Even though Bitcoin and Blockchain have often been seen as the perfect tool for keeping your transactions anonymous, blockchains have by design some privacy issues. To solve the double-spending problem every transaction is recorded on a public ledger including all wallet addresses. Therefore Blockchain is not an anonymous but a pseudonymous system. This means as soon as a wallet address can be linked to an individual, the whole transaction history of that person will be public. With the default re-use of the same wallet address, users make it easier for others to track their transactions and with chain analysis to identify the person behind.
“My take is, privacy is precious. I think privacy is the last true luxury. To be able to live your life as you choose without having everyone comment on it or know about.” Valerie Plame
Now you might think, I am a law-abiding citizen and don’t have anything to hide. However, reasons to keep your transactions private are not only tied to you acting within legal boundaries. The government is not the only institutions that could get hold of your data, actors with less noble intentions could use your data for all kind of illicit activities. Furthermore, your government might be trustworthy but in many other countries, this is not the case. A third reason for keeping transactions private has less to do with the individual but with the fungibility of money.
If you knew the whole transaction history of every dollar bill you own, which effect could that have on you? In case some of your money has been used to buy drugs before, it might harm the value of it. Some merchants could refuse to accept it. Maybe you would personally not even want to use that bill.
Several privacy-focused cryptocurrencies are addressing this problem, often by using advanced algorithms and zero-knowledge proofs. However, some of these have known vulnerabilities and some charge high fees for making your transaction anonymous.
And if you already have your portfolio of cryptocurrencies, you might not be interested in exchanging them for privacy coins whenever you make a transaction. The good news is that, for Bitcoin Cash, we now have Cash Shuffle, which gives you an added layer of privacy for all your BCH transactions. CashShuffle “is a fully decentralized privacy protocol that shuffles your Bitcoin Cash with other network participants”. (Source) By shuffling your transactions with others, your transaction will be obscured. This makes it a lot harder for chain analysis companies to track your spending.
To start shuffling your Bitcoin Cash, you currently will need the Electron Cash wallet, which can be downloaded here. In the future, CashShuffle will be supported by the bitcoin.com wallet to make it even easier to make private transactions.
After setting up the wallet and writing down your 12-word phrase, you can deposit BCH to the wallet and start shuffling. It’s worth mentioning that for added privacy, you can do the whole process over the Tor network.
By default, CashShuffle is deactivated when first using the ElectronCash Wallet. To activate it simply click on the orange stack of BCH bills icon at the bottom right side of the wallet. When CashShuffle first launched, it could take a while until enough participants were online to shuffle, but by now millions of dollars have already been shuffled and popularity keeps growing. When all goes well, you get connected to 4 other shufflers within less than a minute and can do your first private transaction.
All in all, CashShuffle is a great tool to add some privacy to Bitcoin Cash, but it is not a 100% perfect method (yet). Therefore CashShuffle engineers are working on a new scheme to make CashShuffle even more private.
If you want to learn more about CashShuffle, check out their website or simply start shuffling your first BCH. For a detailed guide on how to use CashShuffle, have a look at this video with our Executive Chairman Roger Ver.
We’re looking forward to the CashShuffle integration with the Bitcoin.com Wallet.