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1464 sats \ 6 replies \ @Kruw 24 Jul \ on: Does lightning or coinjoin give better privacy? AskSN Coinjoins

Great question. It requires a very nuanced answer.

Coinjoins make it difficult to trace onchain history, but they have a pretty small anonset.

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.

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.

Taproot fixes this: Cooperative closes use the keypath instead of the script path. But, your concern remains if the channel is force closed instead.

  • 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

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.

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129 sats \ 5 replies \ @Bell_curve 25 Jul

What about exchange to liquid to cold storage

and storage to liquid to lightning to spending?

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31 sats \ 4 replies \ @Kruw 25 Jul

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.

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241 sats \ 1 reply \ @BlokchainB 25 Jul

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

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86 sats \ 0 replies \ @Manikese 2 Aug

I was told the same thing. Lightning and Liquid is not enough?

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120 sats \ 1 reply \ @Bell_curve 25 Jul

Liquid is custodial but it's a federation not one entity

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20 sats \ 0 replies \ @justin_shocknet 26 Jul -100 sats

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.