Most people think of bitcoin as an anonymous cryptocurrency, even though that is far from the case. For those people who look for more anonymity while using bitcoin, there are the so-called mixing services. TumbleBit, a system developed by researchers at various US universities, should make it far more difficult for third parties to identify or track people involved in particular bitcoin transactions.
Is TumbleBit Capable of Making Bitcoin Anonymous?
One of the most common misconceptions people has about bitcoin is how the popular cryptocurrency is anonymous. With every transaction publicly viable on the blockchain without a requirement for special software, bitcoin is one of the most transparent payment solutions the world has ever seen. Researchers at three different US universities claim they have found the solution to bring more anonymity to the bitcoin ecosystem.
Under the name TumbleBit, the bitcoin-compatible system is designed to run on top of the existing bitcoin ecosystem. It takes transaction mixing to a whole new level, though. With multiple parties paying an intermediary tumbler – which then pays out the funds to new addresses – it should become more difficult to determine who the sender or recipient is. That is, after all, the basic idea of how tumbling service work. Unfortunately, there is still a security flaw plaguing that type of business model, which is why TumbleBit does things slightly differently.
In fact, TumbleBit uses an escrow phase where a user notifies the tumbler they are looking to make a payment. At the same time, the recipient address notifies the tumbler of the amount they are looking to receive. This entire process is done on the public blockchain. That being said, there is a twist, as the tumbler is designed to use cryptographic tools to ensure parties are paid the correct amount without even knowing who is the sender or recipient.
As one would expect, this removes further evidence from the blockchain, as there is no obvious link between the involved parties. Once the “cash out” of every transaction takes place, all transactions will be completed simultaneously. This will give blockchain analysts a very hard time figuring out who send how much funds to user B. Interestingly enough, all of these transactions can once again be checked on the public blockchain.
Concepts like these will only work if they provide enough convenience to users who want to keep their bitcoin transactions hidden from the public. The second phase, which is the most integral part of the whole ordeal, can be completed within mere seconds, according to the researchers. Do keep in mind they conducted a test with “only” 800 bitcoin users to come to this result, though. It remains to be seen if TumbleBit can offer a similar service once it is put under a heavy load.
Unfortunately, there is one big drawback to TumbleBit in its current state. The system only works with a fixed denomination. Anyone who wanted to pay an amount larger than that denomination will need to make multiple payments, which is not exactly convenient. The researchers expect to resolve this issue in the coming months, though. It will be interesting to see how TumbleBit will evolve over time, as it is a service some bitcoin users will be more than happy to give a try.
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