And this is the drama. The Wasabi wallet is launching a coinjoin in partnership with Trezor, the cold wallet developed by the Czech SatoshiLabs.
The co-founder of SatoshiLabs Pavol Rusnak, accompanied by the CEO of zkSNACKs (and contributor to the Wasabi wallet) as well as Simon Males (Trezor) unveiled their “ COINJOIN this Wednesday in Prague.
Pavol Rusnak recalled in the introduction to this meet up organized by SatoshiLabs the principles that guide their work:
“Anonymity protects individuals against stalking, harassment or identity theft. It also encourages free expression without fear of reprisal or persecution. This is essential for making independent decisions without fear of judgment or interference.
The protection of privacy helps to ensure equal treatment for all, regardless of race, gender, religion or other personal characteristics, by preventing discrimination and prejudice.
In sum, anonymity is a fundamental human right that protects the autonomy, security and freedom of the individual while promoting trust, equality and innovation. »
These words take on their full meaning when we see the development of dystopia attributes such as CBDCs and Chinese-style social credit.
Coinjoin for what?
Bitcoin is not strictly speaking a “tool” for protecting one’s privacy. The transactions are certainly pseudonymous, but each BTC is linked to a history of transactions that can be traced until its creation.
So much so that it only takes one transaction to be linked to an identity for all the history of past and future transactions to be revealed. And unfortunately, the fact is that obtaining bitcoins requires going through “KYC” exchanges.
Thus, at a minimum, exchanges are a potential flaw. Even your email address provider! Indeed, Coinbase, for example, does not hesitate to send an unsolicited email containing the addresses used to withdraw its BTC…
Also, there is a risk that data from exchanges will leak as a result of a hack. History shows that this probability is very high. Sensitive data always ends up in the wrong hands.
And especially in those of Chainalysis which does not hide doing business with the States. This blockchain analytics firm has received over $25 million since 2015 from the US government.
It is therefore crucial to regularly clean up your wallets to erase your tracks and protect your privacy. This is precisely the raison d’être of the coinjoin.
Joining the corners
The “coinjoin” is the best way to anonymize bitcoins on a large scale. The principle is to group together the transactions of a large number of participants and to “mix” them together.
A coinjoin is nothing but a transaction involving many people at the same time. Everyone must provide BTC and blank addresses in order to build this transaction which will, so to speak, reshuffle the cards.
A coinjoin transaction therefore needs a coordinator. In the case of Wasabi, the company zkSNACKs is responsible for selecting the UTXOs and ensuring that there are enough participants.
In the jargon, we talk about UTXO (Unspent transaction output) to talk about bitcoins. There are currently around 88 million UTXOs that together form the BTC Ledger. But still ?
A UTXO is a transaction output. It is simply a fraction of bitcoin, or even several bitcoins. If your wallet shows a balance of 1.5 BTC, there is actually a good chance that it consists of several UTXOs which, in total, represent 1.5 BTC.
You have to imagine the UTXO as gold ingots of various sizes that we will melt together at the time of a transaction and which will still give different ingots in ouput.
Each UTXO corresponds to a signature necessary for its expenditure. And the fact is that it is possible to choose how many UTXOs to bring in input, as well as the number of UTXOs in output.
It is then easy to understand the interest of such a transaction to cover the tracks. Imagine a helicopter chasing a red car suddenly passing through a tunnel. And let 10 red cars come out the other side of the tunnel. Which to follow?…
This is essentially what a coinjoin transaction is. Breaking the link between transactions makes it possible to create “plausible deniability”, as the Anglo-Saxons say.
The goal is to increase the probability of uncertainty so that you can no longer tell if bitcoins have been spent or simply moved to other addresses belonging to the same person.
Access to the Wazabi coinjoin will not be open to everyone. BTC will be filtered. And this thanks to the help of Chainalysis which keeps track of all addresses affiliated with criminal activities.
Hence the accusation by some of making a pact with the enemy, which annoys the competitor Samourai who prides himself on not filtering anything.
Memes have exploded in recent days on twitter:
Philosophically, Samourai proponents are of the view that coinjoins should instead be used to “smear” all BTC. That is to say mix without filter, otherwise create a boundary between clean BTC and dirty BTC.
The problem is that receiving “dirty” BTC following a coinjoin makes it impossible to resell them on major exchanges. Hence their low success because of this risk which is ultimately a threat to anonymity, others will say.
zkSNACKs CEO Max Hillebrand (and contributor wasabi) is responsible for filtering transactions blacklisted by Chainalysis and OFAC. For him, there is no incompatibility with his cypherpunk anarchist philosophy.
Let’s end on a positive note. Each “dirty” BTC is a BTC that will no longer be able to fuel the bearish pressure on the exchanges. A bad for a good ?
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