Learn to protect your Bitcoin privacy and ensure your financial security.
People often assume that Bitcoin is anonymous because of the ability to send and receive coins without providing personal information.
However, this is not true, you receive Bitcoins at so-called addresses and therefore sending and receiving bitcoins is like writing under a pseudonym.
Because every transaction is stored forever in the blockchain, if your address is ever associated with your identity, every transaction will be associated with you.
This is why it is extremely important to take the necessary steps to protect your privacy.
The following guide will show you how to do this using a Wasabi wallet.
How does a Wasabi wallet work?
Wasabi Wallet works like any other normal lightweight Bitcoin wallet, you can send, receive and store Bitcoins. However, it has a special feature called CoinJoin, which makes it the most anonymous Bitcoin wallet.
CoinJoin is a mechanism that combines multi-participant (or UTXO) coins into one large transaction with multiple inputs and multiple outputs. Looking from the outside, it is almost impossible to determine which output belongs to which input, and this is the case with participants as well. Unlike normal Bitcoin transactions, where there is usually one sender and one recipient. CoinJoin makes it extremely difficult for someone outside to track where a particular coin comes from and where it was sent.
Anonymizing your Bitcoin.
For a start, we have to go to Wasabi first Web page and download the latest wallet.
In this guide we use Wasabi-126.96.36.199
It is recommended that you check the GPG signature for the file. File verification means that you authenticate a file by looking at whether the developer signed the file with his public key or not. Here is a tutorial separately for that: Windows, MacOS
These two guides are for Electrum Wallet, but exactly the same procedure applies.
Although signature verification is recommended, the files are probably all secure anyway.
If you’re really paranoid, you can grab it source code, and make your own wallet.
After you start your wallet for the first time, it will look like this:
Let the wallet sync and prepare, as you may notice that Wasabi also automatically runs Tor in the background.
Once the Wasabi wallet is synced, you can give your wallet a name and a strong password.
This password is needed to recover your wallet, so be sure to write it down in a safe place.
Accept the terms and click Generate.
Then write down your recovery words, mine look like this. Make sure you back it up in the correct order + the password you created, you will lose access to your coins without them!
And so you create a Wasabi wallet, and then we continue and anonymize your Bitcoins!
Alternatively, you can click Test Password on the left and test your password.
If the test is successful, continue and Load Wallet.
Once you have loaded the wallet, you can generate a new receiving address by giving it a tag.
Then you will pay some Bitcoin, the minimum required amount to wait for CoinJoin is 0.09794129 BTC, make sure you pay at least that!
After depositing your Bitcoin, you can switch to the CoinJoin card, you will see your coins and their current set of anonymity, then you can select the coins you want to anonymize and the desired set of anonymity.
By default, the anonymity target is 50, and the price is 0.003% per anonymity set.
In our case, we will select all our coins and use the default set of anonymity.
You will then enter your password and click Put Selected Coins in Order.
Note that you will need to wait for confirmation to be able to queue
The coins will then be placed in the queue, and each UTXO set will wait its turn to merge.
Be patient, CoinJoin will start automatically after registration is complete.
Congratulations, you have now anonymized your Bitcoin!
As you can see in our example, we have two sets of anonymized 0.0979 BTC transactions.
And two smaller change transactions, both with normal anonymity sets of 1.
Keep in mind that you don’t want to spend these coins together!
Mixing your anonymized coins with deanonymized coins destroys everything you’ve done!
If someone looked outside and you spent those coins together, you would see that whoever has these anonymized coins mixes them with deanonymized coins, so they could conclude that it is the same person.
This is why CoinJoin requires the use of a certain number of Bitcoins because this is what makes your transactions anonymous from others. As all UTXOs mix and all end up with the same number of coins, it’s pretty impossible to figure out which coins came from where.
Also, the more people start mixing their coins, the harder it becomes.
Once you’ve anonymized your coins, you want to spend them separately!
In our case, we don’t even mix our anonymous coins together, because even that reduces the set of anonymity a bit, and instead we spend each 0.0979 BTC transaction separately.
And that’s it! This is how you anonymize your Bitcoins and keep them anonymous.
From there you can leave the rest of your coins waiting for the later CoinJoin set or park them somewhere safe, the choice is yours!
Just don’t confuse them with anonymized coins !!!
Related and notes
There are several ways to buy Bitcoin anonymously, such as Hodl Hodl and AgoraDesk.
There are several other articles related to privacy that might be of interest to you: