TL;DR: Privacy is a key worry for some Bitcoiners who use it as a way of keeping their records and movements from government eyes, for example. With this in mind, CoinSpice interviewed legendary developer Adam Ficsor, also known in internet circles as nopara73. He’s a lead developer of Wasabi, one of the most important privacy-oriented wallets in the Bitcoin Core (BTC) scene. He went into detail about the current state of on-chain privacy, and he also discussed the recent feud Wasabi is having with Samourai, another BTC privacy-oriented wallet.
Privacy on the BTC Blockchain with Adam Ficsor
Cryptocurrencies were born as a way of performing transactions between peers without having to deal with a central authority to oversee this exchange. The original use of bitcoin is described in its white paper as being “a peer 2 peer electronic cash system.” Despite new privacy-oriented coins having arrived, whose prime objective is to make transactions and the people behind them anonymous (like Monero and ZCash), it is always interesting to survey the state of privacy on blockchains not necessarily dedicated to privacy per se.
However, the future does not look too bright, according to Wasabi Wallet developer Adam Ficsor, who chatted with CoinSpice to talk about this matter and discusses the constant attacks his organization has been getting from another well-known name in the BTC privacy wallet scene, Samourai.
Adam Ficsor is best known for his work in the privacy-related area. CTO and co-founder of zkSNACKS, it can be said few people know more about privacy and anonymity on the BTC blockchain. Having written dozens of privacy articles, he is also the lead developer of Wasabi Wallet, that possesses ZeroLink, one of the most advanced implementations of CoinJoin, the mixing method described by Greg Maxwell.
Interview: On-Chain Privacy Might Be Priced Out
CoinSpice: What do you think about the general state of privacy on the BTC blockchain?
Adam Ficsor: That’s a great question and surprisingly I don’t think I have ever been asked about this. To answer it, I have to take a step back and talk about scaling. The problem with blockchains is that they don’t scale, thus when on-chain fees go up, because of mass adoption, most likely the Lightning Network will take over most of the volume. While LN is not bulletproof from a privacy point of view, it’s good enough for the majority of people, so that is very promising. It is an open question if we can make LN have bulletproof privacy.
Regarding on-chain privacy, JoinMarket and Wasabi are temporary fixes. All these systems require the user to do more transactions, so they are inherently more expensive. If you are transacting for 1c fees and your fees go up to $1, you don’t mind that compared to if you are transacting for $1 with privacy tech and your fees go up to $100. So this kind of privacy will be priced out of on-chain, which is worrisome.
Non-coinjoin like techniques are also a no-go, because they use even more space than coinjoins, that was the realization why I stopped working on TumbleBit. Coinjoins happen within a single transaction, so we cannot be more cost-efficient than that.
So you do think privacy will be priced out the BTC blockchain?
Yes, it really seems like privacy will be priced out assuming 3 things:
– Bitcoin will take over the world.
– There won’t be any new breakthroughs.
– Confidential Transactions won’t get into Bitcoin.
And the rise of Lightning Network?
LN restores most of the privacy loss we are experiencing today, but on-chain transactions won’t disappear. So we need privacy on-chain, too.
Is there a way to improve that?
There are two ways to improve it. The need for multiple transactions in coinjoins comes from the fact that amounts are unequal and we are equalizing them. Confidential Transactions would hide these amounts so we wouldn’t need it anymore. This would, however, be a protocol-level change. Another “good” news is that our amount equalizing algorithms are rudimentary and we can come up with much better ones that aim to optimize for cost/anonymity.
At this point. however, I don’t know if this would be sufficient to keep on-chain privacy techniques going in case of high fee environment. My hunch is it’s not.
The last big category is network-level privacy, which at this point I would consider to be solved already. We have private enough ways of broadcasting (Tor, listening full node) but Dandelion may be coming to have a great way to broadcast. Private UTXO set awareness can happen in various ways, too.
The perfect way of course is a Bitcoin full node, what Wasabi does with Neutrino filters are almost as good, just a naive non-privacy centric implementation of Neutrino filters would be also sufficiently private for most people, and there are other ideas how to make things lighter and more private, so I’d say we have the network-level privacy mostly figured out, now only the adoption is left.
Do you think BTC will become as good as say, Monero in the privacy aspect? Or will privacy coins always have their place in the crypto world?
Bitcoin can be private enough to make privacy coins a niche, arguably it already is, but we cannot compete in privacy.
On a related note, the scuffle between Samourai and Wasabi comes from the different implementations of CoinJoin, right?
Not sure where does it come from. At first, I wanted to build Wasabi for Samourai and do the ZeroLink research together, but for some strange reason their initial interest dropped and they became unresponsive. I didn’t read too much into it at the time and went ahead building Wasabi alone. But we started to experience numerous attacks on Wasabi, thousands of Telegram bots flowed into our Telegram groups, a bunch of fake accounts started to talk bad about Wasabi on Telegram and other social media, dust attacks, some attempted double spends, and even a Twitter bot was set up to spread lies about deanonymizing Wasabi by looking at the changes instead of the actual mixed outputs. These are just from top of my mind.
What do you think of two of the most important BTC privacy-oriented wallets having this feud?
Well, one thing is for sure. It’s not boring.
How do you know the attacks came from Samourai?
The guy who created our Telegram group kept saying it was Samourai. I didn’t read too much into that, but after a month or so it turned out the guy who created our Telegram group was a former employee of Samourai, that’s why he knows so much how they operate, their sockpuppets and other stuff.
What was really interesting is that he kept saying Samourai were bashing me all the time when he was there, which made no sense to me. I didn’t know we were in a bad relationship. He even told me about one of SamouraiDev’s sockpuppets, FoneBTC.
What happened next?
Suddenly the FoneBTC sockpuppet trolled me. So I started researching who this guy is, and it was indeed SamouraiDev. While I was researching this account I realized just how deep this Samourai rabbit hole is. So by examining this account, I got familiar with the ways they operate, and things started to make sense about the above-mentioned attacks, too. A few times before I wanted to talk it through with them, but after this I realized there’s no help. So I exposed this sockpuppet account [with an] ultimatum: “I know about many of your shady [dealings]. [I’ll] expose only one. If you don’t want more, then stop this right here and [now].”
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