Privacy and anonymity in Bitcoin is quite a complex issue. A user within a cryptocurrency forum wondered why Bitcoin is not more private, adopting better security protocols already used by cryptocurrencies such as Monero and ZCash. To this question, the developer Pieter Wuille, collaborator of Bitcoin Core and co-author of Taproot, offers a brief analysis of why and what are the limitations to achieve this goal.
The analysis in question It is given within the StackExchange forum, in its cryptocurrency section. The publication was made by an anonymous user, who began by saying the following: “currencies such as Monero and Zcash implement privacy protocols that make it almost impossible to trace the origin and destination of transactions, making them completely anonymous. I am curious why Bitcoin does not examine a similar path to privacy. ”
In response to this, Pieter Wuille explained that“ Bitcoin is established by consensus ”. With this, he refers to the fact that individual requirements, including those of programmers like him, cannot be above the decisions of the community. Each proposal must go through the approval of the majority.
Wuille considers it invasive to make Bitcoin use the privacy protocols of Monero and Zcash , because possibly this requires a profound change in your source code. As a further recommendation, the developer, who currently works for ChainCodeLabs company, recommends that instead of asking “Why isn’t Bitcoin doing this?” It would be better to inquire if there is an ongoing investigation on the subject, or what challenges exist to achieve such implementation.
Anonymity: ZCash and Monero under the microscope
A part of the initial question about why Bitcoin is not more private, points out that thanks to the protocols implemented by ZCash and Monero their transactions were completely anonymous.
Pieter comments that the anonymity of a cryptocurrency is quite a complex factor and that it is not It is limited only to the user’s link to transactions within the blockchain.
To more clearly show the factors that affect the anonymity of a cryptocurrency network, Pieter divides it into four points.
The first of them is the privacy of the P2P network, which has to do with the monitoring that an attacker can do to transactions within the chain of blocks. For this problem there are already partial solutions, such as mixers, encrypted private channels, TOR networks, among others.
Second is the network infrastructure. Wuille exposes that the dependencies of some wallets to centralized servers can expose the anonymity of a user by knowing their IP address.
Privacy and Spending policies are other points in which the developer considers that there may be a lack of privacy.
In this regard, Pieter Wuille gives a quite concrete example. Imagine a company that launches a luxury portfolio that creates transactions with 7 different firms, being the only one in the market. The rest of the community will be able to know that each transaction with 7 firms in the network comes from that company, he says. In this sense, he exposes that Taproot aims to offer a model of greater privacy, but partially.
Pieter closes by saying that all this is to explain that privacy is multi-faceted and that “Every aspect of her is important.” He adds that “some of these elements are much easier to improve than others.”
What prevents Bitcoin from being more private?
In the final part of his writing, Pieter talks about the possible barriers that can be found along the way, along with the requirements that would be necessary to adopt to implement the privacy approach of Monero and ZCash.
One of the first limitations is generating drastic changes, all in favor of improving privacy, possibly leaving built systems vulnerable over the Bitcoin network. He also mentions the change in the entire network portfolio infrastructure, something that “historically has been extremely rare.”
The latter speaks of the need to change the protocol for the use of each of the existing wallets, including hardware wallets, mobile applications and even full node wallets. This is because, in a transaction, both the recipient and the sender should implement the new privacy protocol. This change could generate a vulnerability , since those portfolios that do not update would be unusable.
In relation to the adoption of the protocols, either ZCash or Monero, Wuille discusses the challenges in terms of the encryption model. He considers the change that the use of «elliptic curve pairings» used to generate private keys would imply in Bitcoin.
In turn, he also mentions the replacement of the UTXO set within of the ZCash and Monero networks by a different data structure, which grows forever and is “proportional to the frequency with which the coins move.” This could pose a serious scalability problem in the event of mass adoption.
Pieter Wuille concludes that Bitcoin will continue to adopt improvements and that, Today, there is a lot of interesting research. He also emphasizes that within the network there are already different approaches in favor of improving the privacy of users, not only in the field of chain transactions.
With his question, the user it also left open the question of whether there are “intrinsic concerns that governments around the world may shut down the network” if extreme privacy measures are used. To this, the programmer responded in a blunt and humorous way: “as far as I’m concerned, hell, no.”
