bitcoin-dev

Design for a CoinSwap implementation for massively improving Bitcoin privacy and fungibility

Design for a CoinSwap implementation for massively improving Bitcoin privacy and fungibility

Original Postby Chris Belcher

Posted on: June 10, 2020 11:19 UTC

The email conversation between Chris and ZmnSCPxj discusses the proposal of swap-on-receive+swap-on-change scheme as an alternative to coinswap.

The scheme is suggested to be useful when bitcoin is being used more like a day-to-day money, but may not be suitable for users who want to use bitcoin just as a foreign currency for its privacy and censorship-resistant properties. In both cases, the same expected number of coinswaps is done, i.e. one. The exchange also cannot tell how long coins remain unspent in wallets with swap-on-receive, which is useful information for exchanges because it tells them about what hodlers are doing. They might trade against them, e.g. opening big short positions right after they see many long term hodl'd coins being moved.