Learn to protect your Bitcoin privacy and ensure your financial security.
People often assume that Bitcoin is anonymous because of the possibility to send and receive coins without giving away any personal information.
However, this is not true, you receive Bitcoins on so-called addresses, and therefore sending and receiving bitcoins is like writing under a pseudonym.
Since every transaction is stored forever in the blockchain, if your address is ever linked to your identity, every transaction will be linked to you.
This is why it’s extremely important to take the necessary steps to protect your privacy.
The following guide will demonstrate how to do this using Wasabi Wallet.
How does Wasabi Wallet work?
Wasabi Wallet works like any other normal Bitcoin lightweight wallet, you can send, receive and store Bitcoins. However, it has a special feature called CoinJoin, which makes it the most anonymous Bitcoin wallet out there.
CoinJoin is a mechanism that combines multiple participants coins (or UTXOs) into one large transaction with multiple inputs and multiple outputs. Looking from outside it is almost impossible to determine which output belongs to which input, and this is also the case for the participants. Unlike normal Bitcoin transactions, where there is usually one sender and one receiver. CoinJoin makes it extremely difficult for someone outside to trace from where a particular coin originated, and where it was sent to.
To learn more visit the Wasabi website or read the wiki.
Anonymizing your Bitcoin.
To get started we must first head to the Wasabi website and download the latest wallet.
In this guide, we are using Wasabi-1.1.9.2
It is recommended that you verify the GPG signature for the file. Verifying the files means you check the authenticity of the file, by observing whether the developer has signed the file with his public key or not. Here are tutorials separately for that: Windows, MacOS
These two tutorials are for Electrum Wallet, but the exact same process applies.
Although verifying the signature is recommended, the files are probably all safe anyway.
If you are really paranoid, you can also grab the source code, and build the wallet yourself.
After you first launch the wallet it will look like this:
Let the wallet Synchronize, and prepare itself, as you might notice Wasabi also starts Tor automatically on the background as well.
After Wasabi Wallet has synchronized, you can give your wallet a name, and a strong password.
This password is required to recover your wallet, so make sure you write it somewhere safe.
Accept the terms, and click Generate.
Next, write down your Recovery Words, mine looks like this. Make sure you backup these in the exact order + the password you created, you will lose access to your coins without them!
And that’s how you create a Wasabi Wallet, next let’s continue and anonymize your Bitcoins!
Alternatively, you can click Test Password on the left and test your password.
If the test is successful, continue and Load Wallet.
After you have loaded the wallet, you can generate a new receiving address by giving it a label.
Next, you will deposit some Bitcoin, the minimum required amount to queue for CoinJoin is 0.09794129 BTC, make sure you deposit at least that!
After you have deposited your Bitcoin, you can head on to the CoinJoin tab, you will see your coins, and their current anonymity set, you can then select the coins which you want to anonymize and the desire Anonymity Set.
By default Anonymity Set Target is 50, and the cost is 0.003% per anonymity set.
In our case, we will choose all of our coins, and use the default Anonymity Set.
Next, you will type your password, and click Enqueue Selected Coins.
Note that you will have to wait for confirmation to be able to Enqueue
The coins will then be queued, and each UTXO set will wait its turn to be coinjoined.
Be patient, CoinJoin will start automatically once the Registration Ends.
Congrats you have now anonymized your Bitcoin!
As you can see in our example, we have two sets of anonymized 0.0979 BTC transactions.
And two smaller change transactions both with normal anonymity sets of 1.
Note that you do not want to spend these coins together!
Mixing your anonymized coins with deanonymized coins destroys everything you’ve done!
If someone was looking from outside, and you would spend these coins together, they would see that whoever has these anonymized coins, is also mixing them with deanonymized coins, and therefore they could conclude that it is the same person.
This is why CoinJoin requires to use a set number of Bitcoins because that is what anonymizes your transactions from the rest. As all the UTXOs are mixing and everyone ends up with the same number of coins, it’s pretty much impossible to detect which coins came from where.
Also, the more people start to mix their coins the more increasingly harder it becomes.
After you have anonymized your coins you want to spend them separately!
In our case, we do not even mix our anonymized coins together, because this as well slightly lessens the anonymity set, and instead, we spend each 0.0979 BTC transaction separately.
And that’s it! This is how you anonymize your Bitcoin and keep them anonymized.
From there you can either leave the rest of your coins waiting for later CoinJoin batch or park them somewhere safe, the choice is yours!
Just do not mix them with the anonymized coins!!!
Related & Notes
There are few ways to purchase Bitcoin anonymously as well, such as Hodl Hodl and AgoraDesk.
If you want to know how to anonymize your Bitcoins on mobile, we’ve written another guide on how to do this using Samourai Wallet & Whirlpool:
There are also several other privacy related articles that you might find interesting:
Wasabi wallet’s CoinJoin method has been shown, several times before, to be weak. Instead, people should use Samourai Wallet Whirlpool.
Agree 100%, Samourai is slightly more advanced, but it also requires more technical understanding if one wants to use it correctly with Dojo.
However using Whirpool on the mobile can be a fairly simple process, for this guide, look no further: How to Anonymize Your Bitcoin Using Samourai & Whirlpool 🙂
According to the above comment, it sounds like Wasabi coinjoin isn’t the best option. Should I use Samourai and whirlpool? I just want something that’s fairly user friendly and effective. What about those anonymizer services on the Darkweb?
Both options are very effective, and easy to use for the average user, the above comment refers to the advanced feature, where you can run your own node “Dojo” with Whirlpool, and be fully sovereign. Nowadays there are similar workarounds on Wasabi as well. And it must be mentioned that even with default settings Wasabi is more private because it doesn’t reveal your xPub keys.
Great article.
This might be a silly question but I want to confirm…how do you actually spend the anonymized BTC? What does that process look like?
From what I’ve seen, all the crypto cards on the market / cash-out mechanisms are all Linked to your identity.
Thanks
Thanks for the great question, Alice.
However, we wouldn’t suggest anyone simply spending their coins if it’s not totally necessary. Because there’s actually a whole economy within the free markets, so instead we would look for independent income sources such as trading with exchanges that don’t require your id verification.
That being said, the are also many other crypto services which can be used for purchases without the need for any personal information, some of these services include Smart Bitcoin Trading Bots, Cryptocurrency Charts, Bitcoin VPN, and many more.
And if you still want to cash out your coins you could simply use some of the Peer to Peer exchanges such as AgoraDesk.
Mind me these are just a few examples, and there are many more on our website. 🙂