Author: alicexbt 2022-08-06 14:11:34
Published on: 2022-08-06T14:11:34+00:00
The email thread discusses the concept of trading replacement transactions for privacy. The goal is to break the assumption that a replacement transaction is done only to use a higher fee rate with the same sender and recipient. This method offers an extra privacy option, and if the user selects it, everything happens in the background. The UX will be simple, and the user just needs to approve in between. This scheme aims to provide different levels of privacy from coinjoin and coinswap methods. However, the protocol's additional complexity raises questions about whether this is worth it. A two-party coinjoin can get you an output where it isn't clear to blockchain observers which output you control, and coinswap has you taking the coin history of your counterparty. The proposed method involves creating an API to manage trades that will use 2 of 3 multisig. Alice and Bob create orders for replacement, and they could be matched automatically using some algorithm or Bob manually accepts the offer. Two of three multisig is created with Alice, Bob, and Carol keys. Bob locks 0.01 BTC in it and shares outputs e2, f2 with Alice. Alice signs tx2 and shares the transaction with Bob. Alice locks 0.011 BTC in it and shares outputs b2, c2 with Bob. Bob signs tx2 and shares it with Alice. Both replacement transactions can be broadcasted, and funds are released from 2 of 3 multisig with a transaction having three outputs (one to pay fee which goes to Carol).Although this method would improve privacy, there are negatives like extra fees, time consumption, knowing details by Carol and other peers, and need to lock bitcoin with the same amount as used in tx1. However, if this method makes sense or a similar market to trade replacements in the future, it could help create a process in which a chain of replacements happens before Bitcoin reaches the destination, similar to a tor circuit.
Updated on: 2023-06-15T23:40:34.882780+00:00