Wasabi Wallet 1.0 Announced
Making Bitcoin Fungible
Many celebrated the tenth anniversary of the Bitcoin whitepaper’s publication to the Cypherpunk Mailing List on October 31st. It seems fitting, in this respect, that the date also marks the Wasabi Wallet 1.0 release, which should be of great interest to anyone serious about their privacy where their funds are concerned.
Most quickly learn that, contrary to what sensationalist headlines would have you believe, Bitcoin is not in fact anonymous, but pseudonymous. Prima facie, this may seem like a matter of semantics, but it’s important to make the distinction — the Bitcoin ledger is both immutable and public, and the field of blockchain analysis leverages this to attempt to cluster and identify individuals tied to given addresses.
This is problematic for a number of reasons: businesses don’t want rivals snooping on their activities, employees don’t want colleagues knowing their salaries, individuals don’t want merchants/malicious actors/acquaintances knowing how much money they hold, etc.
One of the greatest obstacles to Bitcoin’s long-term viability as a form of money is its fungibility. For the network to thrive, 1 BTC must equal 1 BTC, irrespective of its provenance. Which isn’t necessarily the case, as of yet.
If one takes a single coin, it can be traced all the way back to its creation. Moreover, a number of reports indicate that many exchanges have begun to blacklist transactions associated with criminal activities (a very slippery slope, as this may lead to newer coins incurring a premium).
Enter CoinJoin, a concept initially proposed by Gregory Maxwell on Bitcointalk. CoinJoin, in theory, is simple to grasp: in order to obfuscate the source of coins, a number of parties (the more the better) should combine their inputs/outputs in a transaction so as to foil analysis attempts. The idea has been implemented in the past, notably through HiddenWallet, DarkWallet, JoinMarket and centralised offerings.
Adam Ficsor (perhaps better known as nopara73), Wasabi Wallet’s creator, revealed the product at the Building on Bitcoin conference in July. A rewritten and rebranded HiddenWallet, Wasabi is an open-source and cross-platform light wallet — the only one impervious to network analysis to date by implementing BIP 157 and 158. The wallet is ZeroLink compliant and uses a trustless mixing technique (Chaumian CoinJoin) with mandatory Tor integration.
I’d tried running the software on the release of the beta but had no luck due to a (now resolved) GUI issue on OSX. Having tried it again earlier with an anonymity set of 49 participants (this will later increase to 100), I was blown away with the results. Though nopara73 had mentioned that the mixing process may be lengthy until liquidity takes off, this wasn’t a problem — I didn’t keep meticulous track of the time taken (I left the device unattended), but I’d place it at <2 hours.
Already, Wasabi wallet feels like an invaluable tool. The fees are negligible (0.003% per anonymity set), the process is simple (even for the less tech-savvy) and the value proposition is crucial to ensure the fungibility of Bitcoin.
Of course, an important part of achieving widespread fungibility is adoption — nopara73, in the post announcing version 1.0, reminded everyone that even if they have no need for privacy, that their idle coins are better put to use in mixing, where they’ll make the procedure faster and more private for those that require it. At time of writing, the site claims to have made over 188 BTC fungible since the beta release two months ago.
This is a monumental step in Bitcoin history. Alongside advances on the Lightning Network, the impending Whirlpool functionality of Samourai Wallet, and the more private block propagation technique “Dandelion” (outlined in BIP156) having been proposed, it’s doubtful that we’ll remember 2018 as the year of the bear market.
We’ll remember it as the year where Bitcoin upped its privacy game in a major way.
Make sure to check out nopara73’s rundown on Wasabi here.
Picture of wasabi fields from Wikimedia Commons.
