While the Bitcoin digital ledger of transactions is highly transparent, just as any blockchain-based platform, there is not much privacy is offered. Each transaction is written to what is said to be a public record meaning that anyone with enough capital can monitor the movement of the funds. However, there is a weakness in the blockchain that was solved by a free protocol referred to as the CoinJoin, that is designed to mix transactions in order to improve on the privacy. But, as an effect of the recent regulatory measures most of the privacy-conscious services which include some of the firms in the United States have crippled the CoinJoin function.
Here again, the CoinJoin and bitcoin mixing
CoinJoin protocol is one of the mixing techniques used in the process of bitcoins where the origin and the destination of the transactions cannot be easily identified. This technique has been the main privacy feature utilized by some Bitcoin wallets and is at the current moment utilized by some of the new Bitcoin mixers. It operates based on the fact that transactions from several users are aggregated to form a single large transaction. It is even more efficient since, unlike other techniques, it does not rely on trust in the central operator.
However, the operation with CoinJoin is not without controversy. Although it is a perfectly legal means to improve privacy, it has elicited the interest of regulators and particularly the American ones. The U. S. government has indicated that they fear that CoinJoin and other Bitcoin mixing tools are some of the things that could be used to promote money laundering among other unlawful activities. To address these concerns, new privacy-oriented Bitcoin wallets that emerged after mid-2019 removed CoinJoin support, which led to a new change in the Bitcoin privacy scene.
CoinJoin in Bitcoin mixers
The first-ever dispenser and one of the most famous Bitcoin mixers based on CoinJoin is Whir. Whir has thus developed the reputation of being efficient and reliable in the pursuit of improving privacy by means of mixing. However, because of the new Samourai wallet seizure and all other wallets abruptly canceling CoinJoin, which caused an issue affecting Whir’s service; the following further feature is added to counter misuse.
Whir has warned the US and EU users and has set a condition that all users wishing to use the Bitcoin Mixer must declare that they are not from any of the two regions. This is a major shift that has been brought by increasing legal requirement and the fact that services dealing in privacy have to be compliant with the law. However, to minimise the chances of Whir being used for VPNI the service has limited the one Bitcoin mixing allowance as a measure towards controlling the vice.
Though the regulatory authorities are applying pressure, and though CoinJoin is no longer connected to several famous wallets, there are still many honest Bitcoin mixers. These are mixers for cryptocurrencies available on both clearnet and darknet and they remain to provide users with the crypto mixing services for those who value anonymity.
Conclusion
The events of late that can be characterised as the separation of CoinJoin services from the privacy-oriented wallets such as Wasabi Wallet, Trezor, as well as Samourai Wallet deny the actuality of Bitcoin privacy paradigm. These decisions instigated by the regulatory heinousness and legalities have restricted the users from having more choices in order to beef up their privacy on the Bitcoin blockchain. But of course, CoinJoin was replaced by Bitcoin mixers such as Whir which were still popular up to date since people still need anonymization of their transactions.
