SamouraiWallet and HiddenWallet developers have announced the creation of what they claim to be an anonymous wallet for bitcoin. If true, the developers may have introduced a way to use bitcoin with complete anonymity. This claim was written on Medium.com by nopara73, who describes himself as Chief Redditor of TumbleBit. Creator of HiddenWallet.
In his post, he writes, “Even if there is a great, cheap and performant anonimity technique, there are just so many ways a user can be deanonymized, for example through network analysis. For this reason we came up with the Wallet Privacy Framework.”
Here is a diagram to describe the Wallet Privacy Framework:
In his article, nopara73 quotes a passage in the FAQ for Gregory Maxwell’s CoinJoin, written in 2013. nopara73 says the passage descibes a technique based on th Chaum Blind Signature Scheme. Here is the passage quoted:
“Using chaum blind signatures: The users connect and provide inputs (and change addresses) and a cryptographically-blinded version of the address they want their private coins to go to; the server signs the tokens and returns them. The users anonymously reconnect, unblind their output addresses, and return them to the server. The server can see that all the outputs were signed by it and so all the outputs had to come from valid participants. Later people reconnect and sign.”
nopara73 answers the question that many might be asking who are skeptical of the claims made, if this is truly anonymous and so easy to create, why hasn’t it been done a lot sooner? He answers, ” A part of the reason was: proper DoS protection is fairly hard to do. However the things have changed since 2013 and we are not living in a zero Bitcoin fee environment anymore. It turnes out if Bitcoin fees stay around $1 there is an elegant way to make it uneconomical for malicious actors to disrupt mixing rounds.”
As I have written in a recent article, the greatest danger to coercive enterprises (states) is anonymity. I have little dout that IF this project is actually close to creating a truly anonymous bitcoin wallet, efforts will be made by coercive enterprises to counter this existential danger to their power and their ‘legitimacy’ as a ‘necessary’ institution in human governance.