Bitcoin Fees Will “Price Out” On-Chain Privacy

Google+ Pinterest LinkedIn Tumblr +

The founder of the Wasabi privacy Bitcoin wallet admits that growing fees will soon “price out” privacy from the main chain.

In a recent Twitter exchange on the relative price stagnation of the various privacy-focused cryptocurrencies relative to Bitcoin, Adam Ficsor, the co-founder and CTO of privacy development group zkSNACKS responsible for the popular Wasabi privacy wallet, weighed in on the viability for advanced privacy solutions for the future of Bitcoin. According to Ficsor, specific privacy coins still have a role, as he believes that solutions offering greater “privacy will be priced out of Bitcoin’s main chain” due to increasingly high transaction fees, and that solutions such as Wasabi are a “temporary hack” for the problems caused by the chain’s inherent transparency. Wasabi uses a variant of CoinJoin and mixes the funds from several participants in order to obscure the identity of any one sender.

Coin mixing services require multiple transactions and as such are not suitable for currencies with extremely high fees, which has been a historical problem for Bitcoin. According to data from BitInfoCharts, the current median transaction fee is not particularly obscene at about $0.70, however as recently as 11 days ago it was about $3.72. The highest recorded median fee was over $34 at the height of transaction congestion and the market surge in late 2017.

Recent popular mixing implementations attempt to emulate Bitcoin’s more private competitors

Recently-implemented coin mixing apps have been added to both the Bitcoin and Bitcoin Cash ecosystems to offer advanced privacy features not native in either chain, aiming to approximate the offerings of coins such as Dash which have privacy-specific features built-in. This includes the Wasabi wallet as well as CashShuffle for Bitcoin Cash, both of which use a coin mixing technique similar to Dash’s PrivateSend. In contrast, however, both rely on single servers (multiple choices may be available for CashShuffle) to perform the mixing, rather than Dash’s decentralized network of nearly 5,000 masternodes, and typically mix in a single round rather than through multiple rounds, offering less protection from deanonymization attacks.

Dash’s latest version has made privacy mixing significantly faster

The recent upgrade to the Dash network has significantly improvement the speed for mixing balances for PrivateSend transactions. In the recently-released version 0.14, all transactions are now both InstantSend (meaning instantly confirmed), as well as able to be immediately re-spent. This has the effect of speeding up the process of mixing balances, improving the experience for the end user.



Source link

Share.

About Author

Leave A Reply