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Coinjoin: common misconceptions. Answers to some common… | by SatoshiLabs | May, 2023

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Answers to some common misunderstandings and false rumors.

Coinjoin: common misconceptions

Following four years of research and development, Trezor recently implemented a major privacy feature, coinjoin. We consider this a significant advancement in bitcoin privacy and have been carefully collecting feedback from the bitcoin community to understand the cause for some misunderstandings about our new feature. In this article, we will address the most common questions about coinjoin in Trezor.

To properly address potential concerns, it is important to explain the architecture of Trezor coinjoin. Coinjoin is a collaborative transaction that combines multiple coins from many users into a single supertransaction in order to obfuscate the history and thus achieve greater privacy for the involved users.

For the best user experience and sufficient volume, the coinjoin needs to be centrally organized via a so-called coordinator. Trezor coinjoin uses a coordinator run by the company zkSnacks (the same coordinator that is utilized by the Wasabi Wallet), mostly for the reason that their coinjoins have the highest volume and user participation on the market, which allows us to achieve the best level of privacy.

To learn more about how coinjoin coordination works, see the Twitter thread below:

No, and not only because we don’t want to, but because we would have nothing to report. The “zk” in zkSnacks stands for “zero knowledge”, and zero is precisely the amount of information the coordinator knows about its users.

Coinjoin runs strictly over the Tor anonymization network and relies on block filters rather than user XPUBs, so there is no way to learn who owns the coins entering the coinjoin. Therefore it’s technically not possible to share any user details with authorities.

To learn more about how zero-knowledge software works, see the Twitter thread below:

No, we cannot censor users’ transactions, as users are always in full control of their private keys and thus able to execute regular bitcoin transactions at will. The only thing the coordinator can do is deny entry to specific coins into a coinjoin, as the coordination of the coinjoin is a centralized service where the coordinator faces potential legal liability and thus reserves a right not to offer its services to coins that the coordinator evaluates as high-risk.

The coordinator makes its own judgement about a potential service refusal; contrary to some claims, neither an analytics company nor government agency has any say in the decision process.

No, neither Trezor nor the coordinator can freeze users’ funds, as the coinjoin is non-custodial and users always remain in full control of their coins. The worst thing that can happen is that certain coins might get refused by the coordinator from the coinjoin. If that happens, users can still use them to perform regular bitcoin transactions.

Coinjoining through the zkSnacks coordinator should mitigate the risk of tainting one’s funds, as coins that could be deemed high-risk are refused from joining the coinjoin. That said, some exchanges may ask further questions when they encounter coins coming from a coinjoin, so we recommend learning about individual exchange policy before depositing coinjoined funds.

No, we are not cooperating directly with a chain analytics company. However, coinjoin in Trezor uses a coordinator run by zkSnacks which obtains risk scores of inputs entering the coinjoin from an analytics company. The company learns nothing new in the process, because the risk scores of these inputs have already been assigned by the analytics company earlier, when they were created.

Initially yes, but we plan to roll out coinjoin functionality for the Trezor Model One soon.

Privacy, along with security and usability, has always been a driving motivation behind Trezor products. Bitcoin privacy technologies evolve rapidly and we are proud to remain a pioneering force in this space. We understand that coinjoin is a complex topic and welcome discussion of the pros and cons of its various implementations, as long as it is conducted in good faith.

We understand that some might consider using the zkSnacks coordinator as less than ideal for various reasons. However, we still believe that this is the first of many steps in the right direction toward the goal of improving on-chain bitcoin privacy for everyone. Once a reputable coordinator with similar liquidity as the zkSnacks coordinator appears, we will consider it for inclusion.



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