The question is too simple, but it's what fit in the title.
Coinjoins make it difficult to trace onchain history, but they have a pretty small anonset.
Lightning leaves an onchain footprint for your channel open and close, but if you are using multiple nodes with multiple channels, you could run a lot of sats through your channel.
Which flow is better privacy:
- Buy bitcoin on kyc exchange -> withdraw to wasabi -> coinjoin(s) -> send to cold stroage
- Buy bitcoin on kyc exchange -> withdraw via lightning -> send via lightning to different lightning node -> do atomic swap to onchain sats in cold storage
Great question. It requires a very nuanced answer.
It depends. A small coinjoin tx will have a smaller anon set, just like a smaller routing node on Lightning. Ultimately, small coinjoiners and small routers all interlink with the big ones, so their privacy overlaps.
A Sybil attacker in a coinjoin needs to flood the round with liquidity, and somehow manage to exclude strangers from participating.
A Sybil attacker in Lightning needs to create a lot of nodes and selectively peer with targets to intercept payment routes. This is weakened somewhat if HTLCs are upgraded to PTLCs, but timing and amount analysis remains an issue. Multipath payments and rebalances help skew amount analysis though, so there's hope.
Sender privacy has always been good on Lightning. Receiver privacy requires Alias SCID, Blinded Paths/Bolt12, lnproxy, etc.
Taproot fixes this: Cooperative closes use the keypath instead of the script path. But, your concern remains if the channel is force closed instead.
Money can only flow in two directions:
For savers: Exchange -> Wasabi -> Coinjoin -> Cold storage
For spenders: Cold storage -> Wasabi -> Coinjoin -> Lightning -> Spending
You will need to learn Lightning no matter what. Coinjoin does not scale by itself, it's just how you should move around on the base layer when opening/closing channels.
What about exchange to liquid to cold storage
and storage to liquid to lightning to spending?
There's no reason to do that, Liquid's Confidental Transactions only hides amounts, not the transaction graph. Coinjoin hides both, and isn't custodial like Liquid.
Yeah I swapped my wasabi use to doing peg in and peg out on SideSwap to break the KYC exchange link. I was told this was a decent way to improve privacy because the UTXO history goes into a black box when you peg into liquid and when you peg out it’s hard to trace that history back to an exchange
I was told the same thing. Lightning and Liquid is not enough?
Liquid is custodial but it's a federation not one entity
There's no such thing as a federation, that's a marketing stunt. Still one API surface point of failure, and even if there are N keys there's no way to prove how they are actually distributed.
Bitcoin Privacy Technologies Comparison
24579How They Complement Each Other
These technologies enhance privacy at different stages of using Bitcoin:
Together they provide a more complete Bitcoin privacy toolkit:
Privacy isn't given, it is taken.
Payjoin to lightning channel open is the best
This is incorrect, Payjoins only have two, so either one can deanonymize the other. ZeroLink & WabiSabi coinjoins can have hundreds of participants, multiplying the anonymity of every participant.
Check out Vortex, a ZeroLink channel opener by @benthecarman - https://github.com/ln-vortex/ln-vortex
So, you brought up the anonymity set, so a question, does vortex specifically have a large anon set? Because I remember when vortex was first released as a toy prototype, I don't remember seeing anyone talking about using it.
It was never a production project. But since it's open source, you can resurrect it with AI if you wanted to.
I don't really wanna trust my money to vibe coding....
Well, you can just send payments directly in coinjoins with Wasabi 2.0 and then open Lightning channels in the next tx. You'll pay for ~110 vBytes in extra block space, which is approximately 40 sats. Just zapped you 40 extra sats.
Ecause of missing feature in lightning it is not possible to pass a whole utxo through lightning. Your channel will always have a reserve that will stay linked to you when you close a lightning channel.
I think somebody needs to sandardise simultaneous send all and close of a channel. It is technically possible.
cold storage is good for privacy
Option B
Lightning is the largest Coinjoin