Best Practices for Enhancing Bitcoin Transaction Privacy

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What is Wabisabi Coinjoin?

Advanced Privacy Protection Protocol

Wabisabi is a protocol based on zero-knowledge proofs that allows multiple users to create joint transactions without revealing the associations between their inputs and outputs. This technology significantly enhances the privacy of Bitcoin transactions.

Using Wabisabi Coinjoin helps break the traceability of transaction history, protecting your financial privacy.

Enhanced Transaction Privacy
Break Input-Output Associations
Multi-User Collaborative Mixing
Zero-Knowledge Cryptography Protection
How It Works

Coinjoin Working Principles Explained

1
Preparation Phase
Multiple users prepare to participate in Coinjoin, each user selects Bitcoin inputs to mix
2
Coordination Phase
Coordinator collects input information, verifies signatures, but never touches private keys
3
Mixing Phase
All inputs are mixed in the same transaction, outputs use uniform or multiple denominations
4
Completion Phase
The signed complete transaction is broadcast to the network, users receive privacy-enhanced Bitcoin
Coinjoin Transaction Flow Dynamic Illustration
Wabisabi Coordinator
Coordinates Transaction Construction + Zero-Knowledge Proof Verification
Cannot access user private keys
Coinjoin Mixing Process
Total Input: 1.5 BTC
Anonymity Set Size: 3
0.1 BTC
Uniform Denomination
0.1 BTC
Uniform Denomination
0.1 BTC
Uniform Denomination
0.1 BTC
Uniform Denomination
0.1 BTC
Uniform Denomination
1.0 BTC
Change
User A
Privacy-Enhanced Bitcoin
User B
Privacy-Enhanced Bitcoin
User C
Privacy-Enhanced Bitcoin
Advanced Technical Details of Wabisabi Coinjoin
1
Zero-Knowledge Input Registration

Users prove to the Coordinator that they control the UTXO without revealing the exact amount

2
Encrypted Balance Proof

Using homomorphic encryption to allow Coordinator to verify that the total input equals the total output, without knowing the specific values

3
Blind Signature Credentials

Users obtain blind signature credentials for subsequent steps, enhancing the isolation between inputs and outputs

4
Anonymous Output Registration

Using blind signature credentials to anonymously register outputs, completely isolating the association between inputs and outputs

Core Cryptographic Technologies
  • Blind Signatures - Conceal the source of signature information
  • Zero-Knowledge Proofs - Prove knowledge without revealing details
  • Homomorphic Encryption - Allow computation on encrypted data
  • Vernam Mixing - Prevent mathematical analysis attacks
Coinjoin Effect in the UTXO Model
UTXO Graph Before Mixing
UTXO Graph After Mixing
Regular Transactions vs Coinjoin Transactions On-Chain Footprint Comparison
Regular Bitcoin Transaction
Input A (0.5 BTC)
Input B (0.3 BTC)
Output X (0.7 BTC)
Output Y (0.1 BTC) Change
On-Chain Analysis Results:
Can clearly infer that inputs A and B belong to the same user
Can clearly determine output X is the payment target, output Y is change
Wabisabi Coinjoin Transaction
Input A (0.5 BTC)
Input B (0.3 BTC)
Input C (0.4 BTC)
Input D (0.2 BTC)
Input E (0.6 BTC)
Output 1 (0.1 BTC)
Output 2 (0.1 BTC)
Output 3 (0.1 BTC)
Output 4 (0.1 BTC)
Output 5 (0.1 BTC)
Output 6 (0.1 BTC)
Output 7 (0.3 BTC)
Output 8 (0.2 BTC)
Output 9 (0.9 BTC)
On-Chain Analysis Results:
Cannot determine which inputs belong to the same user
Cannot distinguish which outputs are payments and which are change
Same denomination outputs provide additional privacy protection
Privacy Metrics
Anonymity Set Size
Regular Transaction
1
Coinjoin
Number of Participants
Input-Output Association Probability
Regular Transaction
100%
Coinjoin
1/Number of Participants
On-Chain Footprint
Regular Transaction
Clearly Traceable
Coinjoin
Significantly Obscured

Illustration: The Wabisabi Coinjoin process effectively breaks the association between inputs and outputs by mixing multiple users' inputs in a single transaction and using zero-knowledge proof technology, providing powerful privacy protection.

Regular Transactions vs Coinjoin Transactions

Regular Bitcoin Transactions

Transaction history completely transparent

Inputs and outputs clearly linked

Address behavior can be tracked

Financial status can be inferred

VS

Wabisabi Coinjoin

Transaction relationships effectively hidden

Inputs and outputs decoupled

Address correlation significantly reduced

Financial privacy protected

The Necessity and Privacy Principles of Coinjoin

The Bitcoin blockchain is completely transparent, all transaction data can be viewed and analyzed by anyone. While this transparency helps prevent inflation and fraud, it also creates privacy concerns. Coinjoin technology provides Bitcoin users with an effective solution to protect transaction privacy.

Bitcoin Privacy
Protect Your Bitcoin Privacy

Why Does Bitcoin Need Coinjoin?

Transaction Tracking

Every Bitcoin transaction's history can be traced, and on-chain data analysis companies can identify fund flows and associate different addresses

Financial Information Leakage

Repeatedly receiving funds to a single address exposes your financial status; anyone who knows your address can view your balance and transaction history

Business Secret Risks

Businesses using Bitcoin may inadvertently disclose sensitive supply chain and customer information to competitors

Personal Safety Threats

Publicly visible large balances can make you a target for hacker attacks or real-world threats

How Does Coinjoin Protect Privacy?

Breaking Input-Output Associations

Multiple users' inputs and outputs are combined in the same transaction, making it difficult for external observers to determine which output belongs to which input

Uniform Denomination Outputs

By creating outputs of the same amount, analysis difficulty is further increased

Accumulating Privacy Set

Each time you participate in Coinjoin, your anonymity set increases, representing the number of potential sources your coins might come from

Maintaining Non-Custodial Control

Throughout the entire process, you maintain control of your private keys, with no need to trust third parties

Unique Advantages of the Wabisabi Protocol

Wabisabi is the latest generation of Coinjoin protocol, based on zero-knowledge proof technology, with significant advantages over traditional Coinjoin solutions:

Amount Privacy
Supports inputs and outputs of different denominations without revealing exact amounts
Efficient Block Space Usage
Generates smaller transactions, reducing on-chain fees
Higher Privacy Level
Provides stronger privacy protection through advanced cryptographic techniques
Lower Minimum Amount Requirements
Can process smaller amounts of Bitcoin, improving accessibility

Important Concept

True financial freedom is not only about controlling your own funds but also protecting your transaction history from unauthorized third-party surveillance. Coinjoin technology allows users to actively protect their financial privacy and maintain Bitcoin's basic characteristic as a fungible asset.

Wasabi Wallet Download

Wasabi Wallet is the main wallet implementing the Wabisabi Coinjoin protocol, offering powerful privacy protection features:

Wasabi Wallet Interface Preview

Official Download Links

Wasabi Wallet Download

Get the Latest Version of Wasabi

Powerful privacy protection for your Bitcoin

Windows 10+ 64-bit systems
macOS 12.0+ Intel chips
macOS 12.0+ M series chips
Ubuntu/Debian .deb package

Verify Downloaded Files

For your security, please verify the PGP signature of downloaded files

Wasabi Official PGP Fingerprint: 6FB3 872B 5D42 292F 5992 0797 8563 4832 8949 861E

How to Use Coordinator

The Coordinator is a key component in the Coinjoin process, responsible for coordinating communication between participants without having access to users' private keys. Understanding how to correctly use and select a Coordinator is essential for secure and effective use of Coinjoin.

Important Notice

As of June 1, 2024, Wasabi Wallet no longer provides a default Coordinator

What is a Coordinator?

A Coordinator is a server that:

  • Collects participant input and output information
  • Coordinates the construction process of Coinjoin transactions
  • Ensures all participants follow protocol rules
  • Helps broadcast the final transaction to the Bitcoin network

Importantly, the Coordinator cannot steal your funds because it never touches your private keys.

How to Change Coordinator

  1. 1
    Go to Settings
  2. 2
    Select the Coordinator tab
  3. 3
    Paste/enter the Coordinator's URI
  4. 4
    Restart Wasabi
  5. 5
    Wasabi will use the new Coordinator
Applicable for Wasabi 2.0.8 and higher versions
Coordinator Settings Interface in Wasabi Wallet
Coordinator Settings Interface

Stages in the Coinjoin Process

A complete Coinjoin includes five different stages, ensuring transaction security and privacy:

1

Input Registration Stage

Participants register the Bitcoin inputs they wish to mix

2

Connection Confirmation Stage

Confirming all participants are still online and ready to continue

3

Output Registration Stage

Participants register the output addresses they wish to receive

4

Signing Stage

Participants sign the complete transaction

5

Broadcasting Stage

The Coordinator broadcasts the completed signed transaction to the Bitcoin network

Fee Explanation

When participating in Coinjoin, you need to pay:

Security Tips

When using a Coordinator:

  • Always connect through the Tor network to protect your IP address
  • Do not use multiple Coordinators to mix the same coins simultaneously
  • If the Coinjoin process is interrupted (e.g., power outage), don't worry - your coins are safe, the transaction will either complete or not happen at all