Section 2: Privacy-Enhancing Techniques and Tools
To enhance privacy while using Bitcoin, various techniques and tools can be employed. While these measures don't provide absolute anonymity, they offer increased privacy and make it more challenging to link transactions to specific individuals. Some notable techniques include:
- Using New Addresses: To reduce address reuse and linkability, it is recommended to generate a new Bitcoin address for each transaction. This practice makes it more difficult to trace and associate transactions with a single user.
- Coin Mixing or CoinJoin: Coin mixing involves combining multiple transactions from different users, making it challenging to trace the flow of individual coins. CoinJoin is a specific implementation of coin mixing that allows users to combine their transactions, obscuring the connection between inputs and outputs.
- Privacy-Focused Wallets: Certain Bitcoin wallets prioritize user privacy by implementing features such as coin control, deterministic wallets, and integration with privacy-enhancing technologies like the Tor network. Examples of privacy-focused wallets include Wasabi Wallet, Samourai Wallet, and Electrum Personal Server.
- Layer-2 Solutions: Layer-2 solutions, such as the Lightning Network, enable off-chain transactions that are not recorded on the blockchain. These transactions can offer increased privacy as they occur outside the public ledger, minimizing the potential for linkability.
