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Privacy

A common misconception of bitcoin is that it provides anonymity and privacy of transactions. Since the blockchain is literally an unchangeable ledger of all bitcoin transactions ever made, it is in fact very hard to not have your complete transaction history visible to knowledgable parties once even a single one of your addresses is connected to you. If bitcoin is to become viable for a wider audience and daily use we ought to take privacy seriously. This is certainly not to enable or encourage illicit activity, but to protect individual financial privacy. We would not accept our bank to publish our financial transactions publicly. So when building wallet-products we should strive to implement best practice for maintaining and improving the financial privacy of bitcoin.1

Why hide if there's nothing to hide?

The greed for information —a monster that just wants more.

A case for privacy —

  • Identity
  • Autonomy
  • Control
  • Judgement
  • Freedom
  • Individuality
  • Once the box is opened it doesnt close.

Bitcoin is not anonymous.

Bitcoin is often perceived as an anonymous payment network. But in reality, Bitcoin is probably the most transparent payment network in the world. At the same time, Bitcoin can provide acceptable levels of privacy when used correctly. Always remember that it is your responsibility to adopt good practices in order to protect your privacy2

Why are bitcoin transactions public?

All Bitcoin transactions are public, traceable, and permanently stored in the Bitcoin network. Bitcoin addresses are the only information used to define where bitcoins are allocated and where they are sent. These addresses are created privately by each user's wallets. However, once addresses are used, they become tainted by the history of all transactions they are involved with. Anyone can see the balance and all transactions of any address. Since users usually have to reveal their identity in order to receive services or goods, Bitcoin addresses cannot remain fully anonymous. As the block chain is permanent, it's important to note that something not traceable currently may become trivial to trace in the future. For these reasons, Bitcoin addresses should only be used once and users must be careful not to disclose their addresses.2

Lightning Payments

Solutions

  • Coinjoins
    • Limitations of mixing services
  • Coin Swap
  • Payjoin
  • Tor
  • Schnor Signatures (taproot)

Footnotes

  1. https://deploy-preview-48--sad-borg-390916.netlify.app/guide/private-key-management/principles/ "Bitcoin Design Guide / Private Key Management" ↩

  2. https://bitcoin.org/en/protect-your-privacy "Protect your privacy" ↩ ↩2