108 sats \ 4 replies \ @Catcher 6 Jun \ on: How I spend my coins privately with Coinjoin and Lightning bitcoin
Why can't you do the same but without mixing? I think the lightning transaction is anonymous enough?
(not the op)
You absolutely could do the same without mixing first. Doing both adds a layer of protection in case you end up depositing your funds to a Lightning node that violates your privacy. None of these things are perfect you know. It's always possible that a privacy protection will fail. So layering them makes it less likely that all the layers fail at once. I think this is the reason why the OP suggested doing this via Tor and/or a VPN (ivpn.net accepts lightning!).
Also I think coinjoining the funds first is a good courtesy if your funds are potentially coming from sketchy sources. Like it or not "hot" coins are a potential issue. Coinjoining first means you aren't potentially giving someone a UTXO that could maybe cause them problems. They're kinda choosing to accept that possibility by accepting incoming transactions. But still, diffusion is good.
If I were running an LN node, I'd rather people give me coinjoined funds. I don't want to know where their money is coming from!
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When nodes open a new channel with the UTXO of an old channel, analysis can apply heuristics that reveal which node funded the new channel. It can also label the closing balances of the old channel.
This degrades the privacy of your node and your peers. Even if your node uses coinjoin, a peer can still harm your privacy this way.
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In other words if you become a very interesting target they can probably track you even with coinjoin as you will make mistake sooner or later. But for keeping some basic privacy like buying giftcards online for example lightning payment from non-kyc wallet should be just fine.
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(not the op)
The problem with coinjoin (and monero) is if someone knows where you spent money to, and is trying to determine if you were the receipient of a source of funds, they can just look at the chain and see there is an on-chain link between the two UTXOs. Far from 100% of coins out there have been coinjoined. So if that link shows up, there's still a decent chance the connection is a real one and not coincidence.
Coinjoin is good at ensuring that people sending you money, and people receiving your money, can't determining much from that information alone. But there are cases where you need better privacy than that.
Lightning is good for completely eliminating the on-chain links. As long as the adversary doesn't have information on what transactions happened in the chain of Lightning nodes you used, they just don't have the information necessary to make that linkage. But Lightning isn't perfect either. Bad actors like chainalysis agencies can try to monitor LN channel balances with probing attacks. And those bad actors might be running nodes too.
But that's always true of privacy tech. So layer protections and don't rely on any one thing!
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