Thursday, September 1, 2016


One of Bitcoin’s unique characteristics is its ability to transact anonymously. Because of this, the Federal Bureau of Investigation and law makers agree that it can be taken advantage of by people who want to use bitcoin for illegal operations.

Bitcoin believers, however, disagree and there are even a proliferation of projects emerging that are aimed at preserving and even upgrading bitcoin’s property as a super private and untraceable payment system. Despite the disagreement, bitcoin’s anonymous feature may serve a real need. “As bitcoin becomes more mainstream, it becomes an issue of how to fix consumer privacy,” says Ian Miers, a graduate researcher at Johns Hopkins.

Now, let’s take a look at five projects that are seeking to make bitcoin remain, and even improve, anonymity.

Dark Wallet

The first day of May saw the launch of Cody Wilson’s Dark Wallet with Amir Taaki and the anarchist group unSystem. The project has two particular methods for protecting the users’ identities: “CoinJoin” and “stealth addresses”.

In CoinJoin, every time a user makes a payment with Dark Wallet, the program is set by default to combine the transaction with another Dark wallet user attempting to make a payment at the same time. This transaction will be encrypted so finding out who paid whom becomes more difficult.

On the other hand, stealth addresses happens when a user publishes an invisible address instead of a normal bitcoin address as her public bitcoin address. Any money sent by another Dark Wallet user to that address goes through an extra obfuscating process.

Shared Coin

Unlike Dark Wallet’s automatic feature to mix up its users’ coin to foil surveillance, Shared Coin’s is not enabled by default. Shared Coin is already in use by and it also implements Coin Join to protect transactions as big as 50 BTCs.

Dark Coin

Dark Coin’s approach is to create a new bitcoin altogether, starting with privacy as a first principle. Dark Coin is actually a cryptocurrency launched in January and it already has 4.1 million in circulation. Dark Coin also implements Coin Join, though they call it DarkSend. The difference is that it uses a distributed collection of servers around its network that negotiate Coin Join’s multiparty payments.


Cryptography researchers at Johns Hopkins plan to launch Zerocoin. It is another crypto-currency that uses a technique much stronger than Dark Wallet or DarkCoin’s to anonymize its coins.

Zerocoin uses “zero knowledge proofs,” a decades-old trick that can prove that the mathematical statement is true without revealing the contents of what’s being computed.

Tor Integration

This is an anonymity software which triple encrypts users’ Internet traffic and bounces it through servers around the world to obscure its origin. Some bitcoin wallets already integrating Tor and Dark Wallet is actually planning to add Tor to the future versions of their software.

Just when you thought bitcoin’s anonymity is enough to secure your transaction, you find more phishers and hackers looking for more holes to break it. This is why these software and programs are created. With these developments, anonymity in crypto-currencies will be even harder to break.

Phong Dinh

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