What You Need to Know About Bitcoin’s “Privacy War”

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If you’ve been anywhere near Twitter lately, you might have noticed Bitcoiners furiously debating the ins and outs of bitcoin privacy. This feud has become colloquially known as Bitcoin’s “privacy war.”

Bitcoin is not private by default. Because Bitcoin’s transaction history is open to the world, users must take the time to learn and use certain tools and wallets if they want to fully privatize their Bitcoin.

Two of the most popular wallets today that allow users to easily protect transactions include Wasabi Wallet (operated by zkSNACKs company) and Samourai Wallet. The teams have clashed for years over philosophical differences of opinion on how best to keep Bitcoin private.

The latest round of debate began last week when Bitcoin hardware wallet Trezor announced that it had partnered with Wasabi Wallet to allow Trezor users to easily privatize their Bitcoin stash. Samourai Wallet defenders took aim because they criticized zkSNACKs’ decision to blacklist the transactions, which reignited the debate.

Although much of the debate has turned into slander, it brings out some important points. The so-called war highlights the complexity of Bitcoin’s privacy and many trade-offs that users must consider when choosing a particular wallet.

Wasabi censorship

Wasabi Wallet and Samourai Wallet both rely on a privacy technique called CoinJoin, where many Bitcoin users come together to create a large transaction. Mixing transactions together in this way makes it difficult for viewers to see which user owns which bitcoin.

The years-long feud between the builders of the two wallets has taken different forms over the years. More recently, the primary criticism of Wasabi Wallet from Samourai Wallet supporters is that last year Wasabi announced that the Wallet Coordinator (run by zkSNACKs) would begin blacklisting certain Bitcoin transactions, not not allowing to be used in every CoinJoin, citing undisclosed legal and regulatory reasons. .

Wasabi admitted that the decision was ultimately “undesirable”, but argued that it was the best way forward to keep zkSNACKs going, and thus successfully help as many users as possible protect their Bitcoin. “[Blacklisting] is a small price to pay for the future of Bitcoin privacy,” Wasabi Wallet said in a statement at the time.

But Samourai Wallet supporters see the move as a betrayal of Bitcoin’s censorship-resistant philosophy. “Once they crossed that red line, the debate was over for me,” said SW, pseudonymous co-creator of Samourai Wallet. chain surveillance rely. Teaming up with your sworn adversary is unthinkable,” he said.

He added that regulators never explicitly asked zkSNACKs to blacklist transactions, but they did it anyway. “By normalizing on-chain surveillance’s foray into non-custodial bitcoin wallet software, we are enabling an unthinkable cession of territory without any justification. No regulatory requirement, no legislative requirement, nothing,” he said. .

Pseudonymous privacy and security researcher L0la L33tz noted that blacklisting transactions does not interfere with the privacy of Wasabi Wallet users.

Still, she agrees that blacklisting transactions could be a slippery slope. “Is a future in which we can only enforce our right to privacy at the whim of others desirable? In my view, [EFF founder and privacy activist] John Perry Barlow summed it up well: you can’t separate the air that’s choking from the air that the wings are flapping on,'” she said.

To complicate matters, L0la L33tz also pointed out that users often confuse Wasabi Wallet with zkSNACKS, the company behind Wasabi Wallet, which is responsible for coordinating CoinJoins between users.

Wasabi Wallet gives users the option to use another coordinator if they wish. Someone in the community could hypothetically set up another concurrent coordinator that doesn’t blacklist transactions. However, zkSNACKS admittedly operates the most liquid coordinator at the moment.

Samurai privacy concerns

On the other hand, Samourai Wallet reviews claim that the default settings of the wallet do not protect user privacy well enough.

L0la L33tz calls Samourai Wallet’s design decisions “questionable”. For one, in Samourai Wallet, running the privacy preservation tool Tor is not a default option. Instead, users have to flip a switch to use Torand thus hiding their IP address, which can be tied to a person’s identity. If users forget or don’t realize they need to enable this setting, they can expose their IP addresses with Samourai Wallet.

The second decision she and other Samourai critics criticize is that users must run their own Bitcoin node in order to keep their Bitcoin private, which many Bitcoin users do not do. If users are not running their own Bitcoin node, they share their “xpub” with Samourai Wallet, which exposes information about a user and the coins they own.

“It cannot be independently verified how many users are running their own nodes for [Samourai Wallet]exposing even those running their own nodes to the risk of de-anonymization via [Samourai Wallet] by exclusion,” L0la L33tz said.

Meanwhile, Wasabi Wallet does not allow the option to track any of this data. “zkSNACKs, the coordinator behind Wasabi Wallet, does not learn anything about its users through Tor and filters by default,” L0la L33tz said.

Samourai Wallet counters that they have never granted requests to share this data.

Wasabians argue that users must trust Samourai Wallet not to transmit this data, which goes against Bitcoin’s “don’t trust, verify” philosophy.

You don’t trust, check?

Yet verifying information on your own, rather than trusting others, is difficult and time-consuming.

L0la L33tz argues that the war “actually prevents people from learning more about bitcoin privacy and bitcoin privacy tools. There is a lot of noise and few signals, which leads to confusion rather than to education”.

This is a problem for all Bitcoin users, she argues, adding that it is important that enough people in Bitcoin use privacy tools, to increase “the anonymity package”. The more people in this “set”, the greater the privacy of each user.

“It is only with sufficient adoption of privacy tools that those who wish to use Bitcoin privately can obtain a sufficiently broad set of anonymity; so, in a sense, this debate should be important for anyone who use bitcoin,” she said.

She argues that users need better tools to help them differentiate signal from noise: “Users need to be able to decide for themselves which tools are best suited to their personal threat vectors, and infighting and constant accusations from both projects do not help users to make informed decisions.

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