Your options to having privacy in Bitcoin - and their tradeoffs

[BlackHatCoiner]

Plus instead of debating again and again that goes nowhere, why not open a topic/guide that compares different CoinJoin wallets and illustrate the pros and cons of each? That would be a more constructive solution, no?

Due to recent events with mixer being confiscated by authorities, or mixer doing an exit scam, or with a seemingly legitimate pro-privacy company going in the opposite direction, I think a clarification of where we are at the moment in protecting the users' privacy is necessary.

There are three ways to secure privacy of your bitcoins, each of which comes with its own advantages and disadvantages. Pick according to what fits you best.

1. CoinJoining - what is this?

There are three ways to do a coinjoin with a large liquidity and effectively. Joinmarket, Whirlpool, and Wasabi. We'll break down each.

Joinmarket [Github]
pros:

• Decentralized; each of you can become your own coordinator if you provide sufficient liquidity. The protocol is designed to work with many takers (those that will take ordinary users' offers).
• Self-custody.
• Large liquidity for coinjoins. (orderbook)

cons:

• Difficult to setup for the average user.
• Expensive; you're paying for the inputs of the takers. Those inputs are recommended to be more than 9, so you'll be paying for at least a large in size transaction. This can be in the range of $5 to $10 sometimes.
• Running your own full node is a requirement. (even though you should either way do that, as noted below)

Whirlpool - [samouraiwallet.com]
pros:

• Self-custody.
• Very effective, contains ~8,500 BTC in liquidity and you can make as many coinjoins as you want once you enter a pool.
• Cheap. For amounts within 0.001 and 0.025 BTC, you're paying only 5,000 sat. For larger amounts less than 0.7 BTC, 50,000 sat. (mining fees asides)
  

cons:

• Not fundamentally decentralized; you'll be using Samurai's whirlpool, as they have the most liquidity.

Wasabi - [wasabiwallet.io]
pros:

• Self-custody.
• Cheap. A fresh input (that isn't already coinjoined) will only cost 0.3% of the amount with free remixes according to the wiki. (mining fees asides)

cons:

• Not decentralized. Liquidity sits on top of the default coordinator, even though it's theoretically possible connect to other servers (none of which I'm aware of).
• Service treats the currency as non-fungible and might blacklist your inputs without rationale given.
• Software is caught to have flaws with protecting user's privacy: https://twitter.com/wasabistats.
• Funds blockchain analysis company and requests permission from them when user does coinjoin.

Note: To enjoy great levels of privacy with coinjoin, running your own full node is a prerequisite (unless you're using Wasabi which utilizes block filtering). If viewing your wallet's balance requires a third party, then the gained privacy is questionable.


2. Mixer services

In this category falls every Internet service that runs individually and is often advertised in this forum. You can find an extended list in here: 2023 List Bitcoin Mixers Bitcoin Tumblers Websites. Each service might come with other benefits, but they all fundamentally share the same pros and cons following:

pros:

• Can be cheap. In fact, some services in the past charged you absolutely nothing.
• Can be very effective. Services in the past used techniques like time travel and cutting of blockchain connection, both of which are impossible to do with coinjoins.

cons:

• You're forfeiting the custody of your coins.
• Trust that the service isn't a honeypot or doesn't keep logs is needed.

3. Swapping bitcoin with a private cryptocurrency

The third option is most likely underestimated. Swapping decentralized, cheaply, and with the largest anonymity set currently available (Monero / XMR), is attractive. Let's look in each pro and con closely.

pros:

• Decentralized, using Bisq, you can trade bitcoin for XMR, and there appear to be lots of offers: https://bisq.markets/market/xmr_btc
• Very effective; largest anonymity set (about $2.6B in market cap). You can also take advantage of the time; you can keep the XMR for an indefinite time, and make yourself even more untraceable.
• Self-custody. (if Bisq is used)
• No trust required. Monero is a network resulted from cryptographic achievements like ring signatures and their combination with confidential transactions.

cons:

• Might be a little complicated, as the user has to get along with Monero, and maybe even run a full node for additional privacy.
• Might come a little more expensive sometimes. Total costs are: Bitcoin on-chain fees (4 TXs), Monero on-chain fees (nearly zero), Bisq fees (trading costs).
• You're giving up bitcoin for an altcoin. Some may not like that, and if you keep it for a lot of time, there might be price fluctuations (which can be seen as an advantage too, as they randomize the swapped bitcoin amount).

Comments appreciated.

[1714226590]

1714226590

[Hatchy]

Great job putting this together, @BlackHatCoiner!
I think for someone who really wants to keep their Bitcoin safe, not just their privacy, I'd suggest option 1. Even though it might cost more and expensive, protecting one's coins is what matters the most. I'd tell most people to think carefully and decide wisely. It's a good idea to focus on keeping your Bitcoins secure rather than just your privacy. Choosing methods like Joinmarket, Whirlpool, or Wasabi, which are part of CoinJoining, can give you better protection for your coins. Remember, think about both privacy and security when you're making your choice.

[348Judah]

Due to recent events with mixer being confiscated by authorities, or mixer doing an exit scam, or with a seemingly legitimate pro-privacy company going in the opposite direction, I think a clarification of where we are at the moment in protecting the users' privacy is necessary.

It is very paramount that we consider our privacy together with the security of our assets, if we are to consider this vital information you've just provided fro this thread, we need to have a rethink on this regard because mixing services are truly facing serious regulations from government and other related internal challenges, this isn't a call for us not to know what to do or know about other necessary advantage we could take from it, privacy and security should be both considered and achieved by every bitcoiners.

There are three ways to secure privacy of your bitcoins, each of which comes with its own advantages and disadvantages. Pick according to what fits you best.

1. CoinJoining - what is this?

There are three ways to do a coinjoin with a large anonymity set. Joinmarket, Whirlpool, and Wasabi.

I will go with the best recommendation with the use of coinjoin either through joinmarket or whirlpool but as for wasabi, i think there's a recent compromise in terms of privacy using it just as it was found with a linkage related to that in ledger whereby privacy is nit in its maximum achievement using them.

[o_e_l_e_o]

What's your metric for saying JoinMarket has the largest anonymity set? How is that being defined/measured?

I think $10 is a pretty extreme example. I've done plenty of coinjoins on JoinMarket where I've paid the makers <50 each (sometimes even a single digit number of sats). (Although I suppose if you add up say 10 JoinMarket transactions and compare them to 10 free remixes on Whirlpool, then you have a point.)

I would also say "Service uses the fee you pay to hire a blockchain analysis company to spy on your inputs" is a pretty big con of Wasabi which you've missed.

[Faisal2202]

Great post dear OP, Really useful I wanted to add that we can also use Trezor's new Hardware wallet to get benefit from the Coinjoin feature but con is that coinjoin feature is provided by wasabi wallet cooperation. Which means Trezor HW is also making some actions against anonymity as ledger did.

I would also say "Service uses the fee you pay to hire a blockchain analysis company to spy on your inputs" is a pretty big con of Wasabi which you've missed.

Really!! I mean one thing I knew about them is they are not a good option due to centralization which obviously means we should avoid it but I think your statement make sense. Because centralization means they have people behind there infrastructure to do things like a middlemen.(metaphorically saying).

[Iron Fist]

This is a really informative breakdown of different methods to safeguard privacy. So, would it be off base to say that Samurai might be the sweet spot in terms of striking a balance between coin security and user-friendliness for the everyday user?

I like the convenience and accessibility that mixing services offer, but given the recent incidents, I'm not comfortable with the thought of handing over my coins to a third party that could vanish without a trace at any time.

[BlackHatCoiner]

I think for someone who really wants to keep their Bitcoin safe, not just their privacy, I'd suggest option 1.

Option 3 is also secure.

What's your metric for saying JoinMarket has the largest anonymity set? How is that being defined/measured?

I checked the orderbook, and there are over 700 BTC in liquidity. The default coordinator from Wasabi uses less than that, but I get your concern. Total bitcoin from inputs and total inputs should be what defines the anonymity set. I'm also not aware of what's the total bitcoin in Samurai's liquidity. I'll remove it as "best" for the time being.

I think $10 is a pretty extreme example. I've done plenty of coinjoins on JoinMarket where I've paid the makers <50 each

I was paying about $4 to $6 for 9 inputs when the fees weren't high. I had once paid over $10. We should take into consideration that it's been months since the mempool was nearly empty.

I would also say "Service uses the fee you pay to hire a blockchain analysis company to spy on your inputs" is a pretty big con of Wasabi which you've missed.

Well, I want to keep this free of personal complains and as much objective and on-the-point as possible. What the default coordinator does with the money it makes isn't important for the coinjoin user, but for the integrity of their business. If treating the currency as non-fungible for a pro-fungibility claimed company isn't making the splash, then the cooperation with analysis company won't either.

[o_e_l_e_o]

I checked the orderbook, and there are over 700 BTC in liquidity. The default coordinator from Wasabi uses less than that, but I get your concern.

Whirlpool currently has over 8,500 BTC in liquidity: https://bitcoin.clarkmoody.com/dashboard/

Total bitcoin from inputs and total inputs should be what defines the anonymity set.

I don't think so. It doesn't matter if Samourai has a million BTC in liquidity, it depends on how many rounds of coinjoin I go through and how many rounds of coinjoin all the other inputs in my coinjoin transactions go through.

Well, I want to keep this free of personal complains and as much objective and on-the-point as possible. What the default coordinator does with the money it makes isn't important for the coinjoin user

Sure, but it is an objective fact that Wasabi use the fees you pay them to pay blockchain analysis companies for information about your UTXOs. And I would argue that is incredibly important for the coinjoin user.

[BlackHatCoiner]

Whirlpool currently has over 8,500 BTC in liquidity: https://bitcoin.clarkmoody.com/dashboard/

Good to know, thanks. Liquidity noted into OP and JoinMarket removed as best in terms of anonymity set.

I don't think so. It doesn't matter if Samourai has a million BTC in liquidity, it depends on how many rounds of coinjoin I go through and how many rounds of coinjoin all the other inputs in my coinjoin transactions go through.

But what ultimately matters when remixing is the new coins that come in. If you do a coinjoin with all inputs remixed, then it won't make a difference. Also, it makes yourself more untraceable to be in a coinjoin with 100 inputs, than in one with 5, so the number of inputs used surely matters.

I've always had mixing in my mind as a picture of a person lost in crowd. The more the people, the less likely to find that one.

Sure, but it is an objective fact that Wasabi use the fees you pay them to pay blockchain analysis companies for information about your UTXOs. And I would argue that is incredibly important for the coinjoin user.

What's important here is to break down what's user's best courses to accomplish mixing. Even if funding blockchain surveillance is completely contradictory to being proclaimed a pro-privacy service, that doesn't change their coinjoin process. Just as if Samurai announced that they're funding the Ukrainian war, it wouldn't change the effectiveness of the coinjoin. It'd ruin their reputation, and people would stop using it; not because of effectiveness, but ethical concerns.

[DapanasFruit]

I realized that there are many Bitcoin holders who are really concerned with their safety and privacy that is why they hired these service providers to accomplish the goal. It is just sad that some platforms are not here to do business honestly but has also some evil intent they only knew, judging by some popular mixers who are now six feet understand which left some people wondering what happened. As to myself, I still have to use any of these options since first and foremost I don't have much Bitcoin and I just decide to hold whatever I got.

[ImThour]

Great thread buddy, I would love if you could have created some infographics to make it easier to understand instead of reading the whole post, I still appreciate the post though.
Most of the Mixer services work good for months and once they hit a jackpot, a big order worth millions, they simply shutdown their services. I would prefer those which are trusted in the community.

[Kakmakr]

Great thread @BlackHatCoiner! ....

I just want to know if you see the anonymous (decentralized) casinos as another method to secure your financial privacy? There are still some casinos out there that supports pseudo anonymity, but I will not push large amounts of coins through them.

People can still "mix" their coins through these casinos, until they start asking for KYC verification. Just make sure these casinos are not scams and that you can actually withdraw from them. (They start with no KYC requirements, but eventually bend the knee to law enforcement) 

[o_e_l_e_o]

But what ultimately matters when remixing is the new coins that come in. If you do a coinjoin with all inputs remixed, then it won't make a difference. Also, it makes yourself more untraceable to be in a coinjoin with 100 inputs, than in one with 5, so the number of inputs used surely matters.

Absolutely agree, but my point is the size of the total liquidity pool is not that relevant because nobody is mixing with every other output in the pool. Whether the total liquidity is 5 BTC or 500,000 BTC, it doesn't make a difference if I only coinjoin with 0.5 BTC of it.

So let's say JoinMarket has ~700 BTC in liquidity and Whirlpool has ~8,500. I have 0.5 BTC to coinjoin in each one. For JoinMarket, I perform a single coinjoin with 19 other participants. For Whirlpool, I perform a single coinjoin with 4 other participants. At this point, my anonymity set is greater for the JoinMarket, even though Whirlpool has the greater overall liquidity. But then I leave my coinjoined output in Whirlpool and it gets another 5 free remixes. Now my Whirlpool anonymity set is exponentially larger than my JoinMarket one, especially once you consider the forward looking anonymity set and all the free remixes that every other output I have coinjoined alongside is also getting.

I guess the essence of what I'm saying is that liquidity is not the same as anonymity set. It is difficult to say which out of JoinMarket and Whirlpool provides the best anonymity set, because it depends entirely on how you use them.

What's important here is to break down what's user's best courses to accomplish mixing. Even if funding blockchain surveillance is completely contradictory to being proclaimed a pro-privacy service, that doesn't change their coinjoin process.

It absolutely does. Any sane user of a privacy service does not want the fee they pay being handed to blockchain analysis to spy on their inputs and potentially censor those inputs based on their findings. This is antithetical to the entire concept of privacy.

[pooya87]

3. Swapping bitcoin with a private cryptocurrency
cons:

• You're giving up bitcoin for an altcoin. Some may not like that, and if you keep it for a lot of time, there might be price fluctuations (which can be seen as an advantage too, as they randomize the swapped bitcoin amount).

Apart from price fluctuations, the process itself has some additional costs.
One cost is the network fees you have to pay to create transactions in bitcoin and monero networks that can add up.
The other cost is the exchange fee you have to pay the platform like Bisq that you are using.
The last cost I can think of is the spread. Sometimes if the trading volume is low, there is a spread in the orderbooks between the top sell order and the top buy order. So even if price remains the same and you buy that altcoin and sell it immediately you still lose some money because of the spread.

The other disadvantage I can think of is the complication of this method. Someone who has never used Bisq before or have monero wallet/used monero will have to learn how to do these things first which is time consuming and could be difficult for some people.

[BlackHatCoiner]

I would love if you could have created some infographics to make it easier to understand instead of reading the whole post, I still appreciate the post though.

I'm struggling to imagine how I could do that without seeming affiliated to a service.

I just want to know if you see the anonymous (decentralized) casinos as another method to secure your financial privacy?

Well, no. Just as with centralized exchanges, services which subsequently tumble your bitcoin wouldn't fall in the "Mixer services" category, in my opinion. If you want to go a la mixer, then use a mixer. Internet services listed are specifically created for that purpose. Don't exchange / gamble coins thinking that the outcome will be the same.

Absolutely agree, but my point is the size of the total liquidity pool is not that relevant because nobody is mixing with every other output in the pool.

I removed anonymity set from both Joinmarket and Whirlpool. It's misleading and not important to begin with; both are very effective. From that point on, it depends on how many remixes you'll do.

This is antithetical to the entire concept of privacy.

It is, indeed. I have added - "Funds blockchain analysis company and requests permission from them when user does coinjoin.". I don't believe there's anything more to say.

Apart from price fluctuations, the process itself has some additional costs.

The other disadvantage I can think of is the complication of this method.

Added both.

[o_e_l_e_o]

IMO it's also worth to mention user is required to have Bitcoin Core running (either full or pruned node) which require user to download 500GB+ of blockchain.

Although you can run Whirlpool without a full node, it's not recommended. Any time you are not connected to your own full node, you are sharing data with a third party. Anyone who is in any way serious about their privacy should be running their own node already.

Whirlpool - [Samurai.com]

Just spotted the mistake in the name of the website. It should be samouraiwallet.com, not samurai.com.

I have added - "Funds blockchain analysis company and requests permission from them when user does coinjoin.". I don't believe there's anything more to say.

That seems completely fair. That is a simple statement of fact which any serious user would want to know.

[apogio]

Brilliant post. Let me just say that JoinMarket has a nice GUI (Jam) and is really easy to use. You can run it on your own node too.

[BlackHatCoiner]

IMO it's also worth to mention user is required to have Bitcoin Core running (either full or pruned node) which require user to download 500GB+ of blockchain.

Although you can run Whirlpool without a full node, it's not recommended. Any time you are not connected to your own full node, you are sharing data with a third party. Anyone who is in any way serious about their privacy should be running their own node already.

Edited. I think that's enough:

Running your own full node is a requirement. (even though you should either way do that, as noted below)

Note: To enjoy great levels of privacy with coinjoin, running your own full node is a prerequisite. If viewing your wallet's balance requires a third party, then the gained privacy is questionable.

Just spotted the mistake in the name of the website. It should be samouraiwallet.com, not samurai.com.

My bad. Just corrected it.

Brilliant post. Let me just say that JoinMarket has a nice GUI (Jam) and is really easy to use. You can run it on your own node too.

You have to run it on your own node. It's required. Joinmarket is a software that works with RPC, communicating with your Bitcoin client, you can't connect to a client you don't control of, and neither should you. As for Jam, while I've tried it, I think it lacks some features yet, and it's still in beta so I wouldn't trust it with huge amounts.

[DooMAD]

Well, I want to keep this free of personal complains and as much objective and on-the-point as possible. What the default coordinator does with the money it makes isn't important for the coinjoin user

Sure, but it is an objective fact that Wasabi use the fees you pay them to pay blockchain analysis companies for information about your UTXOs. And I would argue that is incredibly important for the coinjoin user.

If a 'honeypot' is a site or service that covertly passes your personal data on to governments, is a company that does it openly an 'overt honeypot'?  Or is there a better name for it?  Wasabi are giving your details to blockchain analysis firms and those companies are likely passing the details over to law enforcement or other government agencies.

[AprilioMP]

Wow... Informative.

Privacy security is the first thing to look for in bitcoin. Protecting privacy is the responsibility of each. I always try to do it. All three are good options even though the mixer service option is often associated with illegal activity. The third option offered is good to be used as a step in securing privacy.

A_MP