on the crypto
CoinSwap, a promising Bitcoin privacy technology, was finally tested on Tuesday. Bitcoin has flaws in its privacy management, although the opposite is sometimes perceived. The complete history of every transaction on the Bitcoin blockchain is public and anyone can learn about it. CoinSwap is a type of transaction that increases a user's privacy by making history much less simple.
CoinSwap technology for Bitcoin privacy
"A great day for bitcoin privacy and fungibility," tweeted Bitcoin privacy developer Chris Belcher announcing the transaction. CoinSwap transactions look like transactions that go from one address to another, but are actually sent somewhere else.
Furthermore, CoinSwap can be implemented in such a way that it looks like a normal transaction, thus making it “invisible”, unlike the most popular privacy tools currently. Belcher said he had been working on Bitcoin privacy with CoinSwaps since May with a mission to "massively improve" Bitcoin's privacy. Over the summer, he received two scholarships from Square Crypto and the Human Right Foundation to support his work.
How it works
Right now, it's easy to trace the origin of a bitcoin transaction. If the Bitcoin blockchain says 0,1 BTC went from address A to address B, that's probably what happened. CoinSwap uses cryptography to change these assumptions, making it harder for blockchain viewers to know what's going on. A crucial element of Belcher's CoinSwap test is that it uses multiple transactions.
This helps preserve privacy. "Alice made a CoinSwap for 0,05 tBTC [testnet bitcoin] but nowhere on the blockchain was the actual value 0,05 tBTC found, instead any observer-spy of the blockchain would see the values 0,02919015, 0,01233641 and 0,00847344 for Alice and 0,01286471, 0,02457554 and 0,01245975 for Bob, who is the recipient. These numbers can be randomly generated using any algorithm, and the spy would have a hard time figuring out that the transactions are related, ”Belcher said.
There is still a lot to do
This test is a big step, especially considering how complicated CoinSwap is as a structure. But there is still a lot of work to be done before users can use CoinSwap. For example, Belcher's goal is to make CoinSwap transactions indistinguishable from regular bitcoin transactions.
The test Belcher provided on Tuesday still doesn't have this property. Belcher's goal is to make CoinSwap and regular transactions look the same. His plan is to use the ECDSA-2P crypto protocol to achieve this, which would give more privacy to all Bitcoin users, not just those running CoinSwap.
This property distinguishes Coinswap from CoinJoins, the most popular type of privacy transaction used today on Bitcoin. quotation). Although CoinJoins provides users with privacy, its transactions are recognized on the blockchain. This will not be the case for CoinSwap (at least if it is implemented in the way that Belcher intends).
