Bitcoin Privacy in Today’s World

Bitcoin’s privacy has long been a mystery. From the beginning of Bitcoin, it was believed that this tool would provide complete privacy over the finances of anyone who decided to use it. This includes ownership, payments or custody of funds.

However, after just a few years, it became clear that due to the transparent nature of the blockchain, anyone who disclosed any form of identity online and linked it to a wallet or address was exposed. Or at least that part of their Bitcoin garbage was exposed.

As many developers, cypherpunks, and cryptocurrency enthusiasts are aware of this fact, many of their attention and focus is on improving Bitcoin-related privacy tools. So what tools are being worked on and improved upon, and what is the current state of Bitcoin privacy?

First of all, it should be noted that with the current development of the whole cryptocurrency world, the industry is not doing very well when it comes to privacy. More and more exchanges are implementing verification processes, ID and KYC procedures that are completely against any privacy.

This means that if users want to buy Bitcoin on a private matter, it immediately becomes difficult, as even the largest and most convenient cryptocurrency exchanges have become KYC watchtowers. Fortunately, there are several tools and features continuously improving that can help Bitcoin enthusiasts get their privacy back.

While banks, central banks and governments work tirelessly to gain more control over the population, Bitcoin developers are trying to do the exact opposite. They seek to bring more freedom and privacy over their finances to anyone who wants them. And they try to provide this thanks to Bitcoin and the various tools, techniques or services they implement.

1. Bitcoin mixers and blenders

Examples of these are Bitcoin mixers, blenders and tumblers. These platforms or service providers do their best to make Bitcoin transactions dark, thus helping the sender and receiver of the transaction to improve their financial privacy. Solutions like this are currently one of the most popular because they are easy to use and in some cases are even built into some projects like Wasabi Wallet.

2. Privacy-oriented wallets

This brings us to another possibility to improve privacy, which is to use privacy-focused wallets like the aforementioned Wasabi or Samourai. These wallets provide important tools and techniques like CoinJoins right in their interface, making it very easy for their users to take advantage of these tools, thereby improving their privacy.

3. Fediment

However, another example that is not yet complete but is currently in development is Fedi and Fedimint. This solution will not only give users more privacy but also better self-protection. The Fed will likely be seen as a compromise solution between leaving bitcoins on the exchange and keeping it under its control. The same logic can be applied to privacy, where Fedi probably won’t provide the best privacy features, but it would still be an improvement over any solution CEXs (centralized exchanges) currently offer.

4. Lightning Network

Also helping with privacy is the Lightning Network right now. This layer-2 solution, built on top of layer-1, was originally intended as a solution to the scalability problem, but nowadays it has a nice “side effect”. And it’s privacy because transactions in LN can happen anonymously between two parties without being recorded on the blockchain. Due to this, the privacy of both parties can be improved.

The result

The current state of the financial system is not good at all. The control that is increasingly present in everyone’s life is not just going to go away. So people need to take their privacy over their personal lives as well as their money into their own hands. Bitcoin can provide this if combined with the most interesting tools offered by privacy-oriented developers.

One of these options is Whir. At Whir, we are committed to improving the privacy of everyone using this platform to send or receive bitcoins. Whir is very easy to use and offers competitive fees, which is why it’s so attractive to privacy-minded people.