Un-KYC crypto using the lightning network

[Kruw]

"Makers leave a log of the movement of funds with the taker..." does this mean that there will be a history of transactions that the maker or JoinMarket will be able to see, and through them, keep records of how you mixed your coins? Is this true regardless of if the mixer is centralized/decentralized?

Takers, who coordinate the coinjoin, pay for the mining fees of makers. This allows the taker to know which equal sized output belongs to each maker since the taker constructed the transaction themselves.

All other outside observers besides the taker do not know which equal sized output belongs to each maker. However, outside observers can usually calculate clusters of inputs belonging to the same entity and the change output belonging to that same group of inputs.

Is this true regardless of if the mixer is centralized/decentralized?

JoinMarket uses a decentralized order book for buying and selling liquidity while other coinjoin protocols like WabiSabi use a central coordinator with a timed round to gather liquidity. WabiSabi coordinators do not learn any links between the UTXOs of a user.

[Revoltec13]

"Makers leave a log of the movement of funds with the taker..." does this mean that there will be a history of transactions that the maker or JoinMarket will be able to see, and through them, keep records of how you mixed your coins? Is this true regardless of if the mixer is centralized/decentralized?

Takers, who coordinate the coinjoin, pay for the mining fees of makers. This allows the taker to know which equal sized output belongs to each maker since the taker constructed the transaction themselves.

All other outside observers besides the taker do not know which equal sized output belongs to each maker. However, outside observers can usually calculate clusters of inputs belong to the same entity and the change output belonging to that same group of inputs.

Is this true regardless of if the mixer is centralized/decentralized?

JoinMarket uses a decentralized order book for buying and selling liquidity while other coinjoin protocols like WabiSabi use a central coordinator with a timed round to gather liquidity. WabiSabi coordinators do not learn any links between the UTXOs of a user.

"However, outside observers can usually calculate clusters of inputs belong to the same entity and the change output belonging to that same group of inputs." How big of a problem is this?

[Revoltec13]

Also, is there any risk of having your "identity" revealed when using coinjoin through statistical analysis or does this only happen when you reuse addresses?

[Kruw]

"However, outside observers can usually calculate clusters of inputs belong to the same entity and the change output belonging to that same group of inputs." How big of a problem is this?

It's more of an "inefficiency" than a "problem" since a lot of extra block space is required to make a UTXO private. In order to turn BTC private with JoinMarket, here are the steps:

- Receive a UTXO into your wallet
- Act as a taker to sweep that entire UTXO amount into the next mix depth of your wallet with a coinjoin transaction (turning it private)
- Wait as a maker for additional remixes until you spend

After you spend your coins, you also have to act as a taker to sweep your change output from that spend just like you do whenever you receive a new UTXO.

Also, is there any risk of having your "identity" revealed when using coinjoin through statistical analysis or does this only happen when you reuse addresses?

Coinjoins are specifically designed to defeat statistical analysis, but if you reuse an address then it won't make a difference whether you coinjoined or not.

[Easteregg69]

You guys end up in double accounting. The clean version for the exchanges and the casino money you can't spend anywhere.

BTW. Bitcoin is exploding. What are we here for?

[Revoltec13]

The general opinion seems to be that the lightning network offers good privacy for the sender but not the receiver. However, I will be both the sender and receiver. Would it be good practice to swap the coins on the lightning network with coins on the blockchain and therefore improve the privacy that way? How good of a solution is this compared to coinjoin or Monero?

[Kruw]

The general opinion seems to be that the lightning network offers good privacy for the sender but not the receiver. However, I will be both the sender and receiver. Would it be good practice to swap the coins on the lightning network with coins on the blockchain and therefore improve the privacy that way? How good of a solution is this compared to coinjoin or Monero?

The research is 2 years old now, but you can check https://lightningprivacy.com for an overview of the weak spots in Lightning and the improvements that mitigate them. A powerful way to layer these tools is to coinjoin first, then open a Lightning channel with your private UTXO once you want to spend your coins.

[moejoejay]

Hey Folks
 i know it a Bit old but still relevant topic

will the follwing constellation be enough to obfuscate the coinjoin and break the other chain links in an sufficient way:

1.Kyc buy Bitcoin Exchange ( atm not invitable) ->
2.Wasabi wallet coinjoin  ->
3. atomic Swap with lightning and vice versa to 2 different electrum wallets ( May also AN ADDITIONAL  SWAP to monero and Back.) ->
4. moving around approx 5 Times  one some other different electrum/sparrow wallets ( TOR BUT NOT AN PRIVATE NODE) ->
5. make an sparrow private send ( its Like payjoin i think) to an other electrum wallet.

Planned delay Intervall from one to another step : approx 12-24 hours.

 Btw. Is it useful to make the CJ at the beginning?  What else can i improve ?

Best regards

[Satofan44]

Hey Folks
 i know it a Bit old but still relevant topic

You could open your own topic you know.

will the follwing constellation be enough to obfuscate the coinjoin and break the other chain links in an sufficient way:

Whether the actions you undertake are sufficient really depends on what you plan on doing with the coin, besides the importance of the details of execution.

1.Kyc buy Bitcoin Exchange ( atm not invitable) ->
2.Wasabi wallet coinjoin  ->
3. atomic Swap with lightning and vice versa to 2 different electrum wallets ( May also AN ADDITIONAL  SWAP to monero and Back.) ->
4. moving around approx 5 Times  one some other different electrum/sparrow wallets ( TOR BUT NOT AN PRIVATE NODE) ->
5. make an sparrow private send ( its Like payjoin i think) to an other electrum wallet.

The question is what you want to do with the coin later. Realistically after so many steps nobody can easily claim that the coin did not change hands, even if they could trace them through all of this. If you are not going to do something extremely illegal on the level of funding terrorism (which I would not recommend that you do ), I don't think anyone would spend the quantity of resources required to try to break this chain. In any case, I do recommend adding the Monero step and possibly make this step with the longest interval possible if you don't mind the slight risk of losing some value until you wait to swap back (a week or two at least).

Planned delay Intervall from one to another step : approx 12-24 hours.

Always randomize the interval of the steps.

Btw. Is it useful to make the CJ at the beginning?  What else can i improve ?

It doesn't hurt.
Usually with so many steps involved you are good. How people get caught is most often through some basic mistakes.

[moejoejay]

Hello @Satofan44

You could open your own topic you know.

I thought it was so related to, and i wouldnt create a new thread for the same topic.
But next time i'll do so.

something extremely illegal on the level of funding terrorism (which I would not recommend that you do  )

No definitely not just staying private  

I do recommend adding the Monero step and possibly make this step with the longest interval possible if you don't mind the slight risk of losing some value until you wait to swap back (a week or two at least).

I'll take this into consideration thnx , btw. why this step so long and the other ones not.

It doesn't hurt.

my thoughts are sth like, if u go straight from the kyc to CJ an observator sees oh ok this is an CJ and the guy from the kyc is involved, or did i miss sth.

Best regards

[Satofan44]

something extremely illegal on the level of funding terrorism (which I would not recommend that you do  )

No definitely not just staying private  

Then you should be fine.  

I do recommend adding the Monero step and possibly make this step with the longest interval possible if you don't mind the slight risk of losing some value until you wait to swap back (a week or two at least).

I'll take this into consideration thnx , btw. why this step so long and the other ones not.

Monero's anonymity and privacy are so strong that a lot of the observation attacks will be focused at the entry and exit points. I'll give a short and extreme example to illustrate. Assume the following scenario.

You do a swap of 0.0213849 BTC from BitcoinAddressA to Monero and receive it on MoneroAddressA with a 1% fee (can be network fees, platform fees or both but we assume 1% round number for simplicity). It confirms within 20 minutes, you transfer all of the Monero to MoneroAddressB. You come back in an hour and swap all the Monero back from MoneroAddressB with a 1% fee to BitcoinAddressB. The data will show that there was an entry and exit of Monero of 0.0213849 BTC +- 2% within 2 hours. This will show a high probability that it is the same user and defeat the steps in between.

Of course the devil is in the details. Some things can be better hidden than others, but good behavioral advice works in general. Make the step as long as possible, preferably split the coin if you can as well. So that after Monero it lands on 2 or more addresses (as long as you won't merge the coin later).

my thoughts are sth like, if u go straight from the kyc to CJ an observator sees oh ok this is an CJ and the guy from the kyc is involved, or did i miss sth.

That will definitely show, whatever your first step is it will link the KYC'd person to it. Coinjoins are not illegal though so just because you are involved in that it should not be a big problem. Alternatively you can do some other milder steps first to obfuscate the data like Payjoin.

[moejoejay]

Coinjoins are not illegal though so just because you are involved in that it should not be a big problem.

May Not illegal but more under survillance Than other tx'es

This will show a high probability that it is the same user and defeat the steps in between.

Sounds logical Ill  bear this in my mind Thnx

Alternatively you can do some other milder steps first to obfuscate the data like Payjoin.

Good Idea i tried this with 2 sparrow wallet for Testing but fails

but on this point we're still Off topic i think  
May i create another thread for this

Best regards

[internetional]

A very interesting topic! I never even thought someone might set themselves the task of hiding the fact that the coins they withdrew from an exchange are still in their possession.
I usually use Lightning to deposit bitcoins to exchanges, not to withdraw from them. And in my four years of using it this way, I’ve gotten the impression that none of the exchanges try to trace the network to figure out where a deposit came from. That’s why I think that after a withdrawal through Lightning, the exchange won’t try to find out whether the bitcoins remained with the client or were passed on to someone else.

But if I were paranoid, I’d probably solve the task like this: I would withdraw fiat money from the exchange into a bank account. From there, bank secrecy comes into play. Neither the exchange nor anyone who gains access to its logs would be able to know whether the money stayed in my bank account or was converted back into bitcoins on platforms like Robosats or LNP2PBOT, where there’s no KYC.

[Satofan44]

A very interesting topic! I never even thought someone might set themselves the task of hiding the fact that the coins they withdrew from an exchange are still in their possession.
I usually use Lightning to deposit bitcoins to exchanges, not to withdraw from them. And in my four years of using it this way, I’ve gotten the impression that none of the exchanges try to trace the network to figure out where a deposit came from. That’s why I think that after a withdrawal through Lightning, the exchange won’t try to find out whether the bitcoins remained with the client or were passed on to someone else.

You are confusing the adversary here. The exchange is not the adversary. As far as a well run business is concerned, an exchange would only do the minimum necessary to satisfy regulations relating to KYC/AML. This means that they would only do as much tracking as necessary, and not go beyond that. This could be something like simply cooperating with the data of Chainanalysis and handling government requests. They don't spend resources themselves to do more than what is needed. Why would they? It costs more money, but they don't get anything in return. Actually, they even create losses by going the extra mile in this case.

The threat vector is the government, government and intelligence agencies. People casually forget that Bitcoin's data is permanent. Just because your information can't be traced now, that doesn't mean that someone won't be able to trace it in 5, 10, 15, 20 years or more.

But if I were paranoid, I’d probably solve the task like this: I would withdraw fiat money from the exchange into a bank account. From there, bank secrecy comes into play. Neither the exchange nor anyone who gains access to its logs would be able to know whether the money stayed in my bank account or was converted back into bitcoins on platforms like Robosats or LNP2PBOT, where there’s no KYC.

Bank secrecy is an outdated concept that no longer exists. Most banks are interlinked and most KYC data is interlinked. What one bank knows, the others can know too. What any bank knows about you, the government definitely know about it. I guess this part also stems from your confusion regarding the adversary. Exchanges come and go, they are just small cogs in a machine and are not important or dangerous.