Hardware wallet manufacturer Trezor today rolled out a new privacy feature for its devices.
First teased last year, the new CoinJoin feature became possible thanks to Trezor’s collaboration with Wasabi Wallet, a privacy-focused Bitcoin wallet that specializes in this precise piece of technology.
Bitcoin CoinJoins are a privacy-enhancing technique that allows multiple users to pool their Bitcoin inputs (unspent transaction outputs, or UTXOs) into a single transaction and to receive the same amount of Bitcoin output, but with different addresses.
This effectively “mixes” the inputs, making it more difficult to trace the individual transactions back to their original sources.
CoinJoins can be executed in different ways, with varying levels of privacy and complexity. One common method is to use a dedicated CoinJoin service, such as Wasabi Wallet, which is now live on the Trezor Model T. Model One support is to be added in the near future.
Trezor CEO Matěj Žák claims the CoinJoin tech ensures a level of anonymity close to that of cash.
“People can use cash for private transactions without leaving a digital footprint or anyone storing your identity,” Žák told Decrypt. “And clearly, it’s impossible with cash to see the remaining balance in someone’s wallet or bank account. Trezor with CoinJoin brings a similar level of privacy to Bitcoin.”
According to Žák, “the security of the process and ease of use help deliver privacy to a wider audience, which is one of the core values of the Bitcoin community.”
The CoinJoin feature is available on Trezor wallets through a simple click on the “Anonymize” button. After selecting the number of CoinJoin rounds, which enhances privacy with each additional round, users confirm their preferences using the Trezor device and leave it connected while running the Trezor Suite.
The remaining steps of the CoinJoin process are automated and do not require any further user involvement.
Who needs to CoinJoin their Bitcoin?
The CoinJoin technique addresses multiple privacy concerns that arise due to the inherent transparency of Bitcoin, often mistakenly referred to as an “anonymous” payments network.
One such issue is that crypto exchanges can easily link individuals’ real-world identities with their Bitcoin addresses, and can track their transactions even after they withdraw funds. CoinJoin obscures Bitcoin transaction histories and prevents such surveillance.
Additionally, when using Bitcoin for purchases, the total balance of the address from which the payment was sent is visible to the merchant, something that some people consider a breach of privacy as well.
With CoinJoin, users can divide their Bitcoin balance into small amounts with no transaction history, similar to breaking a large dollar bill into smaller denominations. This feature provides an extra layer of protection for privacy-conscious individuals.
Another important feature offered by CoinJoin is safeguarding the privacy of Bitcoin donations. Given the network’s transparency, free-flowing donations can pose a significant danger to non-governmental organizations and their donors, particularly in authoritarian regimes.
“Ensuring that Bitcoin privacy tools are user-friendly and secure is crucial, as this attracts individuals to utilize these products, ultimately enhancing privacy for all users,” Max Hillebrand, the CEO of zkSNACKs (the company supporting the development of Wasabi Wallet) told Decrypt.
Hillebrand also stressed the fact that CoinJoin transactions are “inherently non-custodial.”
“With this integration, they [CoinJoin transactions] can now be signed using keys from a hardware wallet for the first time. This marks a substantial advancement in security.”