First of all, why do we even work on Bitcoin? Well, because money is an incredibly important good for a prosperous society to function. When you hold money, every entrepreneur in your economy will happily solve any problem you might have. Saving your capital in money helps you sleep better at night, knowing that tomorrow you can buy everything you might need.

But, there is good money and there is bad money. If anyone forces you to use a specific money, then generally speaking it’s a bad one. Free people will choose a money that they deem good. Bitcoin is a common choice because it has a predefined and unchanging money supply, so nobody can print himself money and hand it out to friends. Cryptography protects the ownership of coins, which makes theft pretty difficult.

Bitcoin has sound economic principles and powerful cryptographic protocols with an unrestricted free market for anyone to start getting paid in bitcoin. Economically and technically speaking, bitcoin is unstoppable and will eventually be used by the overwhelming majority of all merchants.

However, there are other important aspects of good money, which currently Bitcoin is not optimally designed for. Specifically, the fungibility of money; that any coin has the same demand as any other coin. Merchants don’t care which specific coin they get paid in, as long as it is valid. But in bitcoin, a coin has a unique transaction history which is publicly known and verified by every node. This transaction history makes each coin a unique and non-fungible unit.

In the worst case, this open transaction history is the basis for a dystopian surveillance system. Where every transaction of the same person is clustered together and tied to his identity. Now, everyone is spying on everyone else and the choice of what to reveal about yourself to the world is taken from everyone.

It might be inevitable that bitcoin succeeds economically. But a future where people are in control of whom to tell about their sensitive financial transactions is still uncertain.

But not all hope is lost. There are so many tricks and strategies to increase the financial privacy of bitcoin users. The best thing is, most of them don’t even require any changes to the bitcoin consensus rules but can already be used today. Tor, block filter synchronization, coinjoin, coin swaps, lightning network and eCash; there are endless ways of improving the privacy, security and usability of everyday bitcoiners.

This is the reasoning for why we work on bitcoin privacy and why we focus on innovating at the edges with Wasabi, the privacy-focused bitcoin wallet.

The post Why We Work on Bitcoin Privacy appeared first on Wasabi Wallet - Blog.

They said that Bitcoin isn’t private, that you couldn’t use it without telling everyone about your payments. They said that you had to be an expert before you had a chance to protect your sensitive financial information.

Well, what if I told you that they were wrong and that it’s gotten super easy to make Bitcoin payments without anyone being able to link them all to you? Interested ? Keep reading.

First and foremost, you have to download the latest and greatest Wasabi Wallet 2.0. For many that’s the actual step one, but hey, I know you’re cool and are already running the mighty Wasabi, so you can skip and reclaim your privacy that much quicker.

Maybe you’re a whale, or maybe you’re a pleb, but anyone worth a sat has got a wallet these days, so type in your recovery words to import your keys to Wasabi. If you’re one of those future-coiners who hasn’t got a wallet yet. First, slap yourself and try to wake up. But don’t stress it, you can easily create a new wallet in Wasabi directly. Write down the 12 words and you’re good to go!

Now comes arguably the toughest part. You gotta convince someone to send you some magical internet money. It ain’t easy, ‘cause nobody has enough sats, and everyone wants to stack some more. But I’m sure you’re a fine entrepreneur, so go be productive and earn yourself some treasure worth protecting. That part is easy as pi in Wasabi. Just click “Receive”, write who is sending you that hoard and show him that address. Voila, you’ve now got more sats than yesterday, that’s what I’d call a good day.

Earning sats is already difficult enough; if you think about it, waiting to spend it can be even more difficult. I know you really wanna have that delicious steak, that fast boat and that hidden citadel. But patience is a virtue (that most of us lack); however it’s all you need at this step. While you are dreaming about how delicious that steak is gonna be, Wasabi is doing magic for you in the background. Who knows what exactly is going on under the hood but the crazy thing is, in just a short amount of time, the coins that other people knew were yours are gone and you got new coins that nobody knows are yours. Magic indeed.

Now that you are fully equipped with truly anonymous money, you can frivolously spend it without worrying that those who paid you sats, know where you spend them. But oh well, maybe, just maybe, that short lesson in waiting has made you realize that indeed, you could continue fasting a little more, not buy that steak but hold on to those precious sats just a little longer instead. Who knows, your great grandchildren could buy themselves a spaceship to the stars with those sats.

Earn sats, wait, spend sats. Wasabi is made to help you do that and just that, without revealing your important financial data to everyone in the world.

Reclaim your privacy. Effortlessly. With Wasabi 2.0.

The post How to use Bitcoin Privately in 3 Easy Steps: Receive, Wait and Spend. appeared first on Wasabi Wallet - Blog.

Wasabi Wallet 1.0 solved a lot of difficult problems out of the box. Tor was natively integrated, protecting user IP addresses. Block filters were used to synchronize wallets without anyone else learning about the transaction history. The best available zerolink coinjoin protocol with Chaumian blind signatures provided privacy on the blockchain.

However, the Chaumian blind signature protocol had limitations that lead to a bad user experience and excessive blockspace usage. The minimum denomination was too large for many users, denying them access to the service. But for others it was too small, resulting in many coins in the wallet, which is expensive. If a user wanted to consolidate many inputs in the same coinjoin transaction, he had to tell the coordinator which belonged together. Even though the coordinator could not link the inputs of one user to the equal amount output he received, it was public knowledge which non-equal change output the user received.

Some of these concerns were improved with marginal upgrades to the protocol during the Wasabi 1.0 life cycle. However, in order to truly solve these issues, a fundamental solution was required. But at this point, we did not know what technology existed that could be applied at scale.

A group of developers, cryptographers and enthusiasts got together in the Wasabi Research Club, a weekly meeting to define, discuss and solve this complex problem. Initially, a different academic paper was chosen as the topic for each week. We invited the authors of each paper to join us, and many did, giving ample opportunity to ask questions. One of the researchers, usually Aviv Milner, started the call with a short presentation to introduce and summarize the paper. The recordings of these calls are available on the Wasabi Wallet YouTube channel.

A breakthrough moment was when Jonas Nick suggested that keyed verified anonymous credentials might be a great fit for our specific use case. There are numerous different cryptographic schemes in this category, like Brands’ credentials, Mercurial signatures, anonymous credentials light and keyed verified anonymous credentials. The specific paper Jonas brought to our attention was The Signal Private Group System and Anonymous Credentials Supporting Efficient Verifiable Encryption, written by Melissa Chase, Trevor Perrin and Greg Zaverucha.

This cryptography allows a central server to issue tokens which can have many attributes. Each of these attributes can be blindly committed to, then selectively revealed at a later point. These tokens can be transferred anonymously. The trick we use in WabiSabi specifically, is that one attribute of these credentials is a blinded value of sats. Pedersen commitments are used so that the coordinator never learns how many sats one token has attributed, but he can still ensure that nobody is creating more money than he spent.

These anonymous digital bearer certificates are the access rights to the new bitcoin transaction that is being built. The coordinator issues tokens and gives it to anyone who provides an input. And later, any anonymous user who provides such a token, can write an output address and amount to the transaction. These tokens ensure nobody is writing more outputs than inputs, without the users having to sacrifice their privacy to the central server.

At this point, we had a pretty solid idea of the problem and how flexible anonymous eCash tokens can be used to solve it. This was a sufficient advancement to document in a new paper, WabiSabi: Centrally Coordinated CoinJoins with Variable Amounts, which was peer reviewed and published. This paper was finalized mainly by Adam Ficsor, Yuval Kogman, Lucas Ontivero and István András Seres.

A crucial next step was to implement the cryptography that makes the system possible. Lucas Ontivero, Yuval Kogman and David Molnar dedicated months to building, testing and reviewing this critical part of the codebase. An independent security firm was hired to audit the code base and several outside contributors have reviewed it as well. In the following months, Wasabi’s client and server code were upgraded and sometimes entirely rewritten to support this new protocol.

With the protocol designed, the cryptography implemented and the client and server code well on its way, we realized that some of the most difficult questions are still unanswered. Now that the coordinator no longer dictates the minimum value of inputs and what output values to register, what exactly should the client do now? With great power, comes great responsibility. For the first time in the history of bitcoin coinjoin, the client can basically do whatever it wants. This turned out to be rather uncharted territory, with conflicting ideas of how to approach the subject.

Anonymity likes company meaning that it’s a good idea to hide in a crowd. So a coinjoin transaction should have many coins with the exact same amount of sats. However, every transaction should have many different equal amounts. One of Yuval’s many insights was to use low Hamming weight standard denominations. Only a few of these amounts are required to sum up to any arbitrary value. Specifically, these standard denominations are powers of two, powers of three, and 1, 2, and 5 times the powers of ten. Between 5000 sats and 1 bitcoin, there are 41 of these standard denominations. If all clients prefer to create outputs in only those standard denominations, then there are going to be a higher number of equal amount inputs and outputs.

These developments are why Wabisabi has improved upon the original Zerolink protocol of Wasabi 1.0 and how Wasabi 2.0, powered by Wabisabi are breaking records everyday for facilitating some of the largest coinjoins ever while provided even the newest Bitcoin user access to the highest level of privacy.

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