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Bitcoin Cash (BCH) privacy guide

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1 year ago

Transparent ledger

Bitcoin Cash is an open and transparent ledger. Anyone can check the transaction information through the blockchain, that is, which addresses the coin flows into and which addresses are open and transparent, and can be queried.

At the beginning of Bitcoin's birth, it was widely believed that it was anonymous because it used a "fake name." We can only see on the block from which address the coin flows into which address, as to who the wallet address is, it is difficult to confirm. Nowadays, people have increasingly realized that this anonymity is unreliable.

The advantage of the transparent ledger is that anyone can query the relevant information through the block, and can lock and track the address, and the input and output of the transaction cannot be hidden. Recently, however, attempts have been made to disrupt the input and output of transactions to maintain the anonymity of Bitcoin Cash.

Privacy requirements

Because of the anonymity of Bitcoin and Bitcoin Cash, and people's need for privacy, people are unwilling to make their transaction information public. Monero, Big Zero, and Dash came into being and were once sought after by the market. However, these anonymous coins are implemented through encryption technology, sacrificing auditability and being relatively replaceable.

Decentralized exchange

An important means of protecting privacy is to obtain Bitcoin Cash without passing the KYC certification of the exchange. However, at present, mainstream exchanges around the world generally require users to perform KYC authentication, so that exchanges can track transaction information of locked users and publish this information to others.

But this is not a solution. For example, we can conduct point-to-point transactions on decentralized exchanges. The two parties in the market do not need to perform KYC authentication on the platform. Currently, the popular decentralized exchange for BCH is local.bitcoin.com.

UTXO Management

The best way to combine UTXO in one transaction and link them to the sender is to manually manage and tag coins from different addresses. For example, if you buy some coins anonymously and some coins from an exchange, it is important to separate them. The same goes for changing the output, and if you spend some money and later combine the change with the output linked to your identity, the previous spending transactions can also be linked to your identity.

You can try UTXO management in Electron Cash desktop wallet.

Duplicate address

Most wallets are layered deterministic (HD), which means that whenever a user wishes to receive Bitcoin Cash, a new address is automatically generated. Addresses can be reused in some bitcoin cash wallets because of SLP tokens. Users should pay attention to the protection of privacy and try to avoid it.

If you use the same address for operations (similar to the Ethereum system account), others can see the complete transaction records of the account, can also confirm that the operation was performed by the same person, and can be traced to you through the transaction history.

For the duplicate address problem, there is already a technical solution. If you implement it, you will not need to worry about the duplicate address problem. Both Crescent Cash android wallet and Electron Cash desktop wallet support BCH and SLPtoken, and always generate new addresses.

Mixed currency

Bitcoin Cash can currently make it even more anonymous by mixing coins. We can confuse the input and output of a transaction, which depends on the number of people involved in the transaction. The more involved, the better the privacy and the harder it is to track. The most well-known is the CoinJoin mixed currency scheme, many people use the same anonymous input and change of address to complete transactions. Each output can be linked to any input.

CashFusio, which is being launched on BCH, is a breakthrough privacy solution. Electron Cash wallet is in alpha phase, and Electron Cash desktop wallet supports Cashshuffle.

Privacy protection

The background server of most light wallets will record your address list and complete transaction records. A centralized back-end server may lead to the leakage of personal user information. Currently only the Android version of the neutrino wallet will not leak the user's wallet address information, because it uses special filters to check whether the relevant transaction is in the block, and if so, download the complete block.

The neutrino wallet for Android, which is currently only in beta, uses this technology to avoid the leakage of user information.

The only alternative is to run a full node or set up your own electronic server.

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