Why isn't Bitcoin private by default? [duplicate]

Question

Bitcoin is not fungible...so why haven't the Bitcoin core devs upgraded the protocol to make it private by default?

Answer 1

They are trying to add new features that would help with privacy! There is an upgrade proposal known as Taproot that would come with features to enable additional transaction privacy in Bitcoin.

Note, however, that major changes like this to Bitcoin are much more difficult than they are in smaller altcoins, simply because a significant amount of infrastructure must be updated, and getting so many different people and organizations to agree to a major update is challenging, although necessary to avoid a fork in the network. Also, there is an effort to keep updates backwards compatible with existing infrastructure, which limits the extent to which major changes like this are possible.

Answer 2

Bitcoins themselves are fungible, but the transaction graph is not. This is a small but important nuance: with properly crafted transactions, bitcoin users can gain privacy, without needing to implement more complicated cryptographic constructions.

This is currently an ongoing area of research, for more information you could look into techniques such as coinjoin, payjoin, taproot, the lightning network, etc. Some of these techniques involve obfuscating the chain of ownership through the transaction graph, others obfuscate the nature of the transaction itself, others move payments to a higher level protocol that doesn't leave a footprint on-chain in the first place.

As ieatpizza mentioned, large changes to the protocol can be difficult to implement, but they also bring new risks, as the network consensus will end up depending on new, as of yet untested-in-the-wild code.

In addition to that, the devs cannot just unilaterally decide to change the consensus rules: a majority of users would have to be on board, as would bitcoin businesses and infrastructure providers. It isn't impossible, but it is a very big undertaking.

Answer 3

Except for the technical and organizational challenges others have mentioned in their answers, I would like to add there is also a delicate matter of how Law Enforcement agencies such as police or various governmental tax agencies look at the ability to transfer and store amounts of money in untraceable private accounts - just look at the current leading private-coin - Monero, trading Monero was removed from several big online markets and it's value fell, I guess Bitcoin community would fear loss of value after seeing what happened to Monero.

Private-coin such as Monero is a double-edged sword for government. Corporations, who generally try to maintain good connections to governments (and in turn, governments, unofficially protect interests of important national corporations), traditionally evade paying tax and resort to Cayman Islands banks, private Swiss-bank accounts etc. So in future it is likely bug business might be interested in keeping their money in private-coin, on the other hand, LE is worried about organized crime and terrorist groups hiding their finances behind private-coin.

Currently, future of private-coins is a subject to some speculation and uncertainty, and I don't think Bitcoin wants to take that path.