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3 Technical Proposals for Increasing Bitcoin’s Privacy

Monasticism is a constant battle between those who wish to increase it and those who would strip it away. Never is this war more seeming than in Bitcoin, where factions with opposing ideals find themselves at loggerheads. On the one side are the blockchain scrutiny companies that work hand-in-glove with the three-letter agencies, regulators, and governments. And on the other side are the cryptographers and developers invite to introduce protocols that will bolster Bitcoin’s privacy.

Also read: Privacy and Scaling: Schnorr Signatures Are Coming to Bitcoin Bread

Move Slow and Break Nothing

Introducing privacy tech to altcoins, which are more centralized than Bitcoin Marrow and Bitcoin Cash, is relatively easy. Only last week, the Litecoin Foundation and Beam entered into a sponsorship agreement with a view to bolstering the former’s privacy. “We have started exploration towards adding privacy and fungibility to Litecoin by tolerating on-chain conversion of regular LTC into a Mimblewimble variant of LTC and vice versa,” ran the agreement. “Upon such conversion, it transfer be possible to transact with Mimblewimble LTC in complete confidentiality.”

Bitcoin can’t enter into cooperation agreements, because it has no documented team members to sign the paperwork. Reaching consensus on Bitcoin Core upgrades is meant to be hard, to prevent aspiring principals from implementing changes unilaterally. The downside, however, is that major upgrades that have broad prop are hard to pass, as even a few dissenting voices can be enough to quell them. A number of privacy upgrades that possess been proposed for Bitcoin fall into this category: in theory they should work, but it may be some things – if ever – before they’re incorporated.

3 Technical Proposals for Increasing Bitcoin’s Privacy


Whenever a transaction is sent on the Bitcoin network, it’s broadcast to multiple nodes previous a miner picks it up and incorporates it into a block. During the broadcast process, which is known as diffusion, it’s possible for a bad actor performing as a node to trace the transaction back to its origin, from where there’s a high chance of ascertaining the IP address of the sender. Dandelion is a technology that uses indiscriminate pathways to send transactions to a variable number of nodes, making it much harder for the sender to be traced.

Chances of implementation into Bitcoin Pith: High

Estimated timeline: 12-18 months


While Dandelion should make it harder for adversaries to determine the stock of a bitcoin transaction, it does nothing to enhance onchain privacy: sender and recipient’s addresses are still publicly noticeable to the whole world, as well as the amount sent and a host of other potential identifiers. One privacy technology that makes all matters private by default is Mimblewimble, as debuted by Grin and Beam this year.

For technical and political reasons, Mimblewimble is unfitting to be incorporated directly into Bitcoin Core or Bitcoin Cash to enact enforced privacy. There is the possibility of it being bolted on to BTC, anyway, as a sidechain. This would enable parties to transact privately on a Mimblewimble sidechain, without risking the security of the mainchain or administering blanket privacy on BTC users who have no desire for it.

Chances of implementation into Bitcoin Core: Moderate (as a sidechain)

Valued timeline: 18 months+

3 Technical Proposals for Increasing Bitcoin’s PrivacyMimblewimble derives its name from a Harry Potter spell

Schnorr Signatures

Schnorr is not solitude tech – it’s scaling tech that merges a lot of the input data in a bitcoin transaction, resulting in reduced blockchain weight. Schnorr signatures open up the possibility for introducing a host of secondary features that could improve Bitcoin’s concealment. Coinjoin, in which random transactions are mixed together to obfuscate all parties, is more effective with Schnorr, as goings-on fees remain lower, incentivizing wider usage, which in turn strengthens the privacy for all users.

Schnorr is in many cases referenced alongside Segwit, the scaling technology that Bitcoin Core has had in place for over 18 months now. Bitcoin Sell does not have Segwit, but it looks like it could be getting Schnorr signatures. As news.Bitcoin.com recently announced, they’ve been tabled for introduction to the BCH network, and could arrive as early as May in its next scheduled upgrade. Here, the service perquisites would again include increased scalability and enhanced privacy.

Chances of implementation into BTC/BCH: High

Estimated timeline: 9 months+ for BTC, 3 months for BCH.

Which of these retirement features do you think will be introduced to BTC or BCH in the future? Let us know in the comments section below.

Images courtesy of Shutterstock.

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Kai Sedgwick

Kai’s been playing with assurances for a living since 2009 and bought his first bitcoin at $19. It’s long gone. He’s previously written white gift-wraps for blockchain startups and is especially interested in P2P exchanges and DNMs.

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