Complete Privacy with a Thin Client.

[math83]

Hello all,

I'd like to pick your brains on something. I prefer to use bitcoin completely anonymously. Privacy above all else otherwise what's the point? Just use paypal or some other regulated online payment system. I think this is the whole point of p2p and decentralization. As the blockchain is public though the only way to achieve privacy is to prevent association of the addresses you use with your real world identity.

This being said I like the thin client Electrum. I need BIP 32 and BIP 44 support as I use a bare-metal hardware wallet (keepkey) to store my private keys. Unfortunately Bitcoin Core doesn't have this support so this is the main reason why I have to use Electrum. I also prefer the UI.

So I started with the question how do I make Electrum as private as Bitcoin Core, here's what I did:

I configured a server at home that runs bitcoind. This server has ports closed and is not accepting incoming connections from the internet (I also run a full node with open ports don't judge me). I also run my own electrum server on the same machine. I have another computer that runs an electrum client that I can connect my keepkey to. This electrum client is blocked by the firewall to access any ip but the internal ip address of the machine that runs my electrum server. This way I ensure electrum connects to my server and ONLY to my server. I don't want it to connect to other nodes and do all that SPV crap. I don't trust SPV it's a perfect way to give away what specific parts of the blockchain you're interested in, and I don't trust bloom filters. When I have to use electrum on my phone I just VPN in to my home network I have firewall on my phone as well that makes sure that electrum can connect to only the internal ip of my private electrum server. On top of this I make every effort to use paxful/localbitcoins to buy bitcoins only from a single person and not from a centralized "exchange."

Would you guys say this is pretty good level of privacy? Do you see any flaws with my setup, or anything that I might've overlooked? Thank you for taking the time to read over.

[Soros Shorts]

I think your setup is pretty secure as far as protecting the privacy of your transactions from random blockchain analysis and network scanning.

I would start paying attention as to how you buy your bitcoins and how you spend them. Even if you use paxful or localbitcoins you could give your identity away depending on how the transaction was done. The seller may not know how you spend the coins, but they will know you as a buyer/user and may be able to associate your real name with the amount of coins you bought. Is that ok with you?

[math83]

Thank you for your response.

That's a good point. Perhaps buying into an intermediary address and moving coins to multiple addresses in the same wallet generated from the same public key might be a viable solution. If I split the amount into irregular chunks the seller can't keep track. + I don't know how trustworthy they're but there are mixing services.

Edit:

Actually now I fully understand what you're saying, if I keep buying from the same sellers they will know that I have a certain amount of BTC. This is a problem that needs to be addressed somehow.

[calkob]

You are putting a lot of effort in to staying anonymous, which your right is a good thing.  How do you get around the requests now on Localbitcoins for photo ID and bank account names ?  i take it you are buying in person?