Bitcoin Anonymity

[big-mops]

Yo!  

The problem with many blockchains is transaction sequencing.
Currently, the Monero network solves this through ring signatures, but will there be any attempts to implement this in Bitcoin?

[Ambatman]

I don't really see much reason
Bitcoin is a public ledger and this means it's pseudonymous in nature.
If a person wants pure privacy they can make use of monero.
And if you speaking about ring signatures that would require a consensus change.
I can't really see Bitcoin headings that direction when there are other things to work on.

[big-mops]

I don't really see much reason
Bitcoin is a public ledger and this means it's pseudonymous in nature.
If a person wants pure privacy they can make use of monero.
And if you speaking about ring signatures that would require a consensus change.
I can't really see Bitcoin headings that direction when there are other things to work on.

Are there any methods that could be implemented into the Bitcoin network to make it more difficult to track transactions?

[Ceemv22]

Are there any methods that could be implemented into the Bitcoin network to make it more difficult to track transactions?

yep serveral exist already and dont require any consensus change since theyre just clever ways of constructing transaction withing the existing rules:

- CoinJoin: multiple users combine inputs into one transaction with equal-value outputs so an outside observer cant tell who paid whom.
- P2EP: sender and receiver both contribute an input which breaks the assumption that all inputs in a tx belong to the sender.
- Taproot (i think it's already live since 2021): makes multisig spending conditions that look identical to regular single-sig spends onchain so you cant tell a lightning channel close from a simple payment just by looking at the script

also avoiding address reuse n proper coin control can help too

[Ambatman]

Are there any methods that could be implemented into the Bitcoin network to make it more difficult to track transactions?

On a consensus level there are quite some option
Since the major reason it can be tracked it's because it is transparent which helps in its trustlessness.
Basic things can be done like using conjoin, avoid address reuse, Tor and even proper UTXO management
Can go a long way to help improve privacy.

[big-mops]

- P2EP: sender and receiver both contribute an input which breaks the assumption that all inputs in a tx belong to the sender.

Wow. Could you elaborate on P2EP? At what point during the process of sending input data to the blockchain are the sender and recipient data combined? And how does this even happen?

[Filicius]

Are there any methods that could be implemented into the Bitcoin network to make it more difficult to track transactions?

On a consensus level there are quite some option
Since the major reason it can be tracked it's because it is transparent which helps in its trustlessness.
Basic things can be done like using conjoin, avoid address reuse, Tor and even proper UTXO management
Can go a long way to help improve privacy.

The real question that should be clarified in the first place is to what extent you want or need to maintain anonymity or a very high level of privacy.

For the extremely paranoid it will be difficult to reach a satisfactory level of privacy, close to 100% anonymity, because Bitcoin is not designed for that purpose, although I think it's possible by being very neat and running your own node. But having specific solutions like the one mentioned, why complicate so much trying to do with Bitcoin something for which it was not designed?

For most, however, a simple conjoin over TOR can be enough to prevent their transactions from being tracked. How much you want to complicate yourself depends on the interest that someone else may have in finding out who you are.

[LFC_Bitcoin]

Yo!  

The problem with many blockchains is transaction sequencing.
Currently, the Monero network solves this through ring signatures, but will there be any attempts to implement this in Bitcoin?

No because Bitcoin is engrained in mainstream finance now. It was hard enough to get here and institutional involvement will drive the price to great highs.

The reason Monero is delisted worldwide on pretty much every major exchange in the world is because of its strengths. It’s so good at keeping you anonymous, ultimate privacy. I don’t want that to happen with Bitcoin, it would set it back years.

Bitcoin is a great investment, Monero is great for privacy. There is room for both in your portfolio.

[arwin100]

Yo!  

The problem with many blockchains is transaction sequencing.
Currently, the Monero network solves this through ring signatures, but will there be any attempts to implement this in Bitcoin?

No because Bitcoin is engrained in mainstream finance now. It was hard enough to get here and institutional involvement will drive the price to great highs.

The reason Monero is delisted worldwide on pretty much every major exchange in the world is because of its strengths. It’s so good at keeping you anonymous, ultimate privacy. I don’t want that to happen with Bitcoin, it would set it back years.

Bitcoin is a great investment, Monero is great for privacy. There is room for both in your portfolio.

Agree that what he think is not going to happen, because Monero and Bitcoin actually they serve different purpose. Monero is private and resistant to any censorship, while Bitcoin became so friendly with institution and remain to be transparent.

There's big money flows on Bitcoin, since many institutions right now add it as their reserve asset, while the actual strength or purpose of Monero is to protect the freedom and privacy of each people using this coin,

That's why this coins is good to have and they co exist together. There's no need for people to choose what's best, since both coins is valuable in this space.

[Alphakilo]

Yo!  

The problem with many blockchains is transaction sequencing.
Currently, the Monero network solves this through ring signatures, but will there be any attempts to implement this in Bitcoin?

Bitcoin is very different from Monero because Monero mainly solves the issue of anonymity during transactions whereas Bitcoin is on the public ledger for all to see and only by using CoinJoin, using onion routing that's similar to Tor on layer2, that anonymity of both the sender and receiver can be guaranteed.

[ryzaadit]

Are there any methods that could be implemented into the Bitcoin network to make it more difficult to track transactions?

I add more to the answer from @Ceemv22.

Silent Payment is a payment method using Elliptic Curve Diffie-Hellman (ECDH). This payment option makes sender/receiver payments to create a transaction from 2 keys both sender/receiver to created unique address are mostly only they really know about the address. They can use these for every transaction too.

These example address being generated by Silent Payment:

sp1qqgste7k9hx0qftg6qmwlkqtwuy6cycyavzmzj85c6qdfhjdpdjtdgqjuexzk6murw56suy3e0rd 2cgqvycxttddwsvgxe2usfpxumr70xc9pkqwv

Source: https://blog.bitbox.swiss/en/understanding-silent-payments-part-one/


Some people are not really aware of silent payments, but these payment methods are quite interesting if you are really focused on privacy.

[JeffBrad12]

No because Bitcoin is engrained in mainstream finance now. It was hard enough to get here and institutional involvement will drive the price to great highs.

The reason Monero is delisted worldwide on pretty much every major exchange in the world is because of its strengths. It’s so good at keeping you anonymous, ultimate privacy. I don’t want that to happen with Bitcoin, it would set it back years.

Bitcoin is a great investment, Monero is great for privacy. There is room for both in your portfolio.

Agree, the pseudonymous nature of Bitcoin is the best of both world, we can improve anonymity by using privacy tools, but Bitcoin being pseudonym making it easier to get institutional adoption, XMR never get ETF because it's full privacy. Zcash on the other hand could get listed in NYSE Arca because dual-address structure and make privacy optional. The institutional don't want something to do with the privacy feature at all.

[BlackBoss_]

The problem with many blockchains is transaction sequencing.
Currently, the Monero network solves this through ring signatures, but will there be any attempts to implement this in Bitcoin?

Bitcoin is a public ledger as said, and it only can provide privacy and anonymity somewhat, and results for these things depend on user practice.

Even Monero is not a magic blockchain for anonymity even it's better than Bitcoin, user practice decides the result, no blockchain can provides complete privacy and anonymity.
[Guide] Decent mixing methods.

Privacy is different than anonymity but if you can not protect your privacy well, very likely you won't achieve anonymity.
Protect your privacy.
Guidelines for sending BTC.
Privacy with Bitcoin.
Bitcoin privacy in 2026: a practical guide.
Bitcoin privacy guide.

[Antidote47k]

Yo!  

The problem with many blockchains is transaction sequencing.
Currently, the Monero network solves this through ring signatures, but will there be any attempts to implement this in Bitcoin?

Ring signatures doesn’t really solve transaction sequencing, the main aim is to conceal which previous output is actually being spent by making it indistinguishable from a set of decoys.
Bitcoin is also easier to trace because of its transparent UTXO history, but Bitcoin’s privacy isn’t really one problem.
Chain analysis could use several different pieces of information to link transactions, which includes input ownership, recipients relationships, amounts, timing, address reuse and transaction patterns.

Take for instance, Coinjoin can make it harder to determine which input belongs to which output but the amounts, timing and other relationships could still provide some clues. So transactions doesn’t become automatically impossible to trace because of having a large anonymity set. This is also why I think comparing Monero’s ring to existing bitcoin privacy tools can be misleading.
The ring signature is only one part of Monero’s privacy model, they also use stealth address to prevent straightforward receipt linkabilty and also use RingCT to hide transaction amounts.

So it’s not as simple as needing ring signatures to solve transaction sequencing but which parts of the transaction graph should bitcoin actually hide if it intends to implement stronger privacy? And will this affect the auditability that comes with having a transparent ledger?

[Royal Cap]

Wow. Could you elaborate on P2EP? At what point during the process of sending input data to the blockchain are the sender and recipient data combined? And how does this even happen?

Well, I can explain, Although  I didn't have a clear idea about P2EP either. But I have the idea of coinjoin before. And now I can understand it easily by watching aantonop's P2EP/PayJoin video. Now explaining what I understand,

1. How and in what steps is data added?
Before Bitcoin is broadcast on chain or in Mempool, the whole work happens off chain:

• Draft: Suppose, you create a Draft Transaction of 0.10 BTC to pay the shopkeeper for a 0.05 BTC bill, instead of sending it to the blockchain, you send it directly to the shopkeeper's BIP78 encrypted endpoint.
• Combining Inputs: The shopkeeper not only accepts the payment but also adds another 0.02 BTC from his own wallet as an input to the same transaction.
• Broadcast: Now after both of you sign the combined transaction is broadcast to the blockchain.

2. Who handles this process?

• It doesn't require a third party or central server. Wallets that support the BIP78 protocol communicate with each other off chain in the background to ensure this.
• Supported platforms: BTCPay Server or JoinMarket.

Normal transaction: From your 0.10 BTC input, the merchant receives 0.05 BTC and 0.05 BTC is returned to you as change, trackers can easily figure out which is the original payment and which is the change.

P2EP transaction: Your 0.10 BTC + the merchant's 0.02 BTC = total 0.12 BTC input. The output is 0.07 BTC (original payment + his own 0.02 return) to the merchant and 0.05 BTC to you.

[Ceemv22]

Well, I can explain, Although  I didn't have a clear idea about P2EP either...

good breakdown of the offchain negotiation part

Take for instance, Coinjoin can make it harder to determine which input belongs to which output but the amounts, timing and other relationships could still provide some clues. So transactions doesn’t become automatically impossible to trace because of having a large anonymity set.

ive made basically the same argument elsewhere: coinjoin defeats the common-input-ownership heurisitc specifically, but chain analysis firms have moved on to amount correlation, timing analysis, and post mix spending pattern clustering. its an arms race, not a solved problem

i think thats the honest framing for btc privacy in general, every technique mentioned here raises the cost of deanonymization, none of them make it cryptographically impossible the way ring sigatures, stealth addresses etc. do for xmr. btc trades that for a simpler, auditable base layer and pushes privacy into an opt-in layer built on top

[Antidote47k]

ive made basically the same argument elsewhere: coinjoin defeats the common-input-ownership heurisitc specifically, but chain analysis firms have moved on to amount correlation, timing analysis, and post mix spending pattern clustering. its an arms race, not a solved problem

i think thats the honest framing for btc privacy in general, every technique mentioned here raises the cost of deanonymization, none of them make it cryptographically impossible the way ring sigatures, stealth addresses etc. do for xmr. btc trades that for a simpler, auditable base layer and pushes privacy into an opt-in layer built on top

Yeah, I think arms race is a good way to put it. Each privacy technique weakens or remove some of the info which chain analyst can use, but usually there are other patterns they can move on to.

I also think this is where Monero’s approach gets interesting, they choose to make several part of the transaction graph private in their protocol through ring signatures, stealth addresses and RingCT, rather than mainly relying on users to chose their own privacy techniques.
Bitcoins approach trades some privacy for simpler and more auditable base layer, but how far can bitcoin push opt-in privacy without losing its properties that makes the base layer easy to verify?