Bitcoin Privacy and Anonymity Techniques Flashcards

What is Wasabi Wallet primarily known for in the Bitcoin ecosystem?

Answer: Implementing a trustless CoinJoin protocol (WabiSabi) that allows non-custodial Bitcoin mixing

Wasabi Wallet uses the WabiSabi CoinJoin protocol to allow users to mix their Bitcoin in a trustless, non-custodial manner to improve on-chain privacy.

What is Silent Payments (BIP352) in Bitcoin?

Answer: A protocol allowing sending to a static identifier where each payment generates a unique on-chain address without recipient interaction

Silent Payments let senders compute a unique address from the recipient's static code and the sender's inputs, requiring no interaction and eliminating address reuse.

What is an 'anonymity set' in the context of Bitcoin privacy?

Answer: The number of users or outputs that are indistinguishable from one another after a privacy-enhancing transaction

A larger anonymity set means there are more plausible owners for a given UTXO after mixing, making it significantly harder for analysts to identify the true owner.

Why does running a full Bitcoin node improve privacy compared to using an SPV (lightweight) wallet?

Answer: A full node downloads all blockchain data locally, so the user never reveals which addresses they monitor to a third-party server

SPV wallets must query external servers for address balances and history, leaking which addresses belong to the user; a full node validates everything locally without disclosure.

What is a 'dust attack' in the context of Bitcoin privacy?

Answer: Sending tiny Bitcoin amounts to target addresses so that when the dust is spent with other UTXOs, the owner's addresses become linked

Attackers send tiny 'dust' outputs to target addresses; when the victim later spends them alongside other UTXOs, the attacker can link those UTXOs and deanonymize the wallet.

What does 'plausible deniability' mean in the context of Bitcoin privacy?

Answer: Constructing a transaction so that multiple equally valid interpretations exist and none can be proven correct

Plausible deniability means no single interpretation of a transaction can be definitively proven, as in CoinJoin where any output could plausibly belong to any participant.

What is the role of a CoinJoin coordinator in a privacy mixing round?

Answer: A server that organizes mixing rounds by collecting blinded inputs and outputs without learning which inputs map to which outputs

The coordinator facilitates the CoinJoin round by collecting inputs and outputs, but uses cryptographic blinding so it cannot link inputs to outputs or deanonymize participants.