Bitcoin Privacy is a mess

Chris Dev

July 23, 2019

Since we started talking about the MWC airdrop earlier this year, we have frequently been met with statements like, "Mimblewimble is not needed in Bitcoin because we already have Wasabi and Samurai wallet". My response was always that opt-in privacy is widely regarded as insufficient and does not work. These statements were all based on common knowledge about how privacy is generally implemented, but in the last few days, we have received evidence and conclusive proof that these services are COMPLETELY broken and are quite frankly likely to actually be honey pots.

To recap, this article describes exactly what is happening. As you can see, the Samurai wallet team has explained that there is a frequent participant in Wasabi wallet's coinjoins that can, by virtue of always being involved, de-anonymize the transactions that occurred. Whoops! Hope you didn't really need the anonymity and you were only using the wallet as a test. And Samurai is actually probably even worse because their wallet requires that you send them your xpub information, thus revealing _ALL_ your transactions to them. So, hope you trust the Samurai operators. Sure you can run your own Dojo, but then you'll have even less of an anonymity set than their already limited anonymity set.

Someone in our discord room asked how to do privacy in Bitcoin and I told them it's very hard, but I'd suggest the best privacy would be obtained by sending your coins through 4 or 5 of the centralized sites like darknet markets and gambling sites that don't do KYC. For best results, you'd want to hold the coins on these sites for a few hours and make sure to not send the exact same amount at each step. This would be not only involve risk because the operators of these sites are not totally trust worthy, but also be extremely time consuming because you need to hold your coins on these sites for a few hours each. Also, if you do this, be aware that your coins might be considered "dirty" and sites like Coinbase will likely close your account if they see that you sent them to these sites.

So, how does this all relate to Mimblewimble? Well in Mimblewimble, EVERY transaction is essentially part of a single coinjoin that occurs for each block. Since there are no addresses at the protocol level no one can map the inputs to the outputs in any way. With thousands of transactions per block, as is the case in Bitcoin, it would be almost impossible to map the senders to receivers and essentially as good as the privacy in Monero. Since, with Mimblewimble, amounts are also unknown privacy is even greater because you can't tell whether the transaction is someone moving thousands of coins to an exchange or someone buying a cup of coffee.

So, this is why we are working on MWC. Our registration for the free airdrop to Bitcoin holders is now closed, but we will plan to launch mainnet in Q4.