Wasabi Wallet and the open-source Bitcoin payment processor Btcpay have announced a new plugin for the Btcpay server. The plugin implements the Wabisabi coinjoin coordination protocol from Wasabi, which allows sellers to anonymously store and transact in Bitcoin. By activating the recently launched plugin, all funds received and sent by sellers will be combined or mixed with other Bitcoin transactions.
According to the announcement from the Bitcoin wallet platform Wasabi Wallet and the Bitcoin payment processor Btcpay, sellers can now hide their incoming and outgoing Bitcoin (BTC) transactions.
The technology is presented in the form of a new plugin for Btcpay, which was developed by Andrew Camilleri and is based on the Wabisabi coinjoin coordination protocol from Wasabi Wallet. The Btcpay plugin scheme "protects the privacy of all their incoming and outgoing transactions, preventing the leakage of confidential information about payment history to interested parties."
"Btcpay server was created to give individuals and businesses the ability to restore their financial sovereignty," said Kukks, the developer of the Btcpay Coinjoin plugin, in a statement.
The Wasabi Wallet team and I are proud to offer even greater privacy protection with this new coinjoin feature. I believe that financial privacy is a fundamental human right, and this feature is my contribution to that cause.
The announcement details that all merchants using the Btcpay server can use the coinjoin process with the liquidity coordinator provided by Zksnacks, the company behind the Wasabi wallet. Additionally, Btcpay server administrators can create their own coinjoin coordinators on their own terms if they choose not to use Zksnacks' coordinator. The two companies also mentioned that the new coinjoin service provides a batch payment processing feature that saves space in the block.
Btcpay is not the only company that has collaborated with Wasabi and implemented the coinjoin technology to increase privacy. In September 2022, Trezor announced that it was adding coinjoin implementation to its hardware wallet.
The CoinJoin model is analogous to a situation where a group of people combines their cash into a single sum, puts it in a wallet, and goes to the store. All group members can ensure that no one spends more than they should, but during the shopping process, they do not necessarily use the same banknotes that they personally put in the shared wallet.
In the case of CoinJoin, several parties jointly create a transaction, each providing inputs and desired outputs. When all the inputs are combined, it becomes impossible to say with certainty which user owns which output.
The transaction acts as a kind of black box where coins are mixed. Old UTXOs are destroyed and new ones are created. The only connection between the old and new UTXOs is the transaction itself, but identifying its participants is impossible. At most, one can know that a participant provided one of the inputs and possibly became the new owner of the final output.
By the way, the CoinJoin protocol was introduced in 2013 by Bitcoin Core and Blockstream developer Gregory Maxwell. In less than 10 years, interest in transaction and bitcoin ownership anonymity began to grow.
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