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9

TCP and other stream based protocols do not have a 1-to-1 correlation of application level messages and IP packets. If you call send() 3 times, it might result in sending a single IP packet over the wire (eg, due to Nagle's algorithm which is enabled by default), it might get sent individually as 3 packets, as you would expect from a packet oriented protocol ...


6

Your address is a classical 1 (Pay-to-public-key-hash) address. Your friend has a newer Bech32 Pay-to-Witness-public-key-hash-type address. The block explorer you referenced is partially compatible with Bech32. Sometimes, it doesn't work. On the other hand, there's nothing that prevents you from looking at your friend's transactions using a different block ...


5

The onion routing in Lightning is based on the Sphinx Mix Format described in this paper. The situation is different from Tor We don't have entry and exit nodes in Lightning as all nodes are inside the Network. In Tor a new connection along the path is as easy as creating a TCP socket between the tor routing nodes. In Lightning a payment channel with ...


4

HD vs non-deterministic: "HD" means "hierarchical deterministic". "deterministic" means: all your private keys are generated from a seed, "knowing your seed = knowing all your private keys", so that frequent backup is no longer needed. "hierarchical" means: you can manage multiple coins/accounts/address types with only one seed. Watch-only wallets are ...


4

The paper you link to when used as advice rather than a scholarly investigation into the tradeoffs of different choices is outright bad advice. The attacks they give are largely generic and have little to do with tor itself, while use of tor provides non-trivial protection against many other vectors, and if used consistently and exclusively at least ...


3

Assume you are using a unique common address for each customer and at the end of the day/week/month you make payments to your employees, suppliers or partners. When making those payments, if those outgoing amounts exceed the amounts received from one customer, you will have to include inputs coming from other customers. If some of your customer addresses ...


3

Currently, best practices are to receive coins to an address only once - Any reasonably new wallet will generate a new receiving address for you if the previously displayed one has already received coins. However, there are scenarios where an address might receive coins multiple times, such as being a saved address on an exchange, stored with an automatic ...


3

Bitcoin is not yet built with a privacy layer, all transactions are public and immutable, meaning they are visible to everyone, everywhere, forever. If you wish to make a private transaction, you are better off using another blockchain like Monero, Zcash, or one of the many others focused on maintaining user privacy.


3

I suggest we say channel balance instead of channel state (the state is encoded by a signed commitment TX and if it leaks you could loose your funds) As for the balance such a dilemma indeed exists. Indeed routing becomes more trial and error without public channel balances. Yet, there will probably be methods that allow to predict routes with higher ...


3

The only advantages of doing a coinjoin is that the recipient of your funds cannot see the source of your funds (and the sender of funds to you cannot see your future transactions). If you do a coinjoin with only your funds, any branch they follow along this trail will lead to a source (or destination) of your funds. Every source you include in the coinjoin ...


3

"Privacy loves company." The key is to understand why a coinjoin transaction provides privacy. It is not a magical veil that shields your financial history, it is just a tool that helps obfuscate a particular output's history. This obfuscation is only achieved by including many inputs in the coinjoin transaction, such that each input could be the source of ...


2

With option 2, most analyses will conclude that Alice owned A1, A2 and A3, because the transactions which spent them have no change address. Typically, you assume that the amount you have held in a TXO never exactly matches the amount you're making as a payment, so transactions usually have change outputs too. I think you have a little misunderstanding ...


2

Can this effectively be used to break/hide a Bitcoin transaction chain? No, the block explorers you've mentioned simply do not include code that is capable of decyphering the nonstandard transaction you've linked to. Importantly: Bitcoin transactions do not include a 'from address', instead they reference a valid unspent transaction output (UTXO) that ...


2

In lightning network payments are onion routed. The only thing a PSV could reveal is the previous and next hop, but they can not know the origin or the destination. They know it came from Alice, and went to Bob, but they do not know where Alice may have gotten it from, or where Bob may send it to.


2

Using a mixer helps preserve your financial privacy. The question is: who are you protecting your privacy from? Bitcoin transactions are public record, so anybody can view any historical transaction at their leisure. So when considering your privacy, there are a few different situations worth exploring, for example: An unrelated third party is looking at ...


2

To add to Rene’s answer: The protocol design currently allows the probing of viable paths to leak just enough information to let you determine whether all channels along route provide adequate liquidity or not, without revealing the individual channel balances. Note though that one could use probing (receiver and sender controlled by same individual) with ...


2

Actually, the BOLT has been designed with very strong privacy properties with regard to watchtowers. You can give all your commitment tx id first halves to one watchtower and it still doesn't learn anything about the second halves, others txs or anything else about the state of the channel (or which channel it is watching at all), as long as the full ...


2

...does this present a privacy risk? Privacy concerns can be boiled down to the following questions: what information am I giving up by engaging in this transaction? And who am I sacrificing this information to? When you engage with some counterparty to make a payment, they will gain knowledge about your involvement in the bitcoin transaction that includes ...


2

I am not sure if I get your question right. Please tell me if not and I shall iterate on my answer. First of all the lightning network indeed has a different privacy model only opening and closing of channels is stored to the redundant public ledger called blockchain. Once the channel is open even when routing is applied the payment itself is pretty private....


2

How can [Bitcoin] ...achieve mass usage status as payment method? I suspect much research has been done in this area. Privacy is an important obstacle but not the only one. Motivations and Barriers for End-User Adoption of Bitcoin as Digital Currency. Presthus and O'Malley, 2017 The largest group, the non-users, state that they are awaiting for others ...


2

Bitcoins themselves are fungible, and addresses are designed to be for one-time-use only. It really comes down to how you use it, and it is entirely possible to transact using Bitcoin in a private manner. If the user is naive and has poor practices, then it is possible to track their financial history. But if the user is smart and uses best practices (no ...


2

Community, what is the current state of privacy related BIPs? CoinJoin related ones: Adam Gibson's SNICKER draft, which permits a simple unidirectional CoinJoin construction. BIP 79, Bustapay, a standard for CoinJoined payments. P2P improvements: BIP 156, Dandelion: routing newly broadcast transactions a few hops before broadcasting. Draft for BIP 324: ...


2

A funding transaction is one where some money is paid into a P2WSH transaction output, where the redeeemScript is a 2-of-2 multisig between the two participants. No other information is provided. Technically, even the redeemScript for the funding is not revealed until the funding transaction output is spent (channel closed), which makes it less obvious that ...


2

Doing coinjoin with only your coins is possible, it's called fake coinjoin. Samourai Wallet has one implementation, called Stonewall, I have written fake-coinjoin.sh for Bitcoin Core. But such fake coinjoin by itself does not give you much privacy, because of common-input-ownership heuristic. So, by default chain analysis companies assume that all the inputs ...


1

As per my understanding what you are proposing can be achieved with Schnorr signatures, which will be implemented with Taproot. Since Schnorr signatures permit key aggregation, you can construct a single public key (threshold public key) from multiple participant public keys, which in your case is N + initiator. When spending you can just combine the ...


1

Bitcoin Core is the name of the software you are referring to, and it is the software that runs Bitcoin. Computers that run Bitcoin Core are usually called nodes on the Bitcoin network. It is open source, and there are hundreds of developers around the world that have and are contributing to it over the last 10+ years. The software can be run by anyone, and ...


1

Your VPN provider at least is in a position to deanonymize you. Therefore, I would rather use TOR. It's not infallible, but many people have used it successfully to achieve relative anonymity. Here's a short guide to setting up bitcoin core with TOR As Saxtheowl has already mentioned, however, both a VPN and TOR can only hide your IP address. There are many ...


1

But what if someone has a copy of (e.g. steals) the original file? How can I certify I was the original owner? If you want to use the bitcoin blockchain as timestamped proof that you had the idea (document) first, then you’d need to be the first one to submit the document for a time stamp. A timestamp doesn’t prove ownership of an idea, just possession of ...


1

The Lightning Network does not have the same problems as Bitcoin because all communication is done over an encrypted and authenticated protocol. Lightning Nodes are identified by their public keys, such that communication only occurs between somebody with the matching private key to the public key expected by the connection initiator, making MITM attacks not ...


1

Sidenote: bitcoins exist as unspent transaction outputs (UTXOs), so with this in mind the two options you outlined for Alice create two different situations: in situation 1, Alice will have one UTXO. In situation 2, Alice will have 3 UTXOs. The question you've asked involves an analysis of UTXOs, so I thought this was worth mentioning. Can someone ...


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