Bitcoin wallets and their safety have been one of the primary concerns lately in the crypto-community, in light of the fact that crypto-wallets contain information on the secure private key that is used to access Bitcoin addresses and carry out transactions. With the increasing number of cyber-attacks and online thefts in recent times, tensions over the nature of security continue to rise.
Binance Singapore recently froze Bitcoin withdrawals for a user who employed CoinJoin, a privacy tool, via wallet provider Wasabi. This incident has again, rekindled the never-ending debate about privacy and the legality of privacy tools.
However, Matt Odell, advisor to Bitcoin payments company, Bottle Pay, believes otherwise. On a recent podcast, Odell claimed that financial privacy is the only thing that allows freedom from the claws of central governments and “one way of achieving financial privacy is by using mixing services.” Odell went on to defend mixing services and argued about how they are akin to virtual private networks (VPNs).
“Because these projects are to protect the average user, they have to protect all users. There’s no way to know what’s a good user and a bad user. Because as soon as you’re able to delineate what’s a good user and a bad user, then you have centralization.”
Claiming that Bitcoin is too transparent, Odell said that for financial privacy to be maintained, more and more people should start accepting the transparency of the coin.
In his words,
“I think Bitcoin becomes more valuable, becomes more resilient and robust long term if individual users practice financial privacy because that is the single biggest vulnerability that Bitcoin has today.”
The podcast also discussed the merits and demerits of using mixing services. Mixing services generally make it hard for blockchain analytics companies to track the transactions and this issue had been raised by Trace Mayer, popularly known for leading the proof of keys movement, last year. Mayer had also pointed out the downsides of using mixing services and had urged people to move their coins to a private key wallet to claim ownership.
Odell, however, acknowledged that mixing services currently have low volumes which make them less effective. He added,
“If there were enough other people doing coinjoins or potentially if they moved it through very slowly like they just did a little piece at a time.”
In response to a question regarding the wider implications of services such as this could have, Odell said,
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“If they say CoinJoin is illegal and you’re trying to withdraw from, let’s say CashApp, and you withdraw from CashApp, you go through the five hops and then it goes to CoinJoin, are they going to block your account for that? if they do, that amounts to completely banning self custody.”
Towards the end of the conversation, Odell, however, maintained his stand on the mixing services and claimed that they are indeed a key factor in protecting financial privacy when using Bitcoin.