduced a new release. CoinJoin is also used in MimbleWimble, a PoW protocol with scalability, and increased privacy.

ZeroLink

ZeroLink is a protocol that provides anonymous use of Bitcoin that was presented in August 2017 by the developers of Samourai Wallet and Hidden Wallet.

When creating ZeroLink, the Wallet Privacy Framework was used, combining wallets with functions for pre- and post-mixing, as well as the technology of mixing coins.

Zero Link principle of operation: users connect, give inputs and exchange addresses, as well as the masked address to which their coins should arrive, after which the server pits the signature on crypto coins and returns them. The users reconnect anonymously, unmask the output addresses and give back the addresses to the server. The server agrees that all the outputs were properly signed and came from legitimized holders. After that, users reconnect again and sign transactions.

In this case, a full round of mixing takes place in seconds and is quite inexpensive, and anonymity, if necessary, can spread much further, then a separate CoinJoin transaction.

Stonewall

Stonewall is a technology for protecting transaction anonymity from cluster analysis proposed by Samourai Wallet founders in May 2018. It does not use CoinJoin technology but creates the appearance of such use, and transactions are ordinary transactions: with their help, one user sends Bitcoins to another. The trick is that users combine their transactions into one and add an arbitrary number of exits to the normal Bitcoin transaction. 

Transactions with Stonewall are distinguished by a higher entropy compared to standard Bitcoin transactions, which increases the cost of automated chain analysis and complicates the analysis of the transaction graph. Stonewall transactions are carried out in such a way that they get a Boltzmann that exceeds zero. The technology is built-in by Samourai Wallet as a default feature but is not necessarily involved in every transaction.

Conclusion 

For many virtual asset holders, crypto mixers are very important. Fraudsters and special public services try to disclose information about people who use cryptocurrency transactions. 

It is sometimes better to pay a commission to cryptocurrency mixers to avoid troubles and significant losses. If we neglect the basic tenets of protecting digital capital, then each user who has some knowledge, skills, and technical capabilities will be able to get important information from the coin blockchain against anyone who has committed a simple operation with virtual currency.

Stay in touch!

Subscribe to our weekеly newsletter!
Related:
Zoom