TFTC: A Bitcoin Podcast
#170: Chris Belcher
- CoinSwap is a privacy protocol that breaks the transaction graph by making coins end up at unrelated addresses, improving privacy for both users and non-users of the technology through increased analytical doubt.
- Multi-transaction CoinSwaps solve the amount-matching problem by having one party return multiple coins that sum to the original amount, preventing adversaries from simply finding matching outputs.
- Routed CoinSwaps require collusion among multiple intermediaries (Bob, Charlie, Dennis) to de-anonymize a transaction, spreading trust rather than concentrating it between two parties.
- Fidelity bonds—time-locked Bitcoin sacrifices with squared value—economically prevent Sybil attacks by making it more expensive to create multiple fake identities than to operate honestly.
- Multi-party ECDSA computation allows CoinSwap transactions to appear as single-signature transactions on-chain, avoiding the obvious fingerprint of multi-sig wallets.
- CoinSwap is superior to CoinJoin in efficiency, block space usage, and invisibility on-chain, though Lightning remains better for instant payments and requires adoption by recipients.